Ouch - Do You Know Who Your Clients Are?

Small Firm Business - Impostor Clients Land Attorneys in Hot Water.  On the surface, this is a simple case. A lawyer in a closing asks for photo IDs of his clients at the closing table. Husband provides his. Wife says she left hers at the restaurant. The closing proceeds, and the lawyer doesn't follow up. Lo and behold, the mortgage goes into foreclosure and it turns out that the "wife" was an impostor. Now, lawyer is defending a grievance for not verifying the identity of the parties. Ouch. I had a similar case early in my career, in which I asked for the Seller's IDs. Luckily for me, "wife" said hers was "in the truck", and, when she and husband didn't come back after 30 minutes, I figured out that she never was. I shut down the closing, and didn't get burned. The moral of this story? Get photo IDs from everyone you meet; especially if they are doing business with you. The next chapter in this saga will begin if the FTC is successful in applying rigorous new identity-theft prevention rules to attorneys. The ABA has filed a lawsuit seeking an exemption; however, cases like this one don't help the cause. There are days when I wish I was 6 again, sitting in front of a black and white TV, and the masked man was the good guy.

Comments

[Peter Shafran]

I had a similar situation when I first started practicing. I was an associate at a small firm and doing a closing on a refinance for a client of the firm, covering for one of the partners who was out of the office. The couple came to the closing and signed all the papers. Just before I got to the end of the stack, I remembered to ask for their driver's licenses and walked out of the room to make copies. When I looked at the license for the "wife", I noticed that she had a different first name than in the papers. My initial thought was that the secretary or the bank had made a mistake in the docs. When I asked the "wife", the husband said that his wife was not feeling well so he brought his sister instead. He said that he didn't want to reschedule because the rate was about to expire. Realizing that his cover was blown, he told me "It's OK, your boss will go along with it. Just throw it in the file and keep your mouth shut." I did as he said - I kept my mouth shut as I proceeded to tear up each sheet while he looked on in horror and then threatened to have me fired! I just kept my mouth and continued tearing up the docs. Then I walked out of the room and called the partner. Luckily, the partner stood by me.