16.5 – Common Frauds & Illegal Activity

Lawyers should be on guard against the following common frauds and illegal activity: 

• social engineering scams; 
• law firm employee theft; 
• investment and banking scams; and
• real estate fraud. 

There are also multiple forms of cyberfraud, which will be discussed in Module 17.

Social Engineering Scams

First, there are social engineering scams such as the bad cheque scam, the phony change in payment instructions, or a phony direction to pay. With these scams, the lawyer or law firm is usually the target of a fraudulent diversion of client trust funds into the scammer’s pocket.

Law Firm Employee Theft

Second, there is law firm employee theft. In this case, the employee is usually stealing money from the law firm.

Investment/Banking Scams and Real Estate Fraud

Third, there are situations where the scammer (who may be your client) intends to scam an innocent third party on the other side of a transaction or claim and involve you in the scheme (however, in some situations a third party is part of the scam in cahoots with your client). These include investment and banking scams or real estate fraud. The scammer may want to involve you to lend credibility to their scheme or because they actually need legal services for some aspects of their plan. 

For criminals, coming up with new schemes and looking for unsuspecting victims and vulnerabilities to exploit can be a full-time job. They will target anyone, including lawyers that they can dupe into becoming unwittingly involved in a dishonest, illegal, or fraudulent scheme. Take care to comply with the law and your professional responsibilities. The lessons that follow include more information about each of these scams to help you identify them.