Did you know that, at least in Illinois and likely most other states, YOUR BANK IS NOT LIABLE
IN MOST CASES FOR THE CRIMINAL ACTS OF ITS EMPLOYEES except in egregious cases?
Case in point: an elderly woman and her husband had several accounts at a bank on the South side of Chicago. At age 81, the woman had a stroke. The next year her husband, who had handled the finances, died. The next year she had a second stroke and asked her brother to help her handle her finances. The brother took her down to her bank and the records showed $179,000.00 + in four accounts which included Certificates of Deposit, Checking, and Savings. The woman’s brother attempted to help her with her daily living tasks. Eventually, she got kicked out of her long-time apartment for starting a fire from her smoking and had to move in with him. He took her down to the bank branch to execute a change of address for bank statements. Many of her records were destroyed in the fire. Even though her brother was the one who took her to the bank when she asked, she was very private and did not want him to go with her to see her “personal banker.”
Shortly thereafter, the payments on her bills which were to come out of her checking account were rejected: THERE WERE NO FUNDS LEFT. SHE WAS BROKE. She had never asked for more than $300.00, except one time for gifts. She had her husband’s larger social security check going in each month, but she was broke.
At that time, her brother wanted to act for her but it was questionable whether she was competent to execute a power of attorney so he contacted an attorney to get legal guardianship over her so that he could legally act on her behalf. BANKS DO NOT LIKE POWERS OF ATTORNEY. I read in a financial magazine that more money is stolen with Powers of Attorney than through bank robberies. However, it is tough for banks to stonewall subpoenas for records when the bearer of Letters of Office issued by the local court empower him.
To summarize what took several years to discover:
1. The woman had a personal banker, the same one who had taken care of her and her husband. He turned out to be a fairly competent crook.
2. After her husband’s death, he stuck his finger into her fiduciary pie by selling an 83-year-old woman an Annuity. When the salesman for this product was deposed, he was asked what possible financial benefit this could be to her and he had no answer. Both the personal banker and he made money on the deal and the annuity salesman’s commission. which is sizeable, probably had to be shared as well, but he took the fifth on that one.
3. THE MODERN PERSONAL BANKER IS NOT PRIMARILY A BANKER OR FINANCIAL ADVISER, HE or SHE IS A SALESMAN. He or she earns commissions or bonuses on selling financial products. Have you ever been encouraged to open a home-equity line of credit (HELOC)? Are there different accounts that might give higher yields, be more liquid, have fewer charges (not always 100% accurate… or 10%).
4. Our particular personal banker disappeared soon after the missing funds were brought to the bank’s attention.
5. Here is how the scam worked: (after our investigation the bank quickly changed its operating procedures)
a. Whenever the victim came into the bank, she had been instructed by her personal banker to ask for him. The brother told me that when she went into that branch, this guy would have left Jessie Owens in the dust in his haste to reach her.
b. Take her back to his desk, make small talk and ask her what she needed that day. He would fill out the withdrawal slip (most often) and have her sign it. He would then leave her at his desk, approach the teller, present the slip and take the cash which he would, with a flourish, count out for her at his desk.
c. You have already figured this out: an elderly lady who had suffered two strokes, he would have her sign two withdrawal forms. For example, the one for the $300.00 she had asked for and another to which he could append a far greater amount. The teller is presented with a slip for several thousand dollars. The cash is turned over. A bit of sleight of hand and the woman was given the amount of cash for which she came in. The rest vanishes of course.
d. She gets a carbon of the slip in the correct amount. It required some detail work. (1) After her husband’s death, someone changed the address on the accounts and the bank statements were sent to an address which was close numerically to hers but a different street name, though again, not radically different. This was found when duplicate statements were produced. The personal banker did not live at the new address but apparently knew he could use it for a mail drop. (2) Shortly after his departure from the bank, the brother caught him going through the mail at her old address. He said that he was no longer working for the bank but wanted to remain her personal financial adviser.
e. It required some detail work. (1) After her husband’s death, someone changed the address on the accounts and the bank statements were sent to an address which was close numerically to hers but a different street name, though again, not radically different. This was found when duplicate statements were produced. The personal banker did not live at the new address but apparently knew he could use it for a mail drop. (2) Shortly after his departure from the bank, the brother caught him going through the mail at her old address. He said that he was no longer working for the bank but wanted to remain her personal financial adviser.
f. He had created a total of 11 accounts and transferred funds from one to another with abandon. Even had she been receiving her bank statements, it would have taken an accountant to follow the trail.
g. The bank relied upon a section of the Trustee’s Act holding them blameless for the criminal acts of their employees. We were not about to be able to track this guy down at that point. The bank had technically violated Federal Law because several of these transactions exceeded $10,000 in a single taking but the reporting slips were never submitted. Again, all of these violations occurred while this fellow was employed there.
By then the woman had died but her decedent’s estate received nothing from the bank.
The Law Offices of David Blocher is a specialty law firm serving Chicago, IL and the surrounding areas specializing in elder law, probate administration, and estate planning services. Our attorneys take a keen interest in each case and offer personalized and attentive services to every client. If you need legal assistance in any of these areas, please feel free to contact us at (312) 855-4477 or visit our website at http://www.blocher-law.com.