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Bank Departs from Policy; Cashes Dividend Checks
My wife and I are separated. We had an account at a brokerage firm that was supposed to be frozen with about $700k in stocks and cash (joint account). Without my knowledge, she apparently was able to have a check sent to her payable to myself "AND" her. The amount was $100k. She then took check and deposited it to her personal checking account with her endorsement only.
When I found out the money was missing, I called the brokerage firm, who told me a check was sent. Confused, I asked for a copy confirming the above. Her endorsement only on check payable to me AND her. I called her bank and just asked about policy. The banker said emphatically both parties needed to be present with ID and endorse the check. I then asked "Why in the world did you not follow this on her deposit?" After silence, she asked me if I was Mr. Green. Surprised, I said yes, to which she mentioned several other checks. Turns out dividend checks that were normally reinvested were now being sent to her, payable the same way, and the bank kept cashing them. I asked why and the banker said that my ex said I wouldn't care. I'm currently searching for amounts of dividend checks for the past 1 1/2 years, because I didn't know, and didn't report as income on tax returns. I don't even know where to start. Any help would be great.
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 You are obviously in a difficult place, knowing that if you place a claim on your brokerage firm for the missing funds, those checks will ultimately result in a claim by the depositary bank against your wife.
Given the dollar amounts involved, you'd be wise to speak to an attorney before taking any action other than preventing any further withdrawals from the brokerage account without your knowledge and consent.
If you wish to pursue the funds, start with the brokerage firm. Make it clear that although their checks were payable jointly to you and your wife, not alternatively (joined by "AND"), you knew nothing of the withdrawals and did not endorse the checks. Tell the brokerage firm that you want your share of those distributions at minimum. The brokerage may ask you to sign affidavits that you did not know of the withdrawals or the checks and that you neither received the checks nor received and benefit from them. If you are uncertain about signing the affidavit or other statement under the penalty of perjury to that effect, speak with an attorney before proceeding.
What the effect of those transactions might be on your tax liabilities is unknown, but do talk with a competent tax adviser right away so that you can start any needed dialogue with the IRS and/or state tax authorities. The IRS has provisions protecting innocent spouses.
Claims on check endorsements have to be brought within three years of learning of the facts, in most states. Although you have a little breathing room, you should take action soon.
Published on BankingQuestions.com 12/12/08
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