2 Apr No Comments MikeT Checks Forged, Counterfeit Check, Expert Matters

Facts: The plaintiff law firm received from a new client a foreign draft for a large amount payable to the plaintiff law firm purporting to be drawn on a foreign bank holding company in England.   The draft on its face claimed to be an “official check” of the foreign company.  The client directed the plaintiff law firm to deposit the check and wire transfer a substantial portion of the proceeds to a third party corporate entity in Korea. Before wiring the funds, an attorney in the plaintiff law firm asked his banker if the deposited official check had cleared.  The bank employee responded that “the funds were available.”  Believing that the deposited official check had cleared, the firm wire transferred the funds.  The deposited official check was subsequently returned unpaid by the drawee as a counterfeit.

Client: The plaintiff law firm.

Subject of Expert Report: Whether or not the defendant 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) failing to either detect the fact that the official check (draft) at issue bore an invalid American Bankers Association transit routing number, and (3) failing to appropriately respond to Plaintiff’s inquiry as to whether or not the check at issue had cleared (been finally paid) at the time the Plaintiff sought to wire transfer a portion of funds represented by the check to Korea.  In addition, an expert opinion was sought as to whether or not a customer of a bank is bound by the terms of a deposit agreement (rules and regulations) of a successor bank that the customer has never seen or been made aware of.

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