Forged Disbursement Check

[LynnInMN]

The US Bankruptcy code itself..

http://www.finaid.org/questions/bankruptcyexception.phtml

[Anonymous]

Thanks for the link as it was quite helpful.  I agree, bankruptcy is out of the question.  However, I did some more research and retrieved many answers this week.  And, at the same time raised many questions, such as increasing doubts on the whereabouts of this loan money.  As I stated earlier, my father died while I was in school, so I am not 100% sure of how he handled this situation (I'm merely guessing). It should be noted, after much studying, I discovered an extremely important clause in the contract, which states:

(With "you/your" being the lender and "me" being the borrower) "If you decide to make me a loan to me, you will mail me the disbursement check and a statement disclosing certain information about the loan in accordance with the federal Truth-Lending Act. You have the right to disburse my Disbursement Check through an agent. At your option, you may also make any Disbursement Check co-payable to me and the Cosigner or to me and the School."

Obviously, there is a problem here...I never endorsed these disbursement checks. I'm guessing that my father took the checks and deposited them into his own account, and that is my best guess. I contacted AES, and discussed a similar scenario of this matter w/ multiple agents. Without knowing my exact situation they ALL agreed that these checks should and could not have been deposited without my legal endorsement (the "me" portion of the contract). After gathering these statements from AES employees I spoke to another AES agent, and posed my exact situation with me not knowing where the loan money is located. They looked up my file, and discovered that these checks were made "co-payable to me and the school." How is this possible? Meaning, how did my father take checks that were made co-payable to me and the school, and deposit them into an account that did not bear my name? The money was supposed to go to the school...it didn't. Again, I never endorsed the check. And how did my dad get the school to endorse these checks...or did he even get the school to endorse the checks? Well, I contacted the school, and all of my tuition and fees were paid w/ personal checks and w/ NO third-party loans. Again, no sign of loan money on my account at the school. So...my next move is to have my mother retrieve copies, front & back, of all deposited checks into my father's account to see 1.) were these checks deposited into this account, and 2.) who in the heck endorsed these checks? These check copies will be in my hands shortly, as well as documentation from AES that shows that these checks were made co-payable to "me and the school," and documentation from my school that shows that I did not use third-party loan money to pay for school expenses. My question is to anyone on this board who can help...what should be my next move? If everyone holds their bargain, and my memory serves me right...I'll show that I never endorsed these disbursement checks. And if that's the case, how could have these checks been a valid deposit? Obviously, an attorney is the easy answer, but what are the specifics? HELP!!!

[Anonymous]

Unfortunately, you've answered your own question (actually, Ilecs answered it for you). You NEED an attorney.

Chances are, you're looking at having to file a police report for fraud/ID theft. I don't know how that would work or how effective it would be since 1) your father has passed away and 2) you DID sign the prom. notes, and 3) unless you retain the services of a forensic accountant, you won't know "which" monies from your father's accounts went toward your schooling and which didn't.

You need an attorney. Badly. Or otherwise, you really face having to pay these loans off in full (rather than the amount you *should*), will have to live with the bad credit, and will have to live hand-to-mouth until it's done.

I sincerely wish you luck with this.

[LynnInMN]

The other issue AES will argue is you allowed your father to deposit these checks more than once.  Obviously you borrower multiple loans with multiple dispersements.  Once might be considered a forgery....but to continually allow him to do this was basically giving him permission.  You knew what amount you were borrowing....if he wasnt giving you the money for your educational expenses then you should acted then......not complain about it later.  Quite frankly, I dont think you have a hope in hell of arguing this. 

[Anonymous]

A few things to follow up in response to the replies.  I really don't think I allowed my father to deposit these checks, b/c I didn't even know there were disbursement checks until much time after his death.  Also, I didn't know money was being used for purposes beyond educational expenses until after he was dead, so how could have I screamed foul on this until now?  And, in my opinion there is no such thing as "basically giving him permission."  Either the checks were properly endorsed or they were not.  AES says they were made co-payable to me and the school, meaning the school should have received the moneywhen all was said and done.  Two parties are at fault here, and that's 1.) the bank of the account that I'm guessing he deposited them into, and 2.) the bank that AES and/or the lender was using.  They should have caught this, saying something to the effect of "hold up,  this doesn't have the school's endorsement and the borrower's endorsement isn't on here either."  Meaning, the checks should have been returned.  I spoke w/ a president of a local bank about the situation, and their ressponse was "the checks should have been returned."  As far as me knowing what amount I was borrowing, again, I cannot stress this enough, I was lead to believe that whatever amount I did not use, that money would be forwarded back to me or the lender/AES.  And, AES said since the checks were made co-payable to me and the school, that's what should have happened.  And to the user Wonderin, you are correct.  I won't be able to determine what money was used for school and what money was used for other expenses.  But I do have my own bank records and virtually all receipts from my college days.  I also have all check stubs from my part-time work.  I could easily calculate how much money I spent for educational purpsoes (tuition, books, fees, room and board).  Those numbers may not be applauded, but it could enhance my arguement.  Thank you for your positve tone.

[LynnInMN]

There is an saying that attorneys use...."ignorance is not a defense in the eyes of the law."

You were signing prom notes yearly....you knew what you were borowing and you certified it was for educational expenses.  You got a financial report yearly from your school telling you cost of attendance,expenses and what your aid was.  A simple log in to your lenders website would have confirmed what you owed and received.  If this had been me, after one check of not seeing the money, I would have been balking.  Yet you contined to allow your father to deposit the checks. 

"You were led to believe".......who led you to believe this?  Did you read your prom note?    If it is not written into the prom note it doesnt matter who told you....it wont be valid. 

[Anonymous]

Personally, the determination of AES to get their money notwithstanding, I think there's enough muddy waters and enough extenuating circumstances that it'd be worthwhile to retain a lawyer.

While I don't think you would "win" per se, I think a lawyer would be able to make a good enough case for the lack of due diligence on behalf of the depositing bank and AES, to come to some sort of favorable settlement. While I really don't possibly see the debt being forgiven, I think it's likely that a settlement would be accepted.

Again, you'd have to hire the services of a forensic accountant to see the wheres and whos and whens of the disbursements, deposits and withdrawals. So I'd make sure to have as much in the way of proof that you can get your hands on as much as possible. If you decide to involve the bank in this issue, don't worry: your lawyer would file for discovery and subpoena their records for that account (bear in mind, though, that if this occurred over 7 years ago, you might be out of luck as banks are only required to keep "hard" records of accounts for only 7 years).

Yep, AES would fight you tooth and nail over this. But the bottom line is that the suit (if it comes to that) would be decided by either a judge or an arbiter. And a ruling in either side is not a guarantee (meaning, the ruling could go either way).

The BEST way to have settled this would have been (and I am VERY sorry to say this to you) to sue your father and use the proceeds from that judgment to pay the loans. A ruling in a civil court would hold weight with AES and they would have to (or face suit themselves -- and it would be foolish of them to allow it to go that far, since a ruling of "fraud" in a civil court would have standing) remove any penalties to your credit.

[Anonymous]

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@LynnInMN wrote:

There is an saying that attorneys use...."ignorance is not a defense in the eyes of the law."

You were signing prom notes yearly....you knew what you were borowing and you certified it was for educational expenses.  You got a financial report yearly from your school telling you cost of attendance,expenses and what your aid was.  A simple log in to your lenders website would have confirmed what you owed and received.  If this had been me, after one check of not seeing the money, I would have been balking.  Yet you contined to allow your father to deposit the checks. 

"You were led to believe".......who led you to believe this?  Did you read your prom note?    If it is not written into the prom note it doesnt matter who told you....it wont be valid. 

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The law also recognizes an element of "trust" between family members. That is one of the reasons why family members cannot be forced to testify against members of their family in a court of law.

And simple banking law will attest to the fact that if check acceptance laws are not followed (i.e., endorsement of both parties IF it is required), the bank loses the ability to hold the non-endorsee liable.

We held, for our Boy Scout Pack, a non-prof checking account that required signatures of the two account-holders (their rules, not ours). One of the account holders endorsed a check alone that ended up bouncing (due to their mismanagement of the account). My husband was the "Non-endorsee" and was not held liable, as the bank accepted and processed the payment without the required second signature.

[Anonymous]

LynnInMN, again, I've told you this once before.  I never received "a financial report yearly from [my] school telling [me] cost of attendance,expenses and what [my] aid was."  Also, I do not have any copies of these prom. notes.  I'll have to request these, as I would like to know what type of information is on these documents.  All I have is a credit agreement and a disclosure statement.

[Anonymous]

While I don't have any personal experience in dealing with an SL situation like you're experiencing now, I really can NOT underemphasize how VERY important it is for you seek legal representation. Really.

Currently, I assume, you're dealing with many, many different departments and many different people in AES, the depositing/receiving bank, and the school you attended -- NONE of which have ANY legal standing or authority. NONE of them are going to be able to click and key and magically fix the situation. NONE.

So, please, please, please, PLEASE, if you are able, retain counsel ASAP. This situation is going to get WORSE. More than likely quite soon, since you've woken the dragon with the proverbial pointy stick. Whilst you spend your time here, asking questions and NOT getting the situation resolved, it's possible they're contemplating filing suit -- which could lead to bank levy or wage garnishment. And I really do NOT want to see a post here from you (or from anyone, really) informing us that your assets have been levied and you've no money to pay for necessities.

And one thing Lynn and I can definitely agree on: They WILL file. They WILL take your money -- whether willingly paid or levied. From what I understand, private SL lenders are notorious for doing so.

Please. I'm not trying to scare you needlessly. I just want you to ACT rather than simply spend your time here asking questions.