• September 23, 2016
Facepalm (Caïn by Henri Vidal, Tuileries Garden, Paris, 1896. )

Facepalm (Caïn by Henri Vidal, Tuileries Garden, Paris, 1896. )

Update (September 23, 2016): Minnesota lawyers who do not read Minnesota Litigator can miss out on valuable information (linked is a complaint this week by Crabtree Health Law vs. Wells Fargo because Crabtree got stung in a now-classic scam.).

Update (February 20, 2013):  The string below concerns the sorry history of lawyers scammed by counterfeit checks and sham transactions.  Following up on the Rochester law firm of O’Brien & Wolf’s cameo appearance at the end of the post below, we note that O&W was able to find insurance coverage for its loss.  Now the question that remains is whether its insurer can recoup some of its losses from O&W’s bank…

Update (April 12, 2012):  Here we go again…. “Caveat advocate.”   (Eagan, Minnesota Attorney S. Todd Rapp sued because the check he deposited in his M&I Bank Account was counterfeit and, before this was discovered, Rapp had the bank wire $150,000 that, otherwise, was not in the account.)  (Bank sues Lawyer or Lawyers sue Bank.  Either way,    “a quick transfer of money from/to any untrusted sources” = risk/red flag.)

Original Post (January 5, 2012):  Client comes to lawyer to collect a debt from Debtor.  Debtor sends check to lawyer to pay the debt.  The check “clears” and lawyer sends on the proceeds from the firm’s trust account, less the lawyer’s fee for services, to Client.  AOK?

But the check was a forgery, the debt collection was a scam, the money sent to “Client” from the trust account belonged to other clients of Lawyer!  But how can this be? The bank told the lawyer the check had “cleared”?!

From one recent Second Circuit Court of Appeals case comes this passage from a Citibank agreement with its customers:

When Does a Check Clear?: This process begins when you deposit a check to your account and is not completed until the bank on which the check is drawn either honors or returns it to Citibank unpaid. Checks may be returned because of insufficient funds, missing signatures, stop payment orders, etc.

[S]chedules…show when the majority of your check deposits will be made available to you. The schedules are based on the amount of time generally required for checks to clear and on federal and state regulations.

Please note that a check you deposit may be returned unpaid after we have made the funds available to you. If this happens, the amount of the returned check will be deducted from your account balance.

(Emphasis added).  There can be a difference between when a bank “will make funds available” to you and when the check truly “clears.”  Sometimes banks do not make this entirely clear to account holders.  And banking agreements go on to provide:

Returned Checks: If you deposit a check that is returned to us unpaid, we will deduct the amount of the returned check from your account balance and return the check to you. There will also be a service charge.

Ouch.  Not only is Lawyer out the “scam money” but there’s a bank penalty fee tacked on. Maybe the loss is insured?  The Rochester law firm of O’Brien & Wolf hopes so, but its insurer seems to think otherwise.

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