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October 1, 2010
It could happen to you

One lawyer’s tale of fraud and his fight to clean up the mess

By Mark D. Killian
Managing Editor

Think you’re too savvy to fall for an e-mail scam? Maybe. But perhaps you will redouble your efforts to protect yourself from fraud once you’ve heard how Sarasota lawyer Brandon Daniels got taken.

In September, the Daniels Law Firm deposited a $289,500 cashier’s check into its trust account for what the firm thought was an overseas client. Assured by local bank executives the check was good, the firm’s fees were deducted, and the remaining money was wired to a bank in Seoul, South Korea.

Turns out the “client” was running a sophisticated scam. The check was counterfeit, and Daniels’ world began collapsing around him.

“It’s left me in a world of hurt,” said Daniels, who is now being pursued by the bank for the missing money. He’s countersuing, contending the bank has some culpability in that it wired money overseas without verifying the funds were available. In the meantime, all Daniels’ accounts have been frozen, outstanding checks are being returned, and he’s scrambling to keep the doors to the two-lawyer firm open and his employees paid.

For now, Daniels said, he’s relying on his wife’s income to cover his personal and business expenses.

“My family’s livelihood is at stake right now,” Daniels said.

Here’s how it went down:

Daniels said the firm was contacted through its website — which he said is not atypical as the firm’s site generates many contacts — to represent a Japanese woman who was working temporarily in South Korea and was trying to collect $648,450 owed her by her “ex-husband.”

Daniels said he contacted the woman, who told him she had gone through a collaborative law dissolution with her husband and had a collaborative law agreement drafted by a prominent South Florida attorney, whose name Daniels recognized. The woman then sent Daniels a copy of the agreement, a copy of her passport, and a breakdown of what she was trying to collect on an enforcement action.

“I immediately sent it to my friend, who is an accountant, after we received the signed attorney-client fee agreement,” Daniels said.

Because of the time difference between Florida and Korea, Daniels and the woman agreed to communicate via e-mail, which he thought nothing of since that is also how he communicated with another recent client working in Haiti who was dealing with a bankruptcy.

“I’ve got about 100 e-mails going back and forth between the two of us, and as we enter into this agreement she sends me correspondence saying she had talked with her ex-husband and to avoid litigation — he owed her about $600,000 — he was going to send a partial payment, and we would work out some terms for the remainder.”

An overnight package from UPS arrived at the firm with a $289,500 cashier’s check, which was then deposited into his trust account on a Monday. On Tuesday, Daniels said he was at the bank and spoke with a vice president about the check and his client’s wishes that the money be wired overseas to her.

On Wednesday, Daniels said he checked his account and saw the bank had posted the $289,500 to his account “showing it cleared,” and the international wire was sent out to Seoul.

On Thursday, Daniels said he received a call from the bank with the bad news the check was fraudulent and was being recalled.

“I say, ‘How can this be?'” Daniels recalled. “It’s a cashier’s check. Those things have to be done through the bank, and the funds have to be verified.”

Beginning to worry, Daniels had his staff contact the South Florida lawyer who supposedly wrote the collaborative law agreement only to “find out that 12 other attorneys had contacted him on that Friday asking him about this agreement,” which the lawyer said he had nothing to do with.

Meanwhile, the bank’s efforts to recall the wire were unsuccessful.

Daniels then contacted the FBI, who told him the cashier’s check was “one of the best they had seen,” but the FBI couldn’t help because the crime did not meet the agency’s jurisdictional threshold of $1 million.

Daniels then called the Bar and his local police department, which filed a report and opened an investigation.

Soon thereafter, Daniels sat down with his bank’s president, vice president, and chief financial officer, who wanted to know how he was going to repay the missing $289,500.

“I said, ‘Wait a minute now, I’m your client. Where in this process do you wire funds internationally without verifying they had been received from the bank and that they were there?’” Daniels said. “They had no answer for that. They were asking me about my liability policies, my assets, and how I was going to be able to pay this check to the bank.”

Daniels said the bank froze his trust account (which holds other clients’ funds), his firm’s operating account, and is not allowing any other checks to go out. The bank is also charging his trust and operating accounts overdraft fees.

“It has been a very trying and tough time, and I still to this day do not understand the fact that the bank does not want to have any liability associated with this when they are the stopgap to show that these funds are valid and should never have been released without proof that the funds were there.”

Daniels has hired Mark Fox of Feldman, Fox & Morgado in Ocala to represent him against the bank and has provided the Bar with 38 pages of information documenting his proactive steps in the matter. He said he wants “to be as forthcoming as possible and to ensure that this does not affect my career as a lawyer, but also I want to make sure my fellow attorneys out there aren’t sandbagged by this.”

Since the fraud, Daniels says he hasn’t eaten or slept much, and most of his time is consumed by the case.

“I did not know how we were going to pay the rent. I did not know how I was going to continue to pay my employees who rely upon us,” Daniels said. “It was just a devastating feeling to be sitting there and not know what is going to come out next.”

Going forward, Daniels said he will never again handle large transactions without meeting the client face-to-face and will never rely on a bank to protect his interests.

Daniels, who was admitted to the Bar in 2007, said the whole episode has been an “unsettling experience” and will continue to be “until I get that clearance letter that says you are going to keep your license to practice law.”

[Revised: 12-27-2014]