A friend who has a non-profit received a check from someone for 100K who offered to make a donation to the foundation. He was asked to wire the rest to Japan. He deposited the check it was held for 5 days then wired on the sixth day. The check was no good [fraud]and the bank seized the 25K that was in the foundation plus demands payment for the remainder 75K. It appears that the bank did not safeguard my friends foundation and since it was such a large check that Section 229.13 should protect him from this loss. Greatful for any advice...

I work in my bank's fraud area, so I'm familiar with the fraud you describe(I'm afraid it's becoming a classic scam), but I'm afraid I can't place the legal citation. When I googled 229.13 and "nonprofit", I got a reference to Iowa laws on committing mental patients--probably not at all what you're referring to. Can you help with more info?

No way. How can you possibly believe your friend is entitled to $25,000. Thats like saying I wrote a check to a Las Vegas casino and lost all the money gambeling so the bank owes it back to me because they negoiated my check and didin't protect me from the loss. Your fried participated in and got taken in a scam.

The bank is a processor of transactions and not a police force. They will try and stop fraud where possible, but cannot possibly be responsible for every check that passes through the bank on a daily basis.

What your friend should do is immediately make some arrangements to repay the $75,000 owed to the bank. Its your friend that has defrauded the bank out of the money, and he owes it back.

It is unbelievable that as much publicity this type of scam gets people still fall for it.

We just found out that the depositary bank was notifed 2 days after the deposit that the check was an invalid account. 4 days later the depositary proceeded to wire the 100k to Japan. without informing my friend. Is this the bank's negligence who should be held responsible.

We just found out that the depositary bank was notifed 2 days after the deposit that the check was an invalid account. 4 days later the depositary proceeded to wire the 100k to Japan. without informing my friend. Is this the bank's negligence

Yes, and you can print this thread out and show it to the judge at the trial. he is obligated to rule in your friends favor.

btw, you must be a good detective. are you posting these from the bank lobby? first post at 4:20 and then you "just found out" at 4:51.

Not in the bank's lobby... the facts are: A check deposit of 100k was made on 10/24. A receipt was given to my friend [who has the non-profit] stating that the funds would be availiable on 11/08. The depository bank was notified on 10/26 that the check had no account attached [obviously check fraud].The depository bank wired the money to Japan on 10/31. My friend was not notified by the bank that the check was returned. Was the bank negligent? Should my friend recieve back the 25K that they took from the account?

Your friend would do himself a great big favor at this point of time by engaging an attorney and not rely on the advice of friends. For this amount of money, there is a good chance that he may face criminal charges for fraud. Not only from the bank, but if I was on the board of directors of this non-profit, I would be in contact with both the local DA and a civil attorney. Sounds like a case of misappropriation of funds.

This is the second time I have heard of fraudulent checks in this amount with the request for funds to be transfered to Japan.

Perhaps our Nigerian friends have developed a taste for sushi?

yes this is true... that the receipt given to my friend dated the hold for 11/08. However the funds became availible on 10/31. Which is when he wired the money at noon to Japan. His bank received notice of non-payment on on 10/26 two days after the deposit,and did not notify my friend. The real clincher is that the bank debited his non-profit's account resulting in massive overdrafts and seizing the 25k 2 hours after the wire went out on 10/31. Then the bank demanded payment for the balance. Greatly appreciate any help.

Unfortunately, there is no help available from here - this is up to the attorneys at this point.

Can anyone give me informatin on; Large Dollar Return Item Notification?

When a U.S. bank decides to dishonor a check of $2,500 or more, the bank is obliged to notify the bank that accepted the check for deposit, describing the check with enough detail to identify it and the depositor, and giving the reason for the dishonor. That notice is to be sent in such a way and at such a time as to reach the depository bank no later than 4:00 p.m. (local time at the depository bank) on the second business day following the day of presentment.

So if the check is presented for payment on Monday, the notice would have to reach the depository bank by 4:00 p.m. on Wednesday.

The depository bank, on receipt of that notice, is obliged to notify the depositor of the dishonor no later than the end of the business day after receiving notice. That notice can be combined with a notice the funds are being held (reasonable doubt the check will be collected), or a notice the funds have been withdrawn from the depositor's account.

Thank you.....Large Dollar Return Item Notification
[over 100k] usually sent by Fedwire?

No - as John indicated - $2,500 or more.

I was just trying to find out if the return notification is usually sent by fedwire?

That's one way.

So, considering the fact that the depository bank was informed and negliglected to inform the customer by the day after the day it received the notice of return. The bank received notice on Wednesday midday did not inform the customer until Monday afternoon, a few hours after the wire went out. Considering that the notification was not done in a timely matter does this put the liability on the bank?

It could, but the only way to find out is to sue them.

From the circumstances does it appear that; Reg CC 229.33 Notice of nonpayment. UCC 4202 Responsiblity for collection or return; When action timely and UCC 4-214(a)Right of charge-back or refund; Liability of collecting bank; Return of item. Do these laws all pertain to my friends suituation? Any other relevant regulations or codes? Your help is greatly appreciated.

It really sounds as if you've reached the point where the level of detail needed is beyond the expertise of most bankers. It's time to call in that attorney.

It's not beyond the expertise of many of the bankers that have responded - we have pointed the poster to all the pertinent laws and regulations. Whether or not the bank is liable is only for a judge or jury to determine after the examination of all the facts.