How to handle forgery claims with banks

[Guest Nautical]

It seems to be a serious problem that banks are not accepting forgery claims. They make it almost impossible to have the pension funds returned to us. Here is one example. We had one monthly annuity participant that had her checks cashed by the estate after her date of death (for over a year). (Side note: We were never informed of her death. )We filed a claim with the bank and they informed us we had to have an affidavit signed by the estate to continue the forgery claim process. We are attempting to have this document signed, but we know there is a 99% chance they will not return the form. Who knows, the estate could have been cashing the checks. If your company or client was in a similar situation, what advice would you give them? Are we just going to be out of the funds or do we have any other options to get the funds returned to the trust? It is hard enough just trying to keep the plans fully funded with the market and now we have to deal with banks not returning funds.

[AndyH]

Who are you/us? What is your role? Who is the Trustee? Why don't they help?

[MGB]

Here is a personal story of dealing with this:

I submitted a check to RCA music (before they became BMG) along with the monthly card saying I didn't want any album from them. The check was actually made out to BofA and should have been put into the envelope for my car payment.

RCA cashed the check and posted it to my account. They also sent me a nice thank you, but did not respond when I asked for the money back.

When I received the cancelled check, I took it to my bank. They said it should never have been accepted by RCA's bank because it constituted a forgery by RCA.

MY BANK (not RCA's) took the check, credited my account, and sent it back through the system to RCA's bank as a forgery that my bank would not accept.

So, perhaps having the bank that cut the check deal with this will help, instead of the trust dealing with it directly.

[Guest Nautical]

Role: I work in the HR department

A trust pays our monthly DB payments. The trust sent a letter to Bank of America (where the participant's checks were cashed) requesting the funds be returned. Bank of America sent a letter back saying that in order to return the funds, we needed an affidavided from the Estate. The estate refused to acknowlege the trusts request. Bank of America refuses to return the funds to us.

[E as in ERISA]

It would appear that Bank of America's position is that the estate is the legal owner of those funds once the check has been cut.... I'm assuming that the benefit should have ceased as of the date of death? So the plan is actually the one entitled to have those funds returned. Did you make that point clear to them?

[mbozek]

Who is the plan trying to recover the payments from? The bank or the estate? The bank's position is that the personal representative of the deceased is authorized to cash the checks under state law which means there is no forgery or fraud which requires repayment of the funds by the bank. (The plan had a duty to inform the bank to cease the payments. Check the custodial agreement with the bank.) In order to be repaid the Plan administrator needs to sue the estate for return of the overpayments as unjust enrichment of the estate before the s/l for filing claims expires or the estate is closed. The plan needs to retain counsel if it wants to recover the funds.