E–Mail Scams Very Costly for Lawyers—Be Aware

One of the most recent incidents which has come to light happened in Houston, where lawyer Richard T. Howell Jr., partner at Buckley, White, Castaneda & Howell, was scammed into losing $182,500 for his firm (which he paid back out of his own pocket). Howell was careful and thought he had checked all his bases, but one week after it was too late realized he had lost his firm a lot of money. Now Howell wants a lot of people to know his story so they can be more aware and not get taken in themselves.

It started in October 2008 when Howell was contacted by an alleged client in Japan about doing some collection work for clients he had in the United States worth $3.6 million. Howell alleges the client signed a contingent-fee agreement and advised the firm of Buckley, White, Castaneda & Howell that one of the four customers who owed them money had agreed to make a partial payment of their outstanding debt. On October 7, 2008, the firm received a ''Citibank Official Check'' for the amount of $367,000 which the firm deposited into its account at Sterling Bank in Houston. A firm employee called Citibank and verified that check had cleared, verifying both the check number and the amount of the check, and Citibank confirmed that it had cleared. Once Howell was assured the check had cleared he then wired a transfer of $182,500 to the Japanese company.


Then it all came crashing down three days later. Sterling Bank called to inform the firm that, despite Citibank's unconditional representation, the check had been returned as counterfeit. The wire transfer depleted the firm's account, since the deposit really had not gone through, and left the account negative.

After these events, Howell tried unsuccessfully to contact the client in Japan. This client initially contacted Howell through email, which Howell said is not unusual. The client even called him a handful of times, but Howell never called him. When Howell emailed the client there was no reply.

Howell took full responsibility for the loss and borrowed the money on a home equity loan in order to pay what he had lost. Now the firm is suing Citibank for negligence and misrepresentation for telling Howell that a $367,000 check had cleared when it was counterfeit.

Howell now warns other lawyers to see red flags that he failed to see. Fraud specialists offer the advice that if it sounds too good to be true, it almost definitely is. Be aware; verify everything every step of the way, and do not give anyone money until you are absolutely sure that you have what they were supposed to give you.