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#67668 - 03/14/03 07:36 PM Check indorsement forgery

There is always confusion when it comes to check fraud.
Our customer owns many rental homes. He receives monthly rental checks from his tenants.
His employee stole 23 checks, totaling approx. $11,000.
They were made payable to his company, ABC Rental. The employee opened an account at XYZ Bank under the name of AC Rental.
She took all the checks to XYZ Bank and deposited.
I have instructed our customer that each of his tenants must go back to their Bank and complete an affidavit. Was there an easier way to do this?
Basically, XYZ Bank took the checks and it was their responsibility to ensure the proper person was depositing.
It makes sense to me that each of the Banks which the checks were drawn on, needs to send the item back to XYZ Bank?????
This is so confusing.
Does anyone know of a good manual that is easy to read and understand.....

How would you handle this????
Thanks very much for any assistant you may give me.

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#67669 - 03/17/03 05:15 PM Re: Check indorsement forgery
1111 Offline
Platinum Poster
Joined: Jan 2003
Posts: 580
This one is easy for you to handle - just do nothing! Of course, other than help out your customer, e.g. inform your customer that he/she needs to contact XYZ Bank (perhaps there are funds still on deposit). In addition, tenants may not need to be involved directly as the payee (your customers) needs to complete an affidavit of endorsement forged and present an affidavit covering each of the checks deposited to XYZ bank.

Of course, the local police need to be contacted ASAP to pursue the employee that created this fiasco.

Finally, XYZ bank has a really big problem.

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#67670 - 03/17/03 10:32 PM Re: Check indorsement forgery
MidwestCFE Offline
Platinum Poster
Joined: Jan 2003
Posts: 520
wish it was the Smoky Mountain...
Were the checks that were originally payable to ABC altered for the depositing? or did the suspect simply open a DBA in the same name as ABC? The liability is dependent upon what exactly occurred. Also, the depositing banks could use the bookeeper defense. it's one of my favorites!
My get what you paid for..

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#67671 - 03/18/03 05:16 AM Re: Check indorsement forgery
Deepa C Offline
Junior Member
Deepa C
Joined: Dec 2002
Posts: 27
Dubai, UAE
Makes me wonder what documents XYZ bank checked while opening the account for the fraudster in the name of ABC Rental. What about the Memorandum and Articles of Association, list of authorized signatories of the company,? How did she get away with opening the new account with XYZ as she was not a signatory in the first place

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#67672 - 03/18/03 02:24 PM Re: Check indorsement forgery

What typically happens in this type of fraud is one of two things:

1. The con artist will procure a certified copy of the company's documents from the government office where they were filed. He will then dummy up a corporate resolution and meeting minutes, naming whomever he pleases as authorized signatories. (Usually a name that he has fake IDs to match.) One of the most famous examples of this ploy was this one: John Ruffo case

2. The second variation is that an employee of ABC Company, Inc. will go to a financial institution and pretend to be the owner of a sole proprietorship called ABC Company. Sole proprietorships, in most states, do not require any legal filing for formation, so there is little documentation to obtain or verify. The crooked employee will then deposit checks stolen from his employer into the fraudulent new sole proprietorship account.

A third variation will involve a company with a name like Able, Bunch, Crud, Inc. Since customers will frequently abbreviate a long name, the company will often be sent checks made payable to ABC, Inc. The crooked employee will then form a corporation (or fake a sole proprietorship) named ABC, and will deposit the stolen checks into that account.

The entity in the best position to prevent this fraud is the employer with proper screening practices for hiring, effective monitoring procedures, and good internal controls.

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#67673 - 03/18/03 07:40 PM Re: Check indorsement forgery
Don_Narup Offline

Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
As I see it the landlord is out the $11,000 in rent collected and he wants to be paid the rent. The Tennant's paid it and are not going to hand over another rent check unless they are reimbursed.

IMO the landlord will have to complete an affidavit of forgery and provide it to each Tennant to take the canceled check and his affidavit to their respective banks, where they will have to fill out another affidavit so the item can be returned to the bank that opened the account for the landlord's ex employee.

As each Tennant is reimbursed they will need to write another check to the landlord.

Talk about a hassle Anyone have another way to do this?
Compliance Analysis and Research - Software for your CRA/HMDA analysis needs

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#67674 - 03/18/03 07:59 PM Re: Check indorsement forgery
JacF Offline

Power Poster
Joined: Nov 2001
Posts: 6,719
The procedure you describe is exactly the approach I would take. I don't see an easier way.

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