7 Sep No Comments MikeT Checks Forged, Expert Matters

Facts: The plaintiff small business in Pennsylvania hired a new chief accounting officer.  The officer was added as an additional signer on the plaintiff’s checking account at the defendant bank.  The owners of the business subsequently learned that the individual was stealing funds from the business.  The owners then removed the individual as a signer on the business checking account but continued to employ the individual and left him in charge of the company checkbook and accounting records.  The individual thereafter prepared and signed checks payable to himself and to his spouse to misappropriate additional funds from the business.  After a substantial additional amount was stolen, the owners terminated the employment of the individual and brought suit against the bank for its failure to detect the checks signed by this individual after he was removed as an authorized signer on the account.

Client: The defendant bank.

Subject of Expert Report: Whether or not the signature verification procedures used by the defendant bank were consistent with reasonable commercial standards of the banking business.

Outcome: The case settled on the first day of trial.