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#669906 - 01/22/07 09:55 PM Fraudulent business endorsement
D. Kerstein Offline
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D. Kerstein
Joined: Sep 2003
Posts: 19
Austin, TX
Can you give me some advice on the bank's liability? Our customer stole checks payable to her employer, a governmental agency. She handwrote the endorsement on the back and deposited them to her personal account through the teller line and the ATM. An alert teller finally questioned it, but not after this went on for months. How bad is our situation? As the depostory bank, what is our responsibility for insuring that the endorsement is "resonable", i.e. check is made out to a business but handwritten endorsed to a personal account.

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#670078 - 01/23/07 02:40 PM Re: Fraudulent business endorsement D. Kerstein
Kari Offline
100 Club
Joined: Sep 2002
Posts: 131
I would contact legal on that. It could be sticky. But it will be hotter for the employee that stole the checks. Didn't the business notice when they balanced the books or did this lady do that!

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#670457 - 01/23/07 07:20 PM Re: Fraudulent business endorsement Kari
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,684
Cape Cod
First of all, note that the business is a government agency. As "businesses," they run all over the map as far as internal controls are concerned. Some are better than others at detecting frauds.

I cannot conceive of a reasonable scenario in which a government agency would manually endorse checks it receives over to an individual. Trying to honestly dig back into my days as a teller (we used abaci and hieroglyphics), I'd like to think I would have thought this situation a bit strange, at best. I'm going to guess that a number of these deposits might have been made at ATMs, however, where endorsements should not be, but are, less carefully reviewed, in my experience.

In any event, I think that the best this bank can hope for is to try to convince the government agency that it should bear some of the loss here, since it was apparently lax in its employee supervision. It would be a weak argument at best for the bank to use, but it may be the only one it has.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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