Earlier, I posted a question about cashing/depositing checks made payable to businesses. Do any of you have any "horror stories" of banks who failed to properly manage this? Sorry to ask for such depressing information, but I have been asked to create a presentation on this topic. Change names to protect the innocent if you must, but please make sure that the stories are true. Thanks in advance for your help!

At my old bank we cashed checks for sole proprietors. We had a case where a customer cashed his checks on his business then split the country. Come to find out, the checks were all stolen. This was a customer that had been banking with this company for 25 years and had been doing these types of transactions the whole time. Because the bank was so big, they allowed business to now (small community, farm labors)pull cash from deposited funds. Like that would make a difference. The loss was over 25,000.

A number of years ago when I was at a different bank, we cashed some checks for Person A, whom we knew to be one of the two brothers who owned a company that had an account with us for several years. The company name even had their family name in it. Little did we know that the brothers had had a falling out and split up, with the business going to Person B. Person A had grabbed some vendor payments before leaving the company and we were nice enough to cash them for him. We ended up with a charge off so we could reimburse the company.

I heard from someone at another bank that they had allowed Sole Prop's to cash checks. Then they got hit with a subpeona from the IRS for copies of something like 2 or 3 YEARS worth of these checks. (Seems the owner did a little bit of "fudging" on his tax returns.)

Anyone that has ever had to comply with a subpeona knows that finding CASHED CHECKS in your proof records is like finding a needle in a haystack. A really, really big haystack.

A "customer" presented himself at one of our branches and flashed his real estate company's business card. Said he would be opening an account in that name and depositing checks payable to the business. The account was opened, checks were deposited, and - after embezzling thousands - he disappeared. In this instance, the branch obviously didn't get the correct paperwork up front. But it always pays to make sure the business is legit - as well as the customer.