10 Jun No Comments MikeT Checks Forged, Expert Matters

Facts:  The plaintiff was a not-for-profit organization located in Providence, Rhode Island.  Plaintiff maintained its checking account a large regional bank in New England.  Over a three-year period, the plaintiff’s bookkeeper (an independent contractor) forged the signature of the president of the organization on a series of checks totaling some $400,000.  The bookkeeper cashed the checks as a number of different branches of the bank.  Ultimately, the bank’s fraud detection software noted the activity and the bank notified the not-for-profit.  An investigation was started which led to the detection of the wrongful activity.  The not-for-profit asked the bank to re-credit its account for the amounts of the forged checks.  When the bank refused, the not-for-profit filed suit.

Client:  The plaintiff not-for-profit organization.

Subject of Expert Report:  Whether the bank’s cashing of the checks for the bookkeeper over an extended period of time represented a departure from the reasonable commercial standards of the banking business.

Outcome:  Shortly after the lawsuit was filed, the bank and the not-for-profit agreed to mediate the dispute.  The case settled at the mediation.