9 Jul No Comments MikeT Counterfeit Check, Expert Matters

Facts:  The plaintiff law firm (“Plaintiff”) was retained by a person in Japan who claimed to be the “administrative executive” of a foreign entity.  The purpose of the retention was allegedly for Plaintiff to collect debts owed to the foreign entity from various companies located in the United States.  After Plaintiff agreed to collect these debts on a contingency fee basis, the administrative executive advised Plaintiff that a debtor in the United States had voluntarily agreed to pay a debt to avoid litigation.  The debtor then sent a check purporting to be a SunTrust Bank cashier’s check to Plaintiff in payment of the alleged debt.  Plaintiff deposited the check into its attorney real estate trust account at its bank.   Two days later, one of Plaintiff’s attorneys called a telephone number printed on the face of the check and spoke to a person who he believed to be a representative of SunTrust Bank.  The person assured the attorney that the check had cleared.  Plaintiff then sent one of its employees into the bank to inquire about the deposited check.  According to the Plaintiff, the bank employee assured the Plaintiff’s representative that the deposited check had “cleared.”  Plaintiff then wire transferred a substantial portion of the proceeds of the check to a third party in South Korea.  The check was subsequently returned unpaid to the Plaintiff’s bank as a counterfeit.  The Plaintiff then filed a lawsuit against its bank alleging that the bank had breached its deposit contract with Plaintiff and had negligently misrepresented the fact that the check had “cleared.”  The bank filed a responsive pleading denying any breach of the deposit contract and denying that its employee had told Plaintiff that the check had “cleared.”

Client:  The defendant bank.

Subject of Expert Report:  Whether or not (1) the plaintiff law firm ignored a number of obvious warning signs or “red flags” that should have alerted it to the fact that a fraud was being perpetrated on it, (2) the bank had complied with the guidance of  the Office of the Comptroller of the Currency contained in its Bulletin 2007-2 titled “Guidance to National Banks Concerning Schemes Involving Fraudulent Cashier’s Checks,” and (3) the bank had provided Plaintiff with timely notice that the check had been returned unpaid as a counterfeit.

Outcome:  The court granted summary judgment to the defendant bank.