Possible stolen identity and conflicting claims

[Medusa]

Approximately 2 months ago, Individual A received a termination distribution from the bank trustee of the employer’s plan. He deposited the check into his checking account, which happens to be at the same bank as the trustee.

Individual B filed fraud paperwork on the above check approximately one month later. This paperwork resulted in a withdrawal of the amount of the check from Individual A’s account by the bank/trustee pending investigation.

Individual B and Individual A are related and once lived at the same address. They have the same name and their SSN’s are very similar.

Individual B contends that Individual A stole his identification and Social Security card and assumed his identity.

Incidentally, Individual A apparently does not speak English very well and requires an interpreter. Individual B speaks fluent English.

The bank/trustee spoke with the employer who contended that whomever worked for them spoke fluent English.

Now the bank trustee has decided that it is the TPA’s problem (us) to deal with and are not pursuing the investigation any further. Individuals A and B have been directed to our firm.

It does not seem that we can make a definite determination as to who is entitled to the benefit. My thought is that we should return the distribution and the withheld taxes to the plan and await a court order relative to the distribution.

Does anyone else have any thoughts as to how to handle this? The amount involved is less than $5,000.

[chris]

You stated that "their SSN's are very similar". Wouldn't the employer have the SSN of the person they've been withholding on? And couldn't you match that up with the ones presented by Individual A and Individual B to determine who's entitled? Otherwise, couldn't the SSA tell you the dates as to when a Soc Sec card was applied for....??

[WDIK]

Chris:

I thought the same thing initially, but I think that the problem is complicated by the fact that Individual B claims that his identify and SSN were stolen and used by A.

Surely the employer could identify which of the two inidividuals showed up to work and earned the paycheck and received plan contributions.

The issue of stolen identity would be pursued through other legal means.

[Mike Preston]

I don't see why the TPA is involved at all. Or the Plan Sponsor. This is a problem for the Bank. They issued the check intended for a specific person. Either that person got it, or that person didn't get it. If that person didn't get it, then the Bank is on the hook for sending it to them, aren't they? That, I would think, is the purpose of the fraud paperwork: to legally convince the Bank that the negotiation of the check wasn't done by the individual to whom the check was made out to.

Why would this go back to the Plan Sponsor or the TPA?

[WDIK]

It is an issue of PTB.

(Pass the buck.)

[Guest amfam2]

I have some background which may be of some help. I speak both as a consultant in retirement plans (16 years of experience) and an identity theft victim myself:

If the check was distributed by the plan and the identity thief cashed the check (written off the plan trust), the retirement plan is responsible for 1) making payment to the correct plan participant and 2) recovering the stolen payment from the thief (ha! good luck...). It is possible that a bond covering the retirement plan would cover the loss due to identity theft - check w/insurer & insurance contract.

If the check was distributed by the plan and deposited into participant's checking account and the thief subsequently stole the funds from the checking account, it is the bank's problem. The retirement plan is no longer involved. Participant must go through the bank to recover stolen funds. Most banks have procedures on addressing stolen funds due to identity theft. If customer runs into a brick wall, have them contact Federal Trade Commission's Identity Theft Resource Center or Privacy Rights Clearinghouse (www.privacyrights.org) for additional assistance on recovering funds through bank.

There are court cases which have addressed issues of identity theft as they occur within qualified retirement plans.....

jlg

[Mike Preston]

Amfam, I still think that in the case where the issuing party is the Bank, and not the Plan, that the Bank has the responsibility to make the check good, not the Plan.

Now, maybe the Plan is also responsible, but I can't imagine the Plan not being able to hold the Bank responsible for the ultimate resolution.

[E as in ERISA]

It sounds like a forged distribution form was used. If the plan administrator or another plan fiduciary approved the forged distribution form, then the plan is involved. (The bank probably took direction from the plan administrator/other fiduciary regarding the distribution).

Then the signature on the check was forged, too. At that point the bank potentially becomes involved.

[Guest amfam2]

Hi Mike,

When I was drafting my response, I was assuming that the bank's role in the administration of the retirement plan was custodial. If the bank's role is a trustee, rather than simply as a custodian, I agree that the bank has an active responsibility in recovering payment.

However, if the bank's role is custodial, I believe the responsibility of recovering payment and making true participant whole is the plan trustee's responsibility - not the banks.... Thus, if I were the plan trustee I would be actively working (or arm twisting, if need be) the bank (i.e the custodian) for assistance in resolution to the problem....

Poor victim - what an awful HALLOWEEN trick or treat!!

To Medusa - I'd be interested in knowing how this story ends.....

[Mike Preston]

I would also be interested in how the story ends. However, I still see the bank as being responsible for either: 1) cashing a check made out to Individual B when Individual B didn't sign the check; or, 2) if the check was made out to Individual B in such a way that Individual A could cash the check (same name) not "properly" (whatever that means) identifying on the check that it was really supposed to be Individual B that has the right to deposit the check.

My assumption is that the Bank wrote the check out. Obviously, if the Plan wrote the check out and it didn't identify Individual B well enough so that the Bank should have been able to confirm that only Individual B was allowed to cash the check, then the responsibility switches to the Plan and, quite frankly, I don't have any idea of where the bouncing ball would end up.

[Medusa]

How does the story end? First: we told the bank that it is not our problem and that they do in fact need to resolve it. They subsequently determined that since we had authorized payment to the individual on the plan and employer records, and since that is the individual who cashed the check, they were going to take no further action. So, pending any legal action, that is where it stands.

[Mike Preston]

How did you "authorize" payment to Individual A?

[Medusa]

This is a daily valued plan so everything is done electronically. Electronic instructions were sent to issue a check to Individual A and send it to his address. Of course the employer approved the distribution form itself before it was processed.

[Mike Preston]

What were the identifying elements on the instructions to the Bank? Merely the name or the name and the SSN? Did the check, as generated by the Bank, have all of the elements that the Plan Sponsor communicated, or just the name? If the check had one or more elements that would be specific to Individual B but not applicable to Individual A, then the entity cashing the check didn't identify the individual consistent with the identifying information, did they?

[Medusa]

Instructions to the bank included the name, SSN and address of record. I believe that the check and stub show all three elements, although I am not entirely sure about the SSN.

[Mike Preston]

Then ask the Bank a simple question: Why did they cash the check?

[Medusa]

Mike, perhaps my early posts aren't clear. The bank did what they were supposed to. They did pay the individual they were instructed to pay, and that is the person whose account the money is in. The claim by this other person was totally out of left field.

[Mike Preston]

So, let's see if I've got this right. Individual A *IS* entitled to the money that was distributed from the plan and that money was put into Individual A's account.

Some time later, Individual B shows up and starts making claims that Individual A has stolen his identity. Individual B sends paperwork to the bank stating that Individual A is an identity theif. Fine. What else? Did Individual B ask that all bank accounts be frozen pending resolution? Or did Individual B ask that a specific dollar amount (the amount corresponding to the plan interest) be withdrawn from Individual A's account and sent to Individual B?

Actually, it doesn't matter. The plan has no involvement. The plan properly instructed the Bank to issue a check to Individual A. The bank did so. The money is in Individual A's account. That is where it belongs.

The bank has to deal with the fact that a claim has been made against Individual A by Individual B. They deal with that in a particular way, I'm sure. But whatever way it is, it doesn't involve the plan!

There must be a process that Individual B must go through to prove that Individual B is entitled to the funds in the account of Individual A. I'm sure that Individual A is entitled to add his input into that process. Whatever that process is, Individual B starts it. From there, it plays itself out.

And I would be very surprised if the process involves the Plan in any significant way.

[Medusa]

We are on the same page!

[Guest FYI411]

This kind of mix up happens more often than you know. Identity theft is now an epidemic meaning there is no way to stop it. The only way to protect yourself is by becoming proactive and getting an identity theft plan that includes 24-7 monitoring and RESTORATION.

I'm not trying to be a commercial although I offer the best plan out there to help protect your identity. I just think people need to be extrememly careful, take identity theft seriously. Employers need to know that if they are not offering some type of identity theft plan, they are going to have more employees out on sick leave and personal leave that would not have been, if they chose to offer the service. Read the articles. Identity theft attacks people with both good credit and bad credit. It's your name they want.

If you are not offering a plan to your employees - PM me for more info.

[Blinky the 3-eyed Fish]

I'm not trying to be a commercial although I offer the best plan out there to help protect your identity.

I think you are trying to be a commercial, because each of your posts are soliciting business.

[stephen]

I agree with Blinky...

[RCK]

By my count, two of FYI411's posts were not actively soliciting business. If FYI411 were an active sponsor of this valuable service, I would not mind. But I'm guessing that is not the case.

RCK

[stephen]

Perhaps Dave Baker could answer that one...

Is FYI411 an active sponsor of this valuable service or is she simply soliciting business? ( Including one solicitation on a post that is more than 5 years old... )

[Guest fthorton]

FYI411 is selling pre-paid legal stuff. Its all multi level marketing, so beware.

I wrote this in another post:

Now, if you really are looking for an Identity Theft product, there are many out there. Only a few are any good and even less are reasonably priced. Make sure the company providing Identity Theft services is focused ONLY on identity theft and nothing else.

If your employee or customer pays anything over $60 for an Identity Theft product with a credit report, credit monitoring, insurance, and restoration services...then they are being ripped off. the wholesale cost of the products I mentioned should not be over $40.

Cheers

[SoCalActuary]

I'm not in favor of boldface solicitation on this board. However, I question the pricing just given. How can any service provide individual indentity theft protection for less than minimum wage, assuming they actually take the time to hear the problems and work to correct them?

Or are you talking about posted consumer financial information, which has nothing to do with the discussion about A or B and the right check?