Nigerian Email Scam Targets Lawyers & Their Client Trust Accounts

Law.com reports that a new variation of the standard so-called Nigerian, 419, or advance fee email scam has been targeting lawyers. Phony clients allegedly seeking to collect funds from stateside customers contact a U.S. attorney seeking collections assistance. As soon as the attorney has accepted the representation, the customer immediately agrees to pay (how often does that happen!?), often in two partial payments to be timed one right after another. The check then received will usually be a forged cashier's check, payable to the attorney, and from which the attorney is told to deduct his fee (which the client may not be too concerned about the amount of, another red flag).

The author suggests that attorneys avoid becoming victims by:

• Researching clients using Google and other sources before accepting the matter
• Contacting any attorney or other party that has supposedly referred the matter to the lawyer
• Accepting overseas, especially Chinese, clients only if their story makes logical sense and upon the payment of a retainer
• Responding to any initial inquiries not known to be fraudulent, but which are suspected to be, making sure to point out clearly that an advance deposit against fees/costs is always required
• Taking any suspected fraudulent check to the issuing bank for analysis - they will often be able to identify small details that make the forgery obvious
• If a large payment is received upon behalf of a "client", even if by a cashier's check, holding the funds at least two weeks for clearance before disbursing the funds

A typical solicitation looks like this, and may even track this language precisely:

Dear ,

Request for Legal assistance


This is an official request for legal representation on behalf of XXX Co.Ltd.
We are a textile company with principal business in garment manufacturing and trading.
We are presently incapacitated due to international legal boundaries to exert pressure on our delinquent customers and we request for your services accordingly. We got your contact information from the Online Lawyers Directory as a result of our search for a reliable firm or individual to provide legal services as requested.
After a careful review of your profile as well as your qualification and experience, we are of the opinion that you are capable and qualified to provide the legal services as requested.
On behalf of XXX Co.Ltd, Please accept my sincerest appreciation in advance for your willingness to render your services as we look forward to your prompt response to our request.

Thank you.

Another example:

Attention Counsel,
XXX CO., LTD. is a manufacturing company with its head office in Japan, and branches all over Asia continent. The management of XXX CO., LTD. requires your legal representation for our North American delinquent customers. We are looking for a reputable attorney to represent us in North America in order for us to recover monies due to our organization by overseas customers, and as well follow up with these accounts. In order to achieve these objectives a good and reputable law firm will be required to handle this service.
We understand that a proper Attorney client agreement must be entered into by both parties.
Your consideration of our request is highly anticipated, and we look forward to your prompt response.
Yours Truly,

XXX

June 2009 update: The State Bar of California has issued a fraud alert to California attorneys on this topic:

STATE BAR ISSUES FRAUD ALERT TO CALIFORNIA ATTORNEYS

MEDIA CONTACT: Diane Curtis 415-538-2028 diane.curtis@calbar.ca.gov

San Francisco, May 29, 2009 —

The State Bar of California today issued a warning to attorneys to beware of international Internet scams purporting to hire U.S. lawyers to collect large debts.

Despite efforts to publicize the scams over the last year, Bank of America Vice President Blossom Dunng said attorneys continue to be targeted. In four separate cases since the start of the year, Bank of America attorney customers lost hundreds of thousands of dollars from counterfeit checks.

"As bank officials say, 'Know who you're doing business with,'" said State Bar President Holly Fujie. "If you deposit a check for $500,000, you had better have a clear idea where that money is coming from."

The scammers often use the names of real companies to gain credibility and use e-mail addresses that seem to have a connection to the companies. The State Bar itself has received such bogus solicitations:

"This is an official requisition for your legal consultation services on behalf of _________," one e-mail sent to the bar said. "We are presently incapacitated due to international legal boundaries to exert pressure on our delinquent customers in USA and we request your services accordingly."

"We got your contact information from the state of USA lawyers Directory as a result of our search for a reliable firm or individual to provide legal services as requested. After a careful review of your profile as well as your qualification and experience, we are of the opinion that your [sic] are capable and qualified to provide the legal services as requested."

If an attorney responds, the process begins and at some point the attorney receives a legitimate-looking check - sometimes even what appears to be a cashier's check - for the supposed debt. The attorney is asked to subtract his retainer and then send a check for the rest to the client.

In 2006, one attorney had a $2 million loss. This year, Dunng said, checks from the attorneys to the phantom clients range from $75,000 to half a million dollars.

Dunng, treasury services manager who handles all 8,800 Bank of America Client Trust Accounts, said the customer, not the bank, is responsible because it is common practice for the bank to make deposited funds immediately available to good bank customers.

"Attorneys should be the last people to fall for these scams," said Fujie. "Be careful!"

Scott Wilson, FBI special agent in Cleveland, says scams change so quickly that it's very difficult to keep up with them. Still, law firms that have been victimized or contacted as part of what looks like a fraud scheme should report the incidents. If a law firm has lost money in a fraud scheme, contact the local FBI office, says Wilson. If firms or lawyers have not lost money but believe they have been targeted by scammers, they should make a report to the Internet Crime Complaint Center at www.ic3.gov.

To view a story in the California Bar Journal about attorney victims of Internet scams, go to www.calbar.ca.gov, and check the California Bar Journal archives for July 2008.

Founded in 1927 by the state legislature, the State Bar of California is an administrative arm of the California Supreme Court, serving the public and seeking to improve the justice system for more than 80 years. All lawyers practicing law in California must be members of the State Bar. By May 2009, membership reached more than 222,000.

Federal Minimum Wage Increase

The federal minimum wage increases from $5.85 to $6.55 per hour, effective today, July 24, 2008. The minimum wage will increase to $7.25 next year.

Note that the California minimum wage applicable to California employers and employees is already higher than the current or future federal increases.

Employee versus Independent Contractor

California's Employment Development Department (EDD), in conjunction with the Internal Revenue Service (IRS), is offering a seminar on employment status issues; that is, whether a worker is an employee or independent contractor. The seminar is available live from time to time, but also online as a webinar or on CD, free. The seminar offers an overview of California law in this area, as well as debunking some common employer misconceptions.

CA EDD Payroll Tax Seminars

IRS Increases Standard Mileage Rate

The IRS has announced that, effective July 1, 2008, the standard mileage rate will increase from 50.5 cents per business mile to 58.5 per business mile. The change is in recognition of higher gasoline costs.

The medical and moving rate also increases, from 19 to 20c per mile, but the charitable purposes rate of 14c remains unchanged.

The 2009 mileage rate has yet to be determined and announced.

To those Californians that wonder, if - given the higher gas costs here - the rate varies state by state, the answer is no, although, for some taxpayers in certain instances, using actual automobile operating expenses rather than the standard mileage rate is an option that should be discussed with their accountant. Employers typically reimburse employees for business miles at the IRS standard rate.

John McCain, Republican for President, on the Estate Tax

Although U.S. Senator (Republican - Arizona) John McCain's has been criticized by conservatives in his party for his inconsistent support of President Bush's tax cuts, his recent no-new-taxes pledge and his prior Senate votes on the estate tax seem to indicate that as president he would be likely to preserve the status quo on the estate tax: in 2007, McCain voted to increase the estate tax exemption to $5 million and to reduce the maximum estate tax rate to 35%; and in 2006, McCain voted to permanently repeal the death tax and to make the Bush estate (and income) tax cuts permanent.

Source: OnTheIssues.Org: John McCain on Tax Reform

The conservative Club for Growth, which favor repeal of the estate tax, rated McCain's voting record 76 out of 100 for 2006 for pro-growth economic policies.

See also:

Barack Obama, Democrat for President, on the Estate Tax
Hillary Clinton, Democrat for President, on the Estate Tax
John McCain Official Site: McCain Tax Cut Plan

October 2008 update: McCain has clarified that he supports raising the estate tax exemption amount to $10 million for a husband and wife and cutting the tax rate on larger estate to 15 percent. He also supports lowering the federal corpoarte tax rate from 35 to 25 percent.

Barack Obama, Democrat for President, on the Estate Tax

U.S. Senator (Democrat - Illinois) and presidential candidate Barack Obama's view on the estate tax:

We have to stop pretending that all cuts are equivalent or that all tax increases are the same. Ending corporate subsidies is one thing; reducing health-care benefits to poor children is something else. At a time when ordinary families are feeling hit from all sides, the impulse to keep their taxes as low as possible is honorable. What is less honorable is the willingness of the rich to ride this anti-tax sentiment for their own purposes.

Nowhere has this confusion been more evident than in the debate surrounding the proposed repeal of the estate tax. As currently structured, a husband and wife can pass on $4 million without paying any estate tax. In 2009, this figure goes up to $7 million. The tax thus affects only the wealthiest one-third of 1% in 2009. Repealing the estate tax would cost $1 trillion, and it would be hard to find a tax cut that was less responsive to the needs of ordinary Americans or the long-term interests of the country.

From Obama's book, The Audacity of Hope, 2006, pp. 191-2.

In the Senate, Barack Obama has consistently voted against repealing or reducing most taxes, including the estate tax, and in favor of increasing most taxes, including the estate tax. Senator Obama, for example, voted no on increasing the estate tax exemption to $5 million and reducing the maximum estate tax rate to 35%, voted no on extending the sunset of the Bush estate tax and GST tax exemption increases (which lower the number of families affected by the estate tax), and voted no on permanently repealing what those who oppose it usually refer to as the death tax.

Source: OnTheIssues.Org: Barack Obama on Tax Reform

The conservative Club for Growth, which favors repeal of the estate tax, rated Obama's voting record 7 out of 100 for 2006 for pro-growth economic policies, and most liberal Senator overall for 2007 by the National Journal.

See also:

John McCain, Republican for President, on the Estate Tax
Hillary Clinton, Democrat for President, on the Estate Tax
Barack Obama Offical Site: Fiscal Issues

October 2008 update: Obama opposes repeal of the estate tax and supports repeal of, or allowing the expiration of in 2010, the Bush (estate and income) tax cuts. He supports one-time or short-term tax rebates for most individual taxpayers (and many filers who don't earn enough to pay federal income tax and pay only payroll taxes) and overall higher estate, payroll, income, and corporate taxes over the longer term.

In response to a question about raising taxes, Obama said that he intends to "spread the wealth around."

January 2009 post-election update: President-Elect Obama's Big Tax Plan by Bill Bischoff, SmartMoney's "Tax Guy":

$300 billion in tax cuts are probably on the way -- and soon.

Right after the election, I was virtually certain that upper-income individuals would face higher federal income tax bills as early as this year. And I didn’t see anything very good on the business tax horizon, either. But after two more months of horrifying economic data, it’s a whole new ball game.

Now, President-elect Obama is proposing a $775 billion economic stimulus package that does not appear to impose higher taxes on anybody or anything for 2009. Instead, it looks like we will immediately see some of the "middle-class tax cuts" Obama promised, plus some unanticipated business breaks too. All in all, these tax cuts could add up to $300 billion (or more) over the next two years....

February 2009 post-election update: Obama's Budget: Almost $1 Trillion in New Taxes Over Next 10 yrs, Starting 2011:

President Obama's budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals.

ABC News, February 26, 2009.

Interview Questions Employers Shouldn't Ask Job Applicants

SAN FRANCISCO (MarketWatch) -- "Why aren't you married yet?" "Would you join a church to get a job?" Those are just two examples of questions job seekers said hiring managers asked them in a job interview, according to a new survey of more than 3,000 job seekers and 1,000 hiring managers worldwide by Development Dimensions International and Monster, the career-resource arm of Monster Worldwide.
Others included "Are you happy in your relationship?" "Who is your favorite Beatle?" and "What is your perception of the painting in our lobby?"

The survey findings are "a wake-up call for organizations that this is happening behind closed doors when the applicant is face to face with their potential boss," said Scott Erker, DDI's senior vice president of selection solutions. DDI is a human-resource consulting company in Pittsburgh.

Questions pertaining to family status or religion can easily venture into illegal territory under antidiscrimination laws. That means potentially exposing the company to litigation -- and hindering the firm's efforts to find talented workers....

Don't ask, don't tell: Questions employers shouldn't ask -- and job seekers should avoid answering, Andrea Coombes, CBS Marketwatch, January 28, 2008

California Minimum Wage for 2008 Increases to $8.00 Per Hour

As mentioned here last year, California's minimum wage increased to $8.00 per hour, effective January 1st, 2008. The 2008 rate represents a 6.7% increase over the old (2007) minimum wage, which was $7.50 per hour.

Some employees are exempt from the minimum wage law.

Others are covered by a higher wage law: San Francisco increased its minimum wage to $9.36, also effective January 1, 2008.

The federal minimum wage for those employees not covered by state or local minimum wage laws, remains at $5.85, until July 24, 2008, at which time it will increase to $6.55, and then $7.24 a year later.

Updated California work place posters for employers can be found here: http://www.dir.ca.gov/wpnodb.html

2008 Standard Mileage Rate

The IRS' standard mileage rate for calendar year 2008 business miles has been increased to 50.5 cents per mile driven, up from 48.5 cents per mile in 2007.

See below for more complete information:

WASHINGTON — The Internal Revenue Service today issued the 2008 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning Jan. 1, 2008, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

50.5 cents per mile for business miles driven;
19 cents per mile driven for medical or moving purposes; and
14 cents per mile driven in service of charitable organizations.
The new rate for business miles compares to a rate of 48.5 cents per mile for 2007. The new rate for medical and moving purposes compares to 20 cents in 2007. The rate for miles driven in service of charitable organizations has remained the same.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile; the standard rate for medical and moving purposes is based on the variable costs as determined by the same study. Runzheimer International, an independent contractor, conducted the study for the IRS.

The mileage rate for charitable miles is set by law.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire or for more than four vehicles used simultaneously.

IRS Announces 2007 Standard Mileage Rates, irs.gov, posted November 27, 2007

FAQ: When can I obtain an EIN number for the corporation or LLC I'm forming?

Another frequently asked question:

When can I obtain an EIN number for the corporation or limited liability company I'm forming?

The definition of "EIN" is Employer Identification Number. An EIN, sometimes also called a Taxpayer Identification Number (TIN), Taxpayer ID number, or Federal Identification Number (FIN) is in essence the business entity equivalent of a social security number. Individuals have social security numbers, while corporations, LLCs, and some sole proprietorships, partnerships, and trusts, may obtain an EIN.

How do I obtain an EIN? EINs are issued by the IRS; apply with Form SS-4 by mail, fax, phone, or online. The name EIN is somewhat misleading, since an EIN is often needed regardless of whether a corp. or LLC will have any employees. For example, an EIN is generally required to open a business bank account in a corporate name, or to file corporate taxes.

Because they want to open a bank account as soon as possible, clients and potential clients often want to know how they can get an EIN as soon as possible. While it is not time-consuming to have an EIN issued once the corporation or LLC is formed (I obtain them same-day for clients), it is not possible to issue an EIN for an entity that does not yet exist. Anyone who claims they can get you one today is lying, misguided, or filing fraudulent paperwork on your behalf with the IRS - and probably with your name and social security number on it.

So if an EIN is needed yesterday, then the corporation or LLC itself is also needed yesterday, and the options that should be considered include expedited filing procedures to form the entity as soon as possible, or the purchase of an already-formed, ready-to-use shelf corporation or shelf LLC.

Minimum Wage Increase

The Los Angeles Times reports today:

House OKs rise in minimum wage

82 REPUBLICANS JOIN DEMOCRATIC MAJORITY

By Richard Simon / Los Angeles Times

WASHINGTON - The House Democratic majority, exercising its new political clout, Wednesday approved the first increase in the federal minimum wage in a decade -- from $5.15 to $7.25 an hour over two years.

The measure heads to the Senate, where it is likely to be coupled with tax breaks for small businesses to win Republican votes in the narrowly divided chamber and to secure President Bush's signature.

The minimum wage has been unchanged since 1997, the longest period without a raise since the first minimum wage was enacted in 1938.

California employers are also reminded that the state's minimum wage has risen to $7.50 per hour, effective January 1, 2007, and will rise again to $8.00 per hour on January 1, 2008.  California is amongst 29 states with a minimum hourly wage rate higher than the federal rate.  Certain localities have an even higher minimum wage, such as San Francisco ($9.14 [PDF]).

Updated 2007 mandatory California workplace postings can be found here.

Update 1/25/07: As noted in a blog concerning California employee rights, the recent minimum wage increase may also affect the eligibility of certain employees to be paid on an exempt basis:

"An employee MUST receive twice the minimum wage to be exempt from overtime pay. Commissioned salespeople MUST receive 1.5 times minimum wage to be exempt. If this criteria is not met, these employees are automatically entitled to overtime pay.

Under prior law, employees had to receive $28,080 per year to be exempt (twice the minimum wage ($13.50) X 40 hours X 52 weeks), but now that number has risen to $31,200."