💼 LAWSUIT

Viral “Glitch” Suits

It should go without saying that not everything on the Internet is true. Case in point: a viral trend on social media recently promoted with it called a banking "glitch". The late-August trend claimed that if you deposited a large check at a Chase bank ATM, you could withdraw the money before the check cleared and it was discovered that the money doesn't exist. Of course, this isn't a glitch, this is run-of-the-mill check fraud. And now JPMorgan is suing four of these fraudsters who collectively cashed over $660,000.

"Fraud is a crime that impacts everyone and undermines trust in the banking system," Drew Pusateri, a spokesman for the bank, said in a statement.

According to Reuters, the largest case involves a "Houston man [who] still owes $290,939.47 after withdrawing over two days most of a $335,000 check that a masked man deposited in his account on Aug. 29. Chase said the check was rejected on Sept. 4."

As of last month, the bank was investigating thousands of cases related to this scheme. It is unclear if more lawsuits are on the way.

Chase has noted that it "prides itself on its efforts to protect its customers against fraudsters, particularly in an environment where bank and wirefraud are increasingly more commonplace," says LegalDive. “While fraud methods have evolved over time, the core intent to exploit and deceive remains unchanged."

In September, as the trend was making headlines, Cornell Law professor Dan Awrey posted on X: "Check kiting. It’s called check kiting. And it’s been around since the invention of…checks."

Meanwhile, Rutgers University financial practice professor Mark Guthner told LegalDive, “if they took the money out of the bank, the banking law is pretty clear that they committed fraud and they have to give the money back. Then it’s up to the bank to go chase the people down and take them to court.”

In the four announced cases, Chase is pursuing the return of all stolen money plus additional costs.

Door Kicking

Check fraud is not the only illegal trend circulating on social media this year. Over the summer, "door kicking", in which participants find an unsuspecting home, ring the doorbell late at night, and then kick the door in, gained heat (legal and otherwise) across the country.

"This challenge may see it as a harmless joke. …From the other side of that door a homeowner who may have a family and young kids inside could perceived it as a hostile act. This is a stand your ground state, we are entitled to self defense and these harmless pranks if you will could have deadly consequences," Adam Bradshaw, a police investigator in South Carolina told WSPA.

While in Maryland, local police warned that the challenge constituted "a misdemeanor crime under Maryland Statute §6-301 and commonly referred to as 'Malicious Destruction of Property.' The penalty depends on the extent and value of the damage and ranges from 60 days in jail and a fine up to $500 to three years in jail and a fine up $2,500."

Verdict

Don't kick people's doors in at 1am. Don't commit check fraud. Let's just start there. Furthermore, how should companies (or whole industries) who become the subject of viral trends promoting undesirable behavior respond? Should they respond at all? Maybe a post-trend string of lawsuits is best.

💼 INDUSTRY

Leaving China

WilmerHale is leaving China, and they're not alone.

The Big Law firm is shuttering its Beijing office after 20 years in China, and joining a slew of other Big Law firms reassessing their presence in the country.

"Like many others, WilmerHale has evaluated our global footprint and has made the decision to close our office in Beijing," the firm said in a statement this week, reports Reuters. Skadden, Reed Smith, Perkins Coie, Dechert, Morrison & Foerster, and Sidley Austin have all closed their China office this year.

Reuters adds that "a growing number of major U.S. law firms have shrunk their footprints in China over the past two years, amid growing pressures on foreign businesses, economic uncertainties, muted deal activities, and geopolitical tensions."

“Major US law firms used to advise on a lot of US IPOs, but we’ve seen a reduced number … and many delistings over the years,” Simon Luk, a consultant at Hong Kong-based law firm Kwok Yih & Chan and former Asia practice chair of Winston & Strawn in Hong Kong, told the China Business Law Review. “US investors and Chinese companies that want to debut in the US were discouraged by Washington DC’s additional scrutiny. Beijing has also tightened its regulations, which have led to US and European companies fleeing from China; the business environment has changed.”

To fill that void, Ray Liu, the managing partner of Dorsey & Whitney in Beijing, says UK firms has pushed in farther. "Certain UK law firms, such as the ‘Magic Circle’ firms, have expanded overseas over the past decades with spreading geographical presence and diverse practice portfolios." Liu adds: "Taking Dorsey as an example, we have tailored our legal services to meet the needs of local clients. These proactive efforts have also been well received by clients.”

US Investment

The US Treasury Department has severely restricted investment by American companies into Chinese tech (and specifically AI) companies.

New rules taking effect on January 2, 2025, will be overseen by the newly-created Office of Global Transactions, reports Reuters.

"U.S. investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence, and cyber capabilities," Paul Rosen, a senior Treasury official, said.

Verdict

The world continues to be in state of acute political and economic flux accelerated by the pandemic and its aftermath. As geo-political tensions rise across the globe, the rift between the US and China appears to be widening. While Big Law firms may be able to advise clients in China from abroad, the costs of remain in the country (both financial and political) may be reaching a breaking point.