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  1. #1
    Join Date
    Jan 2011
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    2

    Default What Laws Apply When a Check is Deposited or Cashed By Somebody Other Than the Payee

    My question involves a banking matter in the State of: Arizona

    We have a client who is an LLC. They received payments from their customers made out to their business name. One of their members took the checks and deposited them in a different account that was owned by him personally and did not have the same name as the payee on the checks. What rules/regs govern this conduct by banks and where can I look to find more information on this?

    Thanks in advance.

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: What Laws Apply When a Check is Deposited or Cashed By Somebody Other Than the Pa

    Exactly how was the check endorsed?

    Exactly what do you now want to accomplish?

  3. #3
    Join Date
    Jan 2006
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    38,867

    Default Re: What Laws Apply When a Check is Deposited or Cashed By Somebody Other Than the Pa

    If the checks were endorsed by one having authority to endorse them, there is not necessarily anything wrong with what was done. They are simply 3rd party checks to the person depositing them into his account. Typically a bank will require the depositor to endorse the checks as well but if he is known, they may not.

    If there was any improper action, it would be between the LLC and this individual.

  4. #4
    Join Date
    Jan 2011
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    2

    Default Re: What Laws Apply When a Check is Deposited or Cashed By Somebody Other Than the Pa

    Here are a few more facts that I didn't know when I originally posted this question. The person cashing/depositing the checks did not endorse the checks with the payee's name. He simply put something like, "For deposit in the account of _______." The name of the account into which the checks were deposited was not remotely similar to the name of the payee on the checks. In addition, the payee on the checks did not have an account at the bank where the funds were deposited.

  5. #5
    Join Date
    Jan 2006
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    38,867

    Default Re: What Laws Apply When a Check is Deposited or Cashed By Somebody Other Than the Pa

    so, what kind of problem is this creating? What has happened could still be legal if the parties involved approve of this.

    Basically, if the payee has a problem with this, then the payee has to either contact the payor and get copies of the checks so they can confront the ne'er do well or call the police and report it as theft or embezzlement.

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