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Beware of Lawyers Bearing Foreign Clients
E-mail scams targeting lawyers begin with 'attorney' asking for out-of-area help
New Jersey Law Journal
January 21, 2009
Martin Arbus
NJLJ/Carmen Natale
Martin Arbus, who runs a nice, quiet practice in Ocean Township, N.J., has found himself at the center of an international scam targeted at attorneys.
Arbus has been hearing from lawyers around the country about e-mails, purporting to be from him, that ask them to help a Chinese company collect a $700,000 debt.
The arrangement would call for all or part of the debt to be paid by check into the lawyer's trust account and for the lawyer to write a check to the "client" on the account. The only hitch: The lawyer would later learn the deposited check had bounced.
The e-mails identify Maanshan Iron & Steel Co. of Anhui, China, a real company, as Arbus' client and state his correct street address, with no telephone number and a phony e-mail address, amartin@amartinlawfirm.com.
They describe Maanshan as a "very credible client" based on prior representation, but they say Arbus is unable to handle the matter because it is "out of my legal jurisdiction."
The e-mails say that Arbus will be out of the office on a long vacation but that his secretary, "Sandy," reachable at shoffman@amartinlawfirm.com, can provide contact information for Maanshan. (There is no "Sandy." Arbus' secretary is Sylvia.)
Arbus says several lawyers who contacted him said they responded to the initial contact. They got back an e-mail response supposedly sent by Zhu Changqui, a real person who is Maanshan's general manager and director. The e-mail address given, zchangqui@magangltd.com, also appears legitimate because Maanshan is owned by Magang (Group) Holding Co., of Hong Kong.
"We request your services to enable us to come to payment settlement on a debt owed to us by a customer," said one such e-mail received Nov. 10, 2008, by a lawyer in Oklahoma who does not want to be named. It identified the customer as DSI Transports Inc. in Houston and said it owes $650,000 to $700,000 for goods delivered last July.
"Zhu" suggested DSI would pay readily to avoid being sued once it knew Maanshan had hired a "legal representative (Mediator)" in the state. He said the normal scenario is to try to work out a "mutual acceptable payment plan," with litigation to be only a "last resort."
"Zhu" asked the Oklahoma lawyer to send his retainer agreement by noon on Nov. 12 so the board could review it, but the lawyer called Arbus instead of following through.
DSI Transports was acquired by Trimac Transportation in 2000 and is out of business, says Neil Voorhees, Trimac's U.S. director of safety services and security, who learned of the scam through a reporter's call.
Atlanta attorney Rob Hassett was hit by a similar scheme, and his experience sheds light on how such schemes work.
Last August, Hassett received an e-mail, purportedly from a Minnesota lawyer looking for someone to help a "very good" client, Yantai Xinchao Industry Co. of China, another real entity, in an area outside of the sender's jurisdiction. The sender said he was heading off for vacation and asked Hassett to reply by e-mail to his secretary, "Stacie."
"It's not unusual for a lawyer in another state to send me an e-mail saying I've got this client, please take care of him," says Hassett of Casey Gilson.
Hassett replied and eventually entered into a retainer with the company to help it recover $650,000 from a large company headquartered in Atlanta. The client subsequently sent Hassett a message that it had worked out a deal and that a check would be arriving.
Shortly afterward, a $298,000 check, purportedly an "official" check drawn on Wachovia Bank, arrived from Canada via UPS. "It was so legitimate sounding until they sent me a check and didn't ask for a release," he says, adding that he was also troubled that the check was from Canada and not a company check. "It just had fraud all over it," he says.
After confirming with Wachovia that the check was bogus, Hassett contacted the Minnesota lawyer, who said he had never heard of the client but had heard from many other lawyers who had received the same e-mail as Hassett.
The Minnesota lawyer, who did not want to be identified, says another Minnesota firm, which he did not name, called him in a panic after it fell for the scam and sent out a check. He does not know if that firm managed to stop it.
MEDIATORS TARGETED
Arbus says he has fielded 50 to 100 inquiries about the fake e-mail, mostly from Texas but also from Oklahoma, Illinois, New Jersey, New York, Pennsylvania, California and the Virgin Islands. The lawyers called Arbus to confirm their suspicion of a scam, to warn him or both.
The first lawyer who contacted him, from Dallas, forwarded the phony message, asking whether he had sent it. "If not, it appears your identity has been hijacked for some other purpose," she said.
The Oklahoma lawyer wrote that he was glad he looked up Arbus in the "Martindale-Hubbell Law Directory" before answering the e-mail, adding, "What in the world these people were after is beyond me."
Arbus, who is Ocean Township's municipal attorney, reported the matter to the Ocean police, who told him they referred it to the county prosecutor.
The fake e-mails seem to have been sent to lawyers who do mediation work, and at least one person who contacted Arbus was a nonlawyer mediator. Arbus handles alternative dispute resolution, as do both New Jersey lawyers who called him after receiving the fake e-mails: retired judge William Dreier and Donald Cox Jr., of Princeton. That leads Arbus to believe the names might have been obtained from a roster of mediators.
Dreier, now with Norris McLaughlin & Marcus in Bridgewater, N.J., says he wanted to make sure Arbus was aware of what was happening. "It's a shame that our time and efforts have to be spent countering these things, especially for a lawyer whose good name and reputation mean so much," he remarks.
Cox, whose practice includes Internet law, traced the e-mails. His Jan. 6 e-mail to Arbus says he learned the domain name was a private one registered through a Netherlands registrar but the trail went dead in Canada.
In Cox's view, the lack of a public registry for lawyers licensed in New Jersey enables such scams because an out-of-state attorney who gets a bogus e-mail with a New Jersey lawyer's name on it has a harder time checking it out.
"In any dealing you have with anyone on the computer, you have to be especially cautious and pretty suspicious in today's world," says Arbus. He adds that the situation has "really been a pain in the neck."
