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Questionable Check- Deposit, or Cash, or ?
Old 01-27-2014, 06:12 AM   #1
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Questionable Check- Deposit, or Cash, or ?

My Mother-in-Law is a widow in her mid-late eighties, with no physical ailments and a family history of longevity. She lives alone in a small house in central Florida.

About ten years ago, she was persuaded to invest her IRA and most of her free cash in a loan to LCS Correctional, basically a Louisiana jail company with also an office and attorneys/board members in Florida. It appears to be a private comapny, I couldn't find much on the 'net. At best, this is the classic story of an elderly person being sold an investment that is totally unsuited for her situation. Or maybe it's a scam.

She did receive interest checks on a regular basis.
Firday, she received a letter from Gottlieb & Gottlieb, the attorneys/board members in Clearwater, saying the company could obtain loans at lower rates than had been arranged from the old folks. They sent her a check for the loan total (drawn on BofA), and also said her IRA money had been wire transferred to the custodian bank (IRA still had a few bucks) in Michigan.
She phoned us with this sad story last night as we were driving down, we'll arrive after lunch today.

She, and many of her friends also sucked into this, are worried that the "refund" account will not have enough money to cover all the checks that have been written.
Some of them plan to deposit the check and keep their fingers crossed.
Some of them plan literally cash the check and walk out with a suitcase full of cash, to be deposited inanother bank immediately. She does her checking at BofA, so that might actually be possible. Maybe.
Some of them want to try converting the refund check to a cashiers check, and then deposit that elsewhere.

We can talk about her financial mistakes later, but for now-
What's her best way to protect the "money" represented by the refund check
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Old 01-27-2014, 06:23 AM   #2
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If it is more than she's willing/able to lose then certainly don't use cash.

If she wants to get a cashier's check from her bank they will wait for the deposited item to clear if she does not already have that amount in her account. That's up to ten business days depending on the amount of the check. Probably that's the safest way to go.
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Old 01-27-2014, 06:47 AM   #3
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We will be with her, so there is no problem of literally losing the cash as she walks out of the bank. If BofA will actually give it to her that way...

Since the refund check is drawn on BofA, and her personal bank is BofA, it should "clear" immediately. Should...
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Old 01-27-2014, 07:14 AM   #4
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I agree with Jim. Well, sort of. Before you deposit the check, explain that you expect that the funds will be available immediately since it's drawn on another BofA account. If they hem and haw, then ask them what you need to do to make that happen. It could be that the branch is in another state and they don't have the kind of ineroperability that you might expect from "one bank". But that being said, I once got a "big check" from someone with a BofA account in Georgia, and I'm in North Carolina. The funds were available immediately. Once the funds are in your account without a hold, then they shouldn't be able to claw the funds out. So IMHO, if you can get it in a suitcase, you could get it in your own account without a hold, and so no need to get it in a suitcase.
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Old 01-27-2014, 07:21 AM   #5
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I agree with Jim. Well, sort of. Before you deposit the check, explain that you expect that the funds will be available immediately since it's drawn on another BofA account. If they hem and haw, then ask them what you need to do to make that happen. It could be that the branch is in another state and they don't have the kind of ineroperability that you might expect from "one bank". But that being said, I once got a "big check" from someone with a BofA account in Georgia, and I'm in North Carolina. The funds were available immediately. Once the funds are in your account without a hold, then they shouldn't be able to claw the funds out. So IMHO, if you can get it in a suitcase, you could get it in your own account without a hold, and so no need to get it in a suitcase.
+1

Should, but often an out of state branch check is treated as a different bank.

Instead of depositing the check, present it to be cashed along with a deposit slip. BoA "should" treat that as two separate transactions with the funds being debited from the payers account immediately.
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Old 01-27-2014, 07:27 AM   #6
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Anyone concerned some or all of this is IRA money, and taking cash would be treated as a taxable distribution?
Bruce
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Old 01-27-2014, 07:28 AM   #7
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The bank might hold the funds "to be sure the check isn't a forgery" or some reason. We refinanced with Chase Bank and the money was wired to our Chase Bank account and it was unavailable for ten days.

I vote walk out of the bank with her, helping her carry a suitcase of cash.
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Old 01-27-2014, 10:59 AM   #8
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Even if you walk out with the cash, if the check bounces, I believe the bank can come after you for the money.

There is, of course, the possibility (actually I would say probability) that everything is above board. If the intention was to abscond with MIL's money, I don't see why they would bother to send out checks.

Could you present the check at the bank where the account is held?
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Old 01-27-2014, 11:44 AM   #9
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Sounds like a bond that was called. I didn't have much trouble finding information on this company - LCS Corrections Services, Inc.

Why the concern over the checks not being good?
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Old 01-27-2014, 11:58 AM   #10
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She did receive interest checks on a regular basis.
Firday, she received a letter from Gottlieb & Gottlieb, the attorneys/board members in Clearwater, saying the company could obtain loans at lower rates than had been arranged from the old folks. They sent her a check for the loan total (drawn on BofA), and also said her IRA money had been wire transferred to the custodian bank (IRA still had a few bucks) in Michigan.
I'm missing something here.....

Why do you think the check may bounce? Who knows how the minds of con artists work....... ? But if this was a scam, I doubt the con artist would be sending rubber checks out that would immediately cause the sirens and flashing lights to go off. Wouldn't they just keep the money and maybe make a few more interest payments while they pack their bags and buy tickets for South America?
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Old 01-27-2014, 12:26 PM   #11
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I don't get how anyone thinks the bank would give a suitcase full of money if they won't otherwise make it available via a cashiers check or transfer to another account.
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Old 01-27-2014, 12:54 PM   #12
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Even if you walk out with the cash, if the check bounces, I believe the bank can come after you for the money.
+1

And they will. That's part of the common scam of someone buying an item off of EBay or Craigslist and mailing a certified or cashiers check for a sum exceeding the cost of the item. The buyer wants the seller to send them a check for the difference. When the buyer's check turns out to be bad, the bank comes back to the seller and takes it out of their account. They buyer gets away with the item and the refund. The good check clears before the certified check is found to be bad.
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Old 01-27-2014, 12:58 PM   #13
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Forgive me, but I am not sure I understand all the concern. This sounds like some form of return of capital. Is there any specific reason that you believe the check is not good?

I have never done this, but you might try calling the bank the check will be drawn from and asking. But I don't know what that would accomplish above depositing the check and seeing if it is good.

If it were me, I would deposit it asap. What other options are there?
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Old 01-27-2014, 01:03 PM   #14
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You'll only know it's good if you cash it and the money stays in your account. If the legal system wants to claw it back they'll come after you, not just the cash from the check. I wouldn't think any simple measures would let you off the hook for that.
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Old 01-27-2014, 01:11 PM   #15
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When my wife was the Treasurer for the school PTO group, they would always have some checks bounce. What she would do in order to avoid bounced check fees, is go to the bank the check was written on and check to see if there were enough funds to cash it. The teller would give her a yea or nay and if it was a yea, she'd cash it then and there.

Since the account is with her bank, she'd should have no problem checking on this and then depositing it to her account. Be aware that many companies have zero balance accounts, so if the teller says there are no funds, have them check on it. Usually, an interest bearing account is linked to the zero balance account and funds are swept to it to cover checks clearing.
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Old 01-27-2014, 02:52 PM   #16
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I did google this company and they are very real, so probably the check is good. I hereby rescind my suitcase full of cash vote. I hope OP's mother has no problem with it. I admit to being curious about how her investment in this firm came about.
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Old 01-27-2014, 08:34 PM   #17
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Anyone concerned some or all of this is IRA money, and taking cash would be treated as a taxable distribution?
Bruce

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Sounds like a bond that was called. I didn't have much trouble finding information on this company - LCS Corrections Services, Inc.

Why the concern over the checks not being good?
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I did google this company and they are very real, so probably the check is good. I hereby rescind my suitcase full of cash vote. I hope OP's mother has no problem with it. I admit to being curious about how her investment in this firm came about.
This check is not IRA money, so no problem there.

The company certainly exists, but it appears to be a privately held company in Louisiana with an office in Florida. I'm not used to researching this kind of stuff, but did not find anything about their finances and condition. The law firm handling the finances also has two members on the Board. To me, those are all Caution flags for an 85 year old woman with very limited money and nearly all of it in this one investment.

The money was specifically listed as a "loan", not a bond.

We just found out about the whole situation yesterday while on our way to visit, we have not pried into her finances and she hasn't volunteered anything previously.

The fear of bounced checks apparently comes from her various friends who also had money there and have received similar checks. They claim to know more about the situation than I, but everything I'm getting is second-hand at best. To generalize; these are people who were not rocket scientists to begin with, who had very limited investment ability, and are now treading that fine line between merely "old" and "senile/demented".

We arrived at her house this afternoon after an awful drive from Chicago, and took the check to her local BofA. They say there is sufficient money in the other account to cover her check, but of course we have no idea how many other checks are out there waiting to be cashed.

BofA says her deposit will be available tomorrow morning, we can get a cashiers check at that time or cash if we let them know in advance to lay in a supply of greenbacks.

My hope is to get the cashiers check and deposit it at another bank nearby where she has a money market account. That should keep the money safe until it can be re-invested.
We will try to verify that her other IRA money was indeed wired back to the IRA custodian bank.

The bozo who got her into this investment in the first place, has sent her a letter suggesting that he can find a similar replacement and better hurry...
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Old 01-28-2014, 08:12 AM   #18
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The bozo who got her into this investment in the first place, has sent her a letter suggesting that he can find a similar replacement and better hurry...
She's lucky to have you looking after her.
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Old 01-28-2014, 09:21 AM   #19
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Thanks, but the problem is...

She thinks there is/was nothing wrong with this investment, and she's ready to hand all of her money right back to the same "advisor". She got her money back this time, so everything is fine. We spent considerable time discussing it all yesterday and she totally fails to grasp the idea that what might be an acceptable investment for ME, could be badly wrong for HER. She has no concept of diversification or time horizons.

And I can't get her to answer a simple question. If I ask her the time, she'll start on a long story about where she bought her watch and that will become a story about how nice the store was and how she bought a blouse there and and and...
An hour later, after I've repeated the question three times, she still hasn't answered it. Yes, I know that old people can be that way. But she's the one who called us in a panic several times and wanted us to drive all night to be at BofA first thing in the morning, and then she totally blew off any suggestions I made about how to handle the situation when we arrived.

To say that I'm furious about this, would be an understatement.
I spent most of my life flying airplanes, and airplanes aren't interested in your sad story or anything else except what you do. If you do things right, you survive. If you do dumb things, you die. And I went to lots and lots of funerals for nice guys who just didn't get it.
On Sunday mornings, I get reminded that there's more to the story than that. But right now I'm ready to pack up the car and head south for the rest of our vacation.
(End of this morning's Rant)

The right thing to do would be for someone responsible to control her investments, but forcing that through the courts here is probably difficult and time consuming.

EDIT:
I'm going to start a separate thread about what would be an appropriate investment(s) for her, and how to get a reliable advisor like someone at Vanguard or Fidelity.
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Old 01-28-2014, 09:27 AM   #20
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Even if you walk out with the cash, if the check bounces, I believe the bank can come after you for the money.

There is, of course, the possibility (actually I would say probability) that everything is above board. If the intention was to abscond with MIL's money, I don't see why they would bother to send out checks.

Could you present the check at the bank where the account is held?
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Sounds like a bond that was called. I didn't have much trouble finding information on this company - LCS Corrections Services, Inc.

Why the concern over the checks not being good?

I also wonder why people are concerned with the check... heck, NOT sending a check is more worrisome to me...


The one thing that I would want to do is check to make sure they are sending the full amount, including interest.... is there any way to check this out
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