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August 21, 2009

IOLTA Scam Making Rounds in Ohio

The Supreme Court of Ohio Office of Attorney Services has issued a warning about an Internet scam affecting Ohio lawyers. Multiple individual attorneys and law firms have contacted the Supreme Court about the scam.

Here’s how the scam works: An Ohio lawyer receives an email purportedly from another lawyer for collection of a debt. A follow-up e-mail arrives from the supposed debtor (who is also the client), seemingly legitimate, who sends a bogus check for payment. The Ohio lawyer is instructed to pay the debt by wiring some of the funds to the creditor and to keep a portion of the funds as payment for his/her attorney fees. The Ohio lawyer then deposits the check in his/her Interest on Lawyers Trust Account (IOLTA), wires funds to the creditor, and retains the agreed upon amount as attorney fees.

Meanwhile, the check goes through international banking channels until it’s eventually discovered that insufficient funds are available in the account to cover the amount. The bank debits the IOLTA for the amount of the returned check, while the lawyer has wired “good,” client funds to the purported creditor.

The proposed client is typically an actual Asian company – although the scammers have no connection with the company. Also, sometimes the scammers use real lawyers’ names in the initial e-mail.

Attorneys are advised to exercise caution when approached by unknown attorneys seeking to enter into financial transactions involving foreign entities. To report a suspected online crime, contact the FBI at www.ic3.gov.