| Cashiering a Check Scam
Even an official-looking bank draft can be phony
October 5, 2003
Consumers across the country are being bilked in a scam that often finds victims through the Internet and then counts on their trust in cashier's checks.
Cashier's checks can be counterfeit, and banks that accept them from customers don't consider themselves liable. By one bank's account, the value of the counterfeits amounts to millions of dollars. Frank Fiorino, 64, of Westbury fell victim to the scam in May, and he's out $3,700.
In recent interviews, Fiorino recalled that on May 20, he received by Federal Express what seemed a valid cashier's check. It bore the name of First National Bank of Polk County, based in Haines City, Fla., and was part of a deal to sell a 1977 Cadillac Eldorado Fiorino had advertised for sale on Web sites for classic cars.
On May 21, he deposited the check at Fleet's Central Islip branch and was told he would have access to the funds the next day. On May 22, Fiorino said, he made a withdrawal after Fleet told him the money was available to him.
A week later, he learned that Fleet had received notice from the Florida bank that the cashier's check was counterfeit, and so Fleet told Fiorino he had to cover his withdrawal or be dunned. At first, Fleet threatened to take the money from another account he held with his father, he said. Still, concerned about his credit rating, he made the deposit even though he says the bank should have borne the loss. "I presumed that since the funds were not being made immediately available," he said, "the bank was checking its validity."
"One of the reasons we find these scams to be so successful is that crooks know that consumers trust cashier's checks," said Donna Gambrell, deputy director for compliance and consumer protection for the Federal Deposit Insurance Corp. Most checks are legitimate, she said, but "people have figured out how to subvert the process." Her agency warned banks about the scam in March and urged them to review their internal controls.
Bob Emmons, chief of the criminal frauds bureau in the Nassau County district attorney's office, added, "The average person would think a cashier's check would be safe, not realizing that they are ultimately responsible for the money if it turns out later to be counterfeit."
Chris Wiseman, an officer for First National in Florida, said hundreds of counterfeit cashier's checks with an estimated value in the millions of dollars have been sent as if issued by his bank. He said he has heard of other banks that have had to return cashier's checks as counterfeit, too.
As to who bears the loss, Jim Schepker, a spokesman for Fleet, said, "All banks make very clear in their agreement [with their customers] that having funds available does not mean that they have funds collected." Next-day availability of funds for cashier's checks deposited in a bank account generally is mandated by federal law, said Susan Stawick, spokeswoman for the Federal Reserve Board.
Schepker said that a day's wait allows his bank to record the transaction, but "If the deposit does not clear, we have the right to charge back the account for any credit we have given."
Consumers need to be wary, Schepker said. The cashier's check sent Fiorino was for $7,900 even though the payment due for the car was less - $4,200. A person identifying himself in e-mails as a buyer's representative told Fiorino to send the difference by Western Union to "Mr. Kenedy Egwuasi" in London.
The first steps in the swindle helped set up Fiorino. For one thing, the buyer's representative asked him to send pictures of the car before making an offer as if the buyer cared about the vehicle's condition. Only when an e-mail told Fiorino the buyer had suffered a stroke and wanted the rest of the money returned did Fiorino call law enforcement agencies.
Det. Sgt. James Tilton, deputy commanding officer for Nassau County's Crimes against Property Squad, said the fraud has all the markings of what are known as Nigerian scams, a name given because some trace back to that country.
Tilton said the scam's apparent overseas roots complicate enforcement efforts. So, he urged consumers to beware: "If you ask for $20,000 and somebody offers to give you 30, you better make sure you have the 20 before you give back the 10."
Fiorino still thinks banks that accept cashier's checks could do more to determine if they are valid. "The scam cannot work without their unwitting complicity," he complained. "They can stop it, and they don't."  |
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