NC State Bar Warns of Heightened Discipline for Wire Fraud
The NC State Bar Grievance Committee has warned lawyers to expect “serious professional discipline” if they fail to take adequate protection against wire fraud scams.
The warning appears in the Fall 2021 issue of the State Bar Journal and on the bar’s website. The full text of the “Heightened Discipline” notice appears below.
This affects lawyers in real estate and business practices, as well as any lawyer who handle funds that are transferred electronically.
In its notice, the Grievance Committee says it has been warning lawyers about wire fraud scams for more than five years. It has issued two ethics opinions on the topic, and it has opened 55 grievance files against lawyers alleged to have not been adequately careful.
“After nearly three years of extensive education on this topic, the Grievance Committee concluded that lawyers should be fully aware of the dangers posed by these email scams,” according to the notice.
And yet, the committee says, many lawyers still haven’t gotten the message.
“Unfortunately … the State Bar continues to receive reports of lawyers who failed to take adequate precautions to prevent wire fraud scams,” according to the notice. “ACCORDINGLY, THE GRIEVANCE COMMITTEE IS PROVIDING NOTICE THAT LAWYERS WHO FAIL TO TAKE ADEQUATE PRECAUTIONS TO PROTECT AGAINST WIRE FRAUD SCAMS CAN EXPECT IMPOSITION OF MORE SERIOUS PROFESSIONAL DISCIPLINE.”
The full text of the State Bar notice appears below.
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NC State Bar Notice of Heightened Discipline
“Six years ago, in 2015, the State Bar began receiving reports of criminals hacking into the email accounts of lawyers, their clients, real estate brokers, and others, altering wire instructions, and diverting loan payoffs and other disbursements from real estate and other transactions. Since 2015 the State Bar has written and spoken extensively about this danger in the Journal, social media accounts, and continuing legal education programs.
The State Bar has also issued Formal Ethics Opinions (2015 FEO 6 and 2020 FEO 5) about this topic. Lawyers Mutual Insurance Company and title insurance companies have also continued to broadcast warnings and educational information about these scams.
To date, the State Bar’s Grievance Committee has opened 55 grievance files when lawyers failed to take adequate precautions to protect entrusted funds from these wire fraud scams. Initially, the Grievance Committee issued dismissals, accompanied by letters of warning, advising respondent lawyers of their professional obligation to protect entrusted funds.
After nearly three years of extensive education on this topic, the Grievance Committee concluded that lawyers should be fully aware of the dangers posed by these email scams.
At its July 2019 meeting, the Grievance Committee began issuing permanent discipline – one reprimand and two admonitions – in wire fraud cases. Since then, the Grievance Committee has referred one lawyer to the Disciplinary Hearing Commission and has issued one reprimand, nine admonitions, three dismissals with letters of warning, and three dismissals with letters of caution.
Special alerts were also published in The Disciplinary Department section of the State Bar Journal’s Fall 2019 and Winter 2019 issues.
Unfortunately, although North Carolina lawyers have now received two additional years of notice and education on this issue, the State Bar continues to receive reports of lawyers who failed to take adequate precautions to prevent wire fraud scams.
ACCORDINGLY, THE GRIEVANCE COMMITTEE IS PROVIDING NOTICE THAT LAWYERS WHO FAIL TO TAKE ADEQUATE PRECAUTIONS TO PROTECT AGAINST WIRE FRAUD SCAMS CAN EXPECT IMPOSITION OF MORE SERIOUS PROFESSIONAL DISCIPLINE.”
Source: NC State Bar Journal
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