Atlanta securities lawyer Gregory Bartko said he is the victim of an Internet fraud scheme that is apparently targeting law firms throughout the country and the banks where lawyers have their escrow accounts.
As a result, Bartko is now a defendant in a federal suit by Wachovia Bank -- which is seeking reimbursement for nearly $200,000 that the bank wired, on Bartko's instructions, to a Korean bank on behalf of a company that had hired Bartko via the Internet.
Wachovia has also notified the State Bar of Georgia that Bartko's firm escrow account was overdrawn by more than $190,000, Bartko said.
The scheme that entangled Bartko matches one in a fraud alert issued in February by SunTrust Bank in Atlanta.
An overseas company contacts a U.S. lawyer by e-mail and retains that attorney as a settlement agent to collect a debt from a U.S. company. The U.S. company sends a settlement check to the lawyer, who deposits it into his trust account and then wires the settlement amount, minus his fee, to the "client." But the settlement check is counterfeit, and the lawyer loses the money he wired abroad.
"I'm pretty upset about it," Bartko said last week. "I got conned by someone who I thought was a client."
Bartko is not the first to have been taken in by the scam. The July issue of the California Bar Journal reported on two unnamed California attorneys, one in Long Beach and one in San Francisco, who fell for a similar Internet pitch, but their banks noticed the counterfeit checks before any money was sent abroad.
Wells Fargo Bank in San Francisco and City National Bank in Los Angeles have reported at least six other lawyers who were drawn in, according to the California Bar Journal.
Bartko said that a member of Wachovia's loss-management/rapid-deployment team in Atlanta told him that she was already working on a virtually identical complaint involving another metro-Atlanta attorney who had been instructed to wire funds -- based on a phony check -- to an Internet client in the Philippines by the same individual who had hired Bartko.
Bartko said he was taken in by the fraud scheme because he occasionally handles international legal transactions involving clients in Asia. It is not unusual for such transactions to be conducted by e-mail, he said, because of the 12- or 13-hour time difference between Atlanta and the Far East, he added.
Bartko said fraudsters first contacted him in early February via an e-mail from the Tah Tong Textile Co. in Taiwan seeking representation in the U.S. to collect a large debt.
Bartko said the e-mail mentioned five different firms in Atlanta that Tah Tong claimed to have also contacted. Tah Tong's representative informed him that the company had identified the Atlanta law firms, including Bartko's solo practice, through the State Bar directory, Bartko said.
"I think I let my guard down when I heard that," Bartko explained. "We entered into an attorney-client agreement with them" on March 12 and, eventually, contacted the alleged debtor.
Bartko said that in April he received a SunTrust cashier's check -- payable to his law firm -- from that debtor for $197,530 as partial repayment of its outstanding account. Then, Bartko said, Tah Tong executive Hua Cheng instructed Bartko via e-mail to wire the money to the textile company's account at the Woori Bank in South Korea.
Bartko said Tah Tong is a real public company that trades on the Taiwanese stock exchange. "When they approached us to do some work for them, we checked them out," he said. "It's a reputable company. ... But I suspect there is no connection between Tah Tong and the people who are involved in the scam."
As for Hua Cheng, Bartko said, "Since he was the one who instructed us what to do, I can only assume he was part of the scam."
Bartko said he deposited the cashier's check in his escrow account at Wachovia on April 8. A bank representative told him that he could not draw on the funds until April 10 -- the time it would take to confirm that funds were available and that SunTrust would honor the check, the lawyer said.
On April 11, shortly after 10 a.m., Bartko returned to Wachovia and arranged to wire $192,530 to the Woori Bank. Three days later, on April 14, Bartko said he discovered that his escrow account reflected a debit of $197,530.
When he called Wachovia for an explanation, bank representatives told him that SunTrust had returned the cashier's check that Bartko had deposited as counterfeit. A bank representative told him that Wachovia had attempted to recall the wire the day Bartko had arranged it, but had been unsuccessful.
While the cashier's check was counterfeit, Bartko said that SunTrust had determined that the customer in whose name it was purchased is a real one. "They are not part of the [fraudulent] transaction," Bartko said.
On April 15, Wachovia informed Bartko that he would be responsible for the $197,530 chargeback. Bartko said he learned that day that the bank's loss-management team was already working a similar fraud involving Hua Cheng, the same Tah Tong representative who had contacted Bartko.
"That disturbed me," he said, noting that he thought the bank should have been on the lookout for other counterfeit checks by the same fraudsters.
THE BANK SUES
Wachovia's suit against Bartko -- originally filed in Gwinnett County State Court and transferred to U.S. District Court on Aug. 18 -- claimed that the bank had provided Bartko with "provisional credit" when it wired the funds to South Korea. The bank laid claim to more than $7,000 already in Bartko's escrow account, closed it and billed the $191,619.95 negative balance to Bartko.
Wachovia has also claimed that the account was a personal -- rather than a business -- account, making Bartko potentially personally liable for the loss.
Richard B. Herzog Jr. with Nelson Mullins Riley & Scarborough in Atlanta is handling the suit for Wachovia. On Monday, Herzog said because the matter is currently in litigation, "I don't think I'm authorized to speak on behalf of my client." Wachovia spokeswoman Evelyn Mitchell said that it is Wachovia's policy not to discuss pending litigation.
Bartko acknowledged that he has not paid the bank for the bulk of the wired funds. But he said that what appears to have been a delayed communication between SunTrust and Wachovia caused Wachovia to authorize the outgoing money wire.
Bartko said that SunTrust identified the cashier's check as counterfeit on April 9, the day after he deposited it.
According to federal law, SunTrust had three days in which to notify Wachovia electronically that the deposited check was counterfeit. But SunTrust, according to Bartko, missed the three-day notification deadline.
Bartko didn't wire the money to Tah Tong until April 11. "So what's going on between the 9th and the 11th?" -- the time when SunTrust identified the counterfeit check and Wachovia attempted to recall the bank wire, the lawyer asked.
Bartko suggested that the communication gap could have occurred because the counterfeit check was misplaced. He noted that a copy of the check that was delivered to Wachovia on April 16 stated that SunTrust was providing Wachovia with a photocopy "in lieu of the original item lost in the process of being returned."
Bartko said Wachovia's legal counsel notified him about SunTrust's missed midnight deadline, adding that Wachovia intended to file a claim of late return against SunTrust for the $197,530 loss.
But in June, Wachovia's counsel contacted Bartko a second time, notifying him that the late return claim against SunTrust had failed and that Bartko's "obligation to repay the overdraft remains."
A SunTrust representative could not be reached to discuss the case.
Bartko said that since April, his efforts to get additional information about the counterfeit check have failed. SunTrust's associate counsel advised him that any requests for information about the check would have to come from Wachovia or via a subpoena and that "any recourse you may have is between you and Wachovia."
Said Bartko: "I can't get anything from Wachovia. They won't give me the first piece of paper."
The case is Wachovia Bank v. Bartko, No. 1:08-cv-2636.
