2 Dec No Comments MikeT Counterfeit Check, Expert Matters

Facts:  The plaintiff law firm received from a new client a check purporting to be a Citibank cashier’s check for a large amount payable to the law firm.  The client directed the firm to deposit the check and wire transfer a substantial portion of the proceeds to a third party corporate entity in South Korea.  The firm had concerns about both the new client (a foreign entity) and the check itself.  Accordingly, before depositing the check, law firm sent a copy of the check to its bank and asked its bank to confirm the genuineness of the check.  The bank confirmed in writing that the check was a genuine Citibank cashier’s check.  Based on this information, the law firm then deposited the check and wire transferred a substantial portion of the funds to the third party in South Korea.  The check was subsequently returned unpaid by Citibank as a counterfeit check.

Client:  The plaintiff law firm.

Subject of Expert Report:  Whether or not the bank failed to act with ordinary care and failed to act in a commercially reasonable manner by (1) not properly training its employees to detect and be alert to possible counterfeit cashier’s check scams in accordance with the guidance provided by the Office of the Comptroller of the Currency in its Bulletin 2007-2, (2) misrepresenting to the law firm that the check at issue in this lawsuit was a genuine Citibank cashier’s check; (3) by failing to heed the warnings concerning possible fraud contained in its own policies on wire transfers, and (4) circuitously routing the cashier’s check to Citibank for presentment for payment thereby contributing to the delay in receiving notice from Citibank that the check was a counterfeit.

Outcome:  The case settled shortly after the conclusion of discovery.