The Federal Bureau of Investigation is warning the public about a scam where fake attorneys prey on cryptocurrency fraud victims by claiming they can get the victims’ money back.
A public service announcement cautions of an “emerging criminal tactic used to further defraud cryptocurrency scam victims.”
“We can confirm that there has been numerous victims in Hawaii,” read a statement from the FBI’s Honolulu Division referring to Monday’s PSA.
The number of complaints and lost dollars are hard to quantify as the scams are underreported, prompting the FBI to issue the warning.
Between February 2023 and February 2024, cryptocurrency scam victims who were further exploited by bogus law firms reported losses totaling over $9.9 million, according to the FBI Internet Crime Complaint Center.
The Market Integrity and Major Frauds section of the U.S. Department of Justice’s criminal division charged cryptocurrency fraud cases involving over $2 billion in intended financial losses to investors from around the world between 2019 and June 2022.
Using social media or other messaging platforms, criminals “posing as lawyers representing fictitious law firms” may contact cryptocurrency scam victims and offer their services, claiming to have the “authorization to investigate fund recovery cases,” according to the FBI.
To validate the contact, the fake attorneys claim they are “working with, or have received information on,” the scam victim’s case from the FBI, Consumer Financial Protection Bureau or other government agency.
In some cases, scam victims have contacted fraudsters on fake websites, which appear legitimate, hoping to get their money back, according to the PSA.
The fake attorneys use an array of tactics to steal money and the identities of their victims.
The fake attorneys ask victims to verify their identities by providing personal identifying information or banking information to get their money back and also ask victims to provide a judgment amount they are seeking from the initial fraudster.
The fraudsters will push victims to pay a portion of initial fees up front with balance due when funds are recovered while also instructing the victims to make payments for back taxes and other fees to recover their funds.
The fraudsters will reference actual financial institutions and money exchanges, to build credibility and further their schemes, according to the FBI.
Jesse L. Souki, president of the Hawaii State Bar Association, told the Honolulu Star-Advertiser that while the HSBA does not accept or process “formal complaints” regarding fraud, if a Hawaii-licensed lawyer is involved, the Office of Disciplinary Counsel, formed by the Hawaii Supreme Court, investigates complaints against Hawaii lawyers.
Souki said he is unaware of any complaints about fraudsters posing as lawyers on social media or other messaging platforms contacting victims to offer their services.
“However, that is not to say it is not occurring,” said Souki. “Fraud, scams, phishing, etc. are becoming more prevalent and more sophisticated as fraudsters benefit from our personal information that is leaked and collected on the dark web. It is difficult to be made whole again after becoming a victim of online fraud. Avoiding a scam is best.”
Souki advised that prospective clients should not “accept an offer for legal services from anyone before confirming that the person is licensed to practice law in Hawaii.”
“Practicing law in Hawaii without authorization or a license is prohibited under Hawaii statutes. A list of Hawaii licensed lawyers and their contact information is available to the public online at HSBA.org,” said Souki. “Before a prospective client engages the legal services of a lawyer in Hawaii, at a minimum, they should meet with that lawyer, have the lawyer answer their questions, come to an understanding of what their legal needs are and how the prospective lawyer will assist in achieving their legal objectives, and be sure there is agreement on costs and fees.”
Be sure to sign an agreement with the lawyer before legal services and payment for those services start, Souki said.
An attorney cannot collect fees from clients that are not earned, meaning they’ll send you an itemized bill, and then you pay.
If a retainer fee is paid upfront for future costs and fees, Souki said the lawyer must keep that money in a trust account and cannot spend it until it is earned and billed to the client.
TIPS TO PROTECT YOURSELF
>> Be wary of advertisements for cryptocurrency recovery services. Research the advertised company and beware if the company uses vague language, has a minimal online presence and makes promises regarding its ability to recover funds.
>> If an unknown person contacts you and claims to be able to recover stolen cryptocurrency, do not release any financial or personal identifying information and do not send money.
>> If you believe you have been a victim of a cryptocurrency scheme or other fraudulent scheme, file a report with the FBI’s Internet Crime Complaint Center at www.ic3.gov.
