On November 3rd, we received a demand for payment letter for a large dollar check that was negotiated @ our FI on April 30, 2004. I was informed that the check represented an insurance claim payment for property loss subject to a first mortgage of USDA/Rural Development. The check was made out to John & Mary Doe (USDA borrowers), William Smith and Associates, and the USDA/Rural Development.

The check was accepted for deposit (with a nine day hold due to the dollar amount) in an account titled John Doe or Mary Doe. The check presented by the Doe’s and cashed by our financial institution was missing the endorsement of the USDA/Rural Development.

Fast-forward to today…the Doe’s have exhausted the entire funds over a period of 14 months via ATM withdrawals and the account now has a balance of $25. Recent attempts to contact the Doe’s have been futile (bad address, bad phone number, etc.).

Although we have notified our attorney since the USDA is seeking full compensation, I am curious on its potential outcome…

Thoughts?

We had a similar situation at my old bank with a commercial customer and a university. The commercial customer (a contractor) never obtained an endorsement from the university; and negotiated the item through his business account ($43,000), due to a teller "error" (I say stupidity). The bonding company paid for the loss less the deductible.

The bank ended up having to take the contractor to court to get their money back.

Ouch! Guess that with 17 months passing since "our stupidity" means nothing ('cept that we are smarter now - LOL)...not the answer I was looking for - thanks Devil Queen.

Sorry, but I did enjoy watching the weasel rip-off artist squirm like a rat in court. I only wish he would have served time.