It is old news that scammers pose as clients to defraud attorneys. A typical scam is that the client will have an adverse party (typically a former spouse or a purchaser of equipment ) issue a fraudulent cashier’s check, which the attorney will deposit into his trust account. The attorney will then disburse genuine funds from the trust account to the client. Three or four weeks later, the bank will reverse the deposit of the fraudulent cashier’s check; and the attorney will be responsible for the overdraft.
I recently encountered a similar scam in which a client claimed he had worked for a Fortune 500 company, that he was sexually harassed by his female supervisor, and that he was wrongfully terminated after reporting the sexual harassment to the employer’s Human Resources Department. The client then claimed that he had entered into a $109,000 severance agreement with his employer, but the employer has inexplicably refused to remit the $109,000 severance check.
What makes this particular variation of the scam insidious is that the client provides upfront the following documents: (1) his employment offer letter; (2) his termination letter; (3) a signed severance agreement; and (4) an email exchange in which the employer acknowledges its obligation to pay $109,000 pursuant to the severance agreement. The severance agreement and the email exchange are purportedly from the vice president of H.R. for the corporation; and a google search confirms that the person was an officer of the corporation.
A close examination of the four documents revealed their fraudulent nature. Neither the employment offer nor the termination letter contained the address of the alleged employee. All of the documents contained formatting errors, such as extra spaces between words and no spaces between paragraphs.
The wording of the severance agreement did not comport with standard legal drafting. Instead of stating “One-hundred and nine thousand dollars ($109,000)”, it stated “$109,000 [One hundred and nine thousand dollars]”. Also, brackets were found in the severance agreement around dates, the name of the employee, the name of the employer, and the name of the state in the forum selection clause, as if the drafter did not know to delete these brackets from the template.
In the email exchange, the subject line changed from “Breach of Severance Agreement” to “Severance Payoff”; and the alleged emails from the corporation’s Director of Human Resources contained spelling and punctuation errors. Also, this corporate officer had recently resigned from her position.
The potential client also insisted that I send him a retainer agreement before we even spoke.
Update: The Virginia State Bar has issued an alert about the severance agreement scam. https://www.vsb.org/site/news/item/scam_involving_severance_agreement
Second update: I recently received another severance agreement scam email. It contained numerous red flags, including:
1. A purported email exchange with the director of H.R. in which her name and the corporate name were misspelled in the email address.
2. The purported severance agreement was signed by the H.R. director, instead of a corporate counsel.
3. The purported severance agreement included a payment for a personal injury suffered at work; and
4. The date of the purported severance agreement was bracketed and was missing a comma.
There is a theory as to why such scam emails and attached documents contain such obvious errors. The scammer wants to screen out the non-gullible. It takes very little effort for a scammer to send an email, but it takes time to engage a recipient in an email exchange. Therefore, it is in the scammer’s best interest to screen out the non-gullible, because the scammer does not want to waste time communicating with a person who will never send him money. The scammer wants the non-gullible to delete his obvious fraudulent email about being owed a large sum of money. By having the non-gullible screen themselves out, the scammer will receive responses only from the gullible.
Practice pointer for attorneys: Always be wary of emails from potential out-of-state clients, who claim that they are owed a large sum of money for severance pay, alimony arrears, or sale of equipment. Always meet in person with the potential client. Never deposit a cashier’s check without verifying its source and authenticity.
