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Prior Owners of Corporation Refuse to Cede Name
We purchased a corporation from the company for whom my family worked. We went thru all the red tape necessary to have the prior owners taken off the checking account (resolution was written) and statement of information, etc. The bank the account was at is very small, with only a few people usually working there. The prior owners of the corporation opened up a fictious statement similiar to the name they sold to us, and opened up another account at the same bank and location and cashed about a $100,000 worth of our corporate checks.
We, of course, had a purchase agreement showing that we bought the stock of the company, including the trade name, etc. This small bank made us, the new owners, wait to be signers on the account until we received the statement of information, so that the only person on the account was the secretary who stayed on to work for a couple of months until she retired. She gave the checks to the prior owners and they deposited them into the account with a similiar name, but not a corporation, and they named it one fictious name dba as another fictious name.
They were supposed to receive money that we agreed on for work-in-progress payments as stated in our agreement, but I would have thought it would have cleared the corporate books and a check from the corporation would have been written to them from our account. I wondered from the time I started to work in the office, how could they, prior owners, or small bank cash/deposit a corporate check in an account that is not a corporate account, not the same name, and especially because everyone at this small bank knew us all, both the new owners and prior owners for at least fifteen years. To top it off, I would make a deposit and because I was not a signee on the account, they made sure my receipt did not show the bank balance. I would really like to sue both parties because who knows exactly what their intent was? Yes, we the changed banks, but I don't know if they still have the that account at the bank, or stole any checks I didn't know about because we moved from their building where the secretary was working and handing out checks.
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 Suing the former owners and the bank could be expensive, maybe more than you'd be entitled to recover. However, you are right in saying that the bank ought not to have opened an account for the former owners that could be used to convert those checks and possibly others.
You should assure yourself that the former owners won't be converting any more checks payable to your company. If you trust them, you can simply tell them that it's not legal for them to do so, and ask them to close out the phony bank account. If you don't trust them, get an attorney involved. The same attorney can advise you on what, if anything, you should do about the checks that were previously misapplied, and help you find out if any other checks have been run through the fraudulent account.
Published on BankingQuestions.com 3/26/09
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