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Attorneys Beware The Fake Creditor Scam

As a solo practitioner or small firm owner, few things are more exciting than obtaining a new client. What follows is a warning about how what seems like a great case may end up costing you everything in your bank account and then some. The scam goes like this:

You receive an unsolicited email from a creditor seeking legal assistance to collect on a debt. You respond to the phone number in the email and speak to the creditor. The creditor is a Michigan business that has run into trouble with a client in Pennsylvania. He has allowed the local debtor to continue its relationship but now the debt is out of control and something must be done. He informs you that he feels all that will be necessary is a demand letter from your office. Upon asking how he found you, he replies from the local bar association.

At this point, some due diligence on your part reveals that the creditor is a real Michigan company. Moreover, the judgment debtor is a genuine company, registered with the Commonwealth of Pennsylvania. The credit agreement and invoices provided from the client are signed by a man who is listed as an officer of the debtor company. Everything seems to check out ok. Unlike most clients, this gentleman does not seem to care a great deal whether you represent his business on an hourly or contingent rate, but ultimately you agree this will be a contingent matter. You draft a fee agreement for your new client. It is returned immediately. Upon receipt of the agreement, you draft a demand letter.

In response, and with record haste, comes a letter from the judgment debtor on company letterhead. Enclosed is a certified check with a hologram and watermark. It is drawn on a big bank and is in the amount of $198,750.00, 100% of the demand made out to your firm alone. Why couldn’t all your collection matters be this easy? You contact your client who is happy to have you deposit the check and then cut him the client’s share from your trust account. You laugh all the way to the bank, (literally perhaps), with visions of what all this wealth can bring you.

After about 24 hours, your trust account shows that the funds have cleared. You cut your client a check for his share and yourself a check for the remainder. Everything is right with the world. But then, five weeks later, you receive a phone call from your bank. The certified check was a fake and you, as the account holder, are responsible for the funds that are deposited into your account. Your “client” has long ago left for the Caribbean and you are now staring down some extraordinary financial and legal troubles.

Usually, fake creditors are obvious. Their email solicitations come from overseas with nonsensical details or are simply way too vague to be taken seriously. They are often no more credible than the ubiquitous Nigerian Prince who needs your help to move some money out of the country. Here we have real companies with the names of real individuals. There are working phone and fax numbers and the people speaking to you sound perfectly credible.

Lucky for me, there were three red flags when I was working my way through this matter. First, the creditor used two different email accounts. While they both contained some variation of his name and some numbers, they were not sent from the creditor company’s domain. Rather, they arrived from Hotmail or AOL accounts. This seemed a little odd.

Second, the envelope containing the check from the “Pennsylvania debtor” was postmarked in Canada. This can be an easy thing to miss, however. Your attention is certain to be drawn more towards the six figure check in your hand than an empty envelope. Also, if an assistant opened the mail and threw out the envelope you would have no way of knowing.

Last, the scammer got greedy and sent his certified check before my demand letter was mailed. There was basically no way that the debtor could have known that I represented the creditor.

The lesson is to be diligent in accepting new clients and beware of certified checks. If there is any doubt whatsoever, contact your local bank and ask them how long it would take to determine for certain that the check is legitimate. Use phone numbers found on company websites, not those provided in emails from the contact. If you run up against this scam, report it to the local authorities. Unfortunately, no one investigated my case but it doesn’t mean someone may not take it more seriously in the future. You may save the next attorney his livelihood!

By: Gregory S. Shields, published in March 2013 in Upon Further Review.


Sole Legal Custody Means Solo Decision-Making

In the matter of M.P. v. M.P., 54 A.3d 950 the Superior Court of Pennsylvania clarified the extent of authority of a parent who enjoys sole legal custody s/he has over a child.

In M.P., the mother of the child at issue in the case is from Ecuador.  Most of mother’s family, including her own parents, still reside in Ecuador.  Mother was granted primary custody of the child in July 2009 and Father was awarded supervised visits for two hours per week.  Despite receiving such minimal custody, Father did not take advantage of it to spend time with his child.  In or about November 2011, after a hearing, Mother was awarded sole legal custody of the child.  Mother filed a petition to permit her to take the child to Ecuador for three weeks, a trip which Father opposed.  The lower court entered an order prohibiting Mother from taking the trip to Ecuador which led to Mother filing an appeal to Superior Court and it is the Superior Court’s decision that is the focus of this article.

Mother wanted to take the child to Ecuador as it is her own ancestral home and most of her family lives there.  It was not feasible for Mother’s family to come to the United States as there was testimony that Mother’s parents would have difficulty in securing visas to come to the United States and Mother’s mother has health issues which makes flying difficult for her.

Father opposed Mother’s proposed trip to Ecuador as he views Ecuador as a third-world nation filled with potentially dangerous diseases and crime.  He also had concerns about the compatibility of the child’s health insurance coverage with Ecuadorian hospitals and the difficulty retrieving the child if something unfortunate happened to the Mother.

The lower court, by its own volition, investigated international law and the terms of the Hague Convention regarding international custody arrangements and had concerns regarding Father’s options to retrieve the child if Mother failed to return her to the United States.

When reviewing this matter, the Superior Court reversed the lower court’s decision and permitted Mother to go to Ecuador with the child for her proposed three week trip.

The Superior Court first looked at what it means for a parent to have sole legal custody.  Legal custody is the right and ability to make major decisions for the child.  Sole legal custody is the granting of one parent exclusive and final right to make major decisions; indeed, specifically exclusive from the other parent.  The Superior Court ruled that the lower court, by allowing Father to block Mother’s trip to Ecuador, enabled him to undermine Mother’s sole legal custody, and, essentially, render it meaningless.  As a result, the Superior Court ruled that if a party has sole legal custody, the other parent cannot move to prevent it from being exercised but for a formal petition to modify the custodial arrangement.

In terms of the lower court’s reliance upon international treaties and the Hague Convention, it is notable that Father did not raise them at the hearing but the lower court took judicial notice of them.  Regardless, the Superior Court noted that it is not unusual for a court to take judicial notice of such things, so the lower court’s reliance upon them was not objectionable, at least in principle.  Instead, the Superior Court took issue with the fact that the lower court relied on that information after the hearing had concluded and without notice to the parties.  The Superior Court ruled that a party has the right to be heard as to the propriety of a court taking judicial notice of an issue, especially one as critical as international law.

Based on the above, the Superior Court reversed the lower court’s decision, ruling that sole legal custody cannot be undermined or otherwise disturbed without an order altering the custodial arrangement and a court taking judicial notice of an issue must indicate doing so on the record and allow the parties involved to address it.

Originally published in The Legal Intelligencer on March 16, 2015 and can be found here and reprinted in Volume 37, Issue No. 3, September 2015 edition of the “Pennsylvania Family Lawyer” (see here).

Pa. Justices Clarify Evidentiary Standard for Child Abuse Registry

The Pennsylvania Supreme Court weighed in on the burden of proof required to place someone onto the statewide ChildLine Registry (“Registry”) in the matter of G.V. v. Department of Public Welfare, et al., 91 A.3d 667 (2014).

In September 2009 the Lancaster County Children and Youth Services (“CYS”) received a referral alleging that Plaintiff sexually abused his sixteen (16) year old niece, of who he had custody. After an investigation, CYS filed an “indicated” report against Plaintiff upon finding substantial evidence that Plaintiff had abused his niece.

Upon the finding that Plaintiff abused his niece, he was listed on the statewide Registry pursuant to 23 Pa.C.S.A. § 6301-6386. Subsequently, Plaintiff sought the expungement of his name from the Registry through DPW. DPW denied his request to expunge his name from the Registry and he appealed to an administrative law judge (“ALJ”). After a hearing before the ALJ at which several witnesses testified against Plaintiff, the ALJ concluded that the “indicated” report was supported by substantial evidence and, therefore, denied Plaintiff’s appeal. Ultimately Plaintiff appealed to the Pennsylvania Commonwealth Court which vacated the ALJ’s decision on the basis of using an improper evidentiary standard, and remanded the matter back to the ALJ.

The Commonwealth Court agreed that there was substantial evidence but further noted that there was no statutory direction as to what standard of proof is required to be placed onto the Registry and ultimately ruled that clear and convincing evidence is required to be placed onto the Registry. The Commonwealth Court’s decision was appealed to the Pennsylvania Supreme Court and it is that appeal which is the subject of the case described herein.

The Supreme Court noted that an indicated report is warranted if there is substantial evidence, which is defined as “evidence that outweighs inconsistent evidence and which a reasonable person would accept as adequate to support a conclusion.” This is in contrast to the clear and convincing standard urged to be applied by the Commonwealth Court and the Plaintiff, which is defined as “evidence that is so clear, direct, weighty, and convincing as to enable the trier of fact to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue.” Customarily, the clear and convincing standard is applied when a person’s “individual interests at stake in a state proceeding are both particularly important and more substantial than mere money” and especially when there is a potential for “significant deprivation of liberty or stigma.”

After an indicated report, and a placement of a person onto the Registry, that person must report his placement onto the Registry whenever he accepts some sort of position (whether through employment or volunteer work and the like) where he would have contact with children. In its review of the applicable case law the Supreme Court established that the substantial evidence standard is what has been historically used in cases such as the instant case despite an absence of a statutory directive to use that standard.

In its review of the Commonwealth Court’s decision, the Supreme Court acknowledged that the Commonwealth Court did not err in determining that the preservation of one’s reputation is protected under Pennsylvania’s Constitution. Nevertheless, it ruled that it did err by overestimating the significance of the Registry as something covered by the above-mentioned reputation protections as to warrant the application of the clear and convincing standard instead of the substantial evidence standard.

The Supreme Court pointed out that only a limited number of people in a limited number of circumstances could access the names on the Registry. Consequently, the Supreme Court suggested that the Commonwealth Court overstated both the potential and probability for disclosure of the information on the Registry as well as overstated the potential risk of the deprivation of a fundamental interest of someone on the Registry. As a result, the stigma that the clear and convincing standard is supposed to address is simply not present. In addition to the above, the Supreme Court found that the Commonwealth Court did not take appropriate consideration of the fact that the government has a legitimate interest in ensuring the safety of children.

Ultimately, in sum, the Supreme Court ruled that even though being placed on the Registry is significant, there is no legal justification to apply the clear and convincing evidence standard as opposed to the substantial evidence standard when deciding whether to place someone on it.

Originally published in The Legal Intelligencer on January 20, 2015 and can be viewed here.

Attorneys Beware The Fake Creditor Scam

Here is an article, by Gregory S. Shields, Esquire, who is my friend and colleague,  providing some sound wisdom and insight into how an attorney pursuing a practice in debt collection can be defrauded.  The article is entitled “Attorneys Beware The Fake Creditor Scam” and can be found here and on my website here.

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