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Rhode Island lawyer who “blindly followed instructions” of “internet scammer” to forward fraudulently obtained trust funds is publicly censured

Hello everyone and welcome to this Ethics Alert blog which will discuss the recent Rhode Island Supreme Court opinion publicly censoring a lawyer who “blindly followed the instructions” of an “internet scammer” to forward fraudulently obtained trust funds to accounts around the world.  The opinion is here:  https://www.courts.ri.gov/Courts/SupremeCourt/Orders/13-275.pd.

According to the opinion, the “internet scammer” client contacted the lawyer by e-mail after the lawyer had marketed himself as an “attorney pay master” who would act as an escrow agent for commodities brokers and hold funds until receiving confirmation that they had been earned and could be disbursed.  The lawyer stated that he decided that the client was a legitimate broker after a “cursory investigation” through the internet; however, either prior to or shortly after entering into the agreement, the lawyer spoke to a Rhode Island Disciplinary Counsel seeking advice as to whether it was permissible to perform the services.  The Disciplinary Counsel advised the lawyer that he strongly recommended that he not engage in these services, that attorneys were being specifically targeted by scam artists using the internet, and that he was most likely becoming involved in a scam.  According to the opinion, “(the lawyer) chose not to heed that advice.”

The lawyer also failed to ask about the source of the client’s funds and then followed the client’s instructions and transferred the money to accounts around the world, including the Cook Islands, St. Vincent and the Grenadines.  The lawyer was paid “$68,734 in slightly over a month for performing no other service than following (the client’s) directives to transfer funds.”  In addition, he “provided unlimited access to an individual he had never met, other than via email contact, to deposit funds into his client account…(h)e received deposits into that account from unknown sources, and he made no effort to determine whose funds he had received. He then blindly followed instructions to forward those funds to accounts around the world.  A clearer breach of fiduciary duty would be difficult to imagine.”

When the lawyer became aware that the client was engaging in fraud and was using his client account to facilitate that fraud, he immediately stopped acting as an “attorney pay master” and cooperated with federal and state law enforcement officials, as well as the Rhode Island disciplinary counsel. No criminal charges were filed against the lawyer and he “deposited $50,000 of the funds he received into the Registry of the Superior Court to pay any claims made by victims of (the client’s) fraud.  Additionally, his malpractice insurance carrier has also deposited some funds into that account as well.”  The Rhode Island Supreme Court imposed a public censure.

Bottom line:  This is another example of how lawyers can be “innocently” drawn into potential violations of Bar rules through the internet by being less than diligent (or somewhat greedy).  It is also an example of how a “client” can take advantage of the attorney and the attorney/client relationship in representations where the relationship is created over the internet and “client” and attorney never actually meet.  Lawyers must be very wary of such “electronic attorney/client relationships” and potential scams and this lawyer was apparently also warned by the disciplinary counsel not to become involved but he failed to heed that warning.

Let’s be careful out there!

As always, if you have any questions about this Ethics Alert or need assistance, analysis, and guidance regarding these or any other ethics, risk management, or other issues, please do not hesitate to contact me.

Disclaimer:  this e-mail does not contain any legal advice and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2454 McMullen Booth Road, Suite 431

Clearwater, Florida 33759

Office (727) 799-1688

Fax     (727) 799-1670

[email protected]

www.jac-law.com

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