Stolen Cheques

Our firm recently was on the periphery of a fraud involving the theft of some cheques. 

We were acting for a seller in a normal real estate transaction.  Our client had two mortgages to pay off and a bridge loan.  There were two certified cheques that came from the buyer’s lawyer to pay off the two mortgages, each just a little more than $100,000, payable to our client’s bank. 

After the transaction had closed, we personally delivered the two certified cheques and one of our trust cheques to a branch of our client’s bank.  We make it our practice to have the teller stamp a copy of the cheques and our letter to the bank.  The bank would then send the cheques to their central processing centre, which would then discharge the paid-off mortgage from title.

Well, the cheques never made it to the processing centre.  That’s a problem.  Our clients’ bank tried to withdraw another mortgage payment and our clients’ credit still showed them as owing the mortgages. 

It might have been a small problem.  It happens occasionally that cheques are lost in transit or misplaced by the bank.  When that happens, everyone writes new cheques and everything gets worked out. 

Well, it was not to be.  One of the big cheques showed up about three weeks later.  Someone presented it at a branch of another bank, with the payee changed by hand to someone other than our client’s bank.  Uh-oh.

Well, we weren’t dealing with lost cheques anymore. We were dealing with theft and fraud. 

About three weeks later, we discovered another cheque was part of the missing batch.  Now we had two clients whose mortgages had not been paid off because of stolen cheques. 

Ultimately, it can’t be a problem for our clients.  The money was delivered to the bank and they are responsible for what happens to it after that point.  However, we had to get a little argumentative to get our clients’ discharges. 

It took a lot of phone calls before we could get the matter into the hands of a banker responsible enough to deal with this.  We had not been getting results with either the branch or the mortgage discharge centre.  So, I called the “corporate security” department of the bank.  We told them about the fact that cheques had gone missing from the bank and had been altered.  Well, that was the right button to press!

Now, we had the attention of the bosses of the people we had been talking to before!  It seems that nothing gets people’s attention more than the fact that cheques had been stolen from the bank after they had been in the bank’s hands. 

Our clients’ mortgages were discharged and now the Bank will go about the process of finding the perpetrator.

I’m just really glad that my partner practices defensively and had the teller stamp the copies of the cheques.  Without that, the investigation would have started with us!