He took Citibank to court because they misrepresented the validity of a check

Jan 30, 2009 14:11 GMT  ·  By

Richard T. Howell Jr., partner in the Houston-based law firm Buckley, White, Castaneda & Howell, has been successfully defrauded of $185,500 by an international criminal gang, in a operation involving e-mails, telephone calls and fake checks, the Texas Lawyer reports.

Howell decided to go public, despite the possible embarrassment, because he wants to alert others after finding out that a fellow lawyer lost $300,000 to a similar scam. "I'm a capital 'D' Dumbass," he admits.

The lawyer explains that it all started with an e-mail he received from someone identifying himself as a businessman from Japan seeking legal help to collect a $3.6 million debt in unpaid invoices from U.S. customers. Thinking this is a possible profitable deal, the lawyer got lured into the scam and after further communication, the Japanese company signed an agreement to pay the law firm a 33.3 percent fee.

Not long after Howell's new clients informed him that one of the U.S. companies agreed to pay a part of their debt, on October 7, 2008, the lawyer's firm received a check for $367,000, which was then deposited into its account at Sterling Bank.

A Buckley, White, Castaneda & Howell worker then called Citibank to verify the check, where someone confirmed that check number 310096829 in the amount of $367,500 was paid. Relying upon this information, the firm proceeded to authorize a wire transfer of $182,500 from its account to what they were told was a Hong Kong branch of the Japanese business.

Representatives from the Sterling Bank informed the firm that the check was returned as “counterfeit” on October 10, but by that time, it was already too late for the wire transfer to be canceled. "It was moving fast with me. I thought I was covering any base," commented Mr. Howell for the Texas Lawyer.

According to the attorney, the client provided him with the website of his company, as well as the U.S. companies from whom the debt was to be collected and even called him on the telephone a couple of times. The law firm has filed suit against Citibank for being negligent and misinforming them about the check. They ask for $182,500 in actual damages and at least $367,000 in punitive damages.

The case is scheduled to be heard in July, but Citibank's attorney already stressed that “we are not liable for those funds” and that the bank was not willing to pay for any damages. Howell also contacted the U.S. Secret Service and the Houston Police Department, but both agencies refused to launch investigations. He did manage to file a complaint with U.S. Postal Service Office of the Inspector General, but there is little to no chance that the money can be recovered.

What happened to the Houston attorney, who has been practicing law for 23 years, was a more complex form of a Nigerian 419 scam. This incident stands to combat common belief that only uneducated people are vulnerable to such types of fraud. We recently reported the stories of two men who lost $340,000 to similar complex schemes.