Sinacom North America, the U.S. office of Shanghai-based Sinacom Electro-Mechanical, has filed a lawsuit against Detroit-founded law firm Clark Hill Plc and attorney Steven Richman.
The lawsuit alleges that Clark Hill and Richman were “recklessly” responsible for transferring $1.1 million to scammers who utilized hacked email accounts to intercept settlement funds.
In the lawsuit filed in Pennsylvania state court, Sinacom accuses Clark Hill and Richman of being deceived by an “obvious scam” and transferring the funds to a bank account that did not belong to Sinacom.
The complaint alleges that an unknown third party provided the law firm with fraudulent wire transfer instructions, leading to the erroneous transfer of funds.
Suit Exposes Risks Lawyers Face From Cybercriminals Exploiting Digital Dealings
Clark Hill has asserted its intention to vigorously defend against the claims made by Sinacom. However, Richman has not yet responded to requests for comment regarding the lawsuit.
This incident underscores the heightened risk faced by law firms and other legal service providers from cyberattacks. While much attention has been focused on the theft of sensitive data, this lawsuit sheds light on a less common tactic wherein bad actors directly interfere with financial transactions by impersonating parties involved.
Sinacom’s lawsuit details the sequence of events leading to the unauthorized transfer of funds. The company had reached a settlement agreement with Golden Technologies, stipulating a payment of $1.1 million to Sinacom.
However, Richman directed the funds to be sent to Clark Hill’s trust account instead of directly to Sinacom, for reasons unknown to Sinacom.
Scammers gained access to Sinacom’s email account, enabling them to send fraudulent messages posing as Sinacom executives.
These messages, including one purportedly from Sinacom’s president with grammatical errors and typos, instructed Richman to wire the funds to a JP Morgan Chase account belonging to a fictitious company.
Despite discovering the email compromise, Richman allegedly continued communicating with the impersonators and proceeded with the wire transfer without verifying the banking information with his true clients.
The lawsuit, titled Sinacom North America Inc v. Clark Hill Plc, underscores the growing concern over cybersecurity vulnerabilities in the legal industry. Sinacom is represented by Casey Green of Sidkoff, Pincus & Green, while Clark Hill’s legal representation is currently unknown.
