Bad checks total $10 billion in annual losses

The craziness of the holiday shopping season is over but the effects good and bad linger. A side effect of stores flooded with impatient shoppers can be cash registers flooded with bad checks.

Ron Cleek, first assistant prosecutor, oversees property crimes in the Greene County Pros-ecutor's Office. He confirmed that the holiday season is a big time for fraudulent checks. "We'll start getting reports of bad checks in late January, and it will be a big flood of them," Cleek said.

While check fraud may not be as dramatic as a stick-up, bad checks are a hard-hitting crime financially, and not just during the holidays.

Check fraud and counterfeiting result in losses of $10 billion a year, according to the National Check Fraud Center, online at www.ckfraud.org. Normally two detectives work check cases in the Springfield Police Department; for one of them bad checks are a full-time job. The main investigator tracked 1,700 cases of forged checks in 2000, Det. Dave Bowden said.

Bad checks come in several varieties. Checks may be stolen, signatures forged, amounts altered, or the checks may be completely bogus and drawn on fake accounts. "Bad check forgery is probably the easiest scheme out there to make money," Cleek said.

Cases can be as simple as a forged name on a stolen check or as complex as a check kiting ring that opens bank accounts and swaps bad checks to inflate balances so the criminals can draw out cash, Bowden said.

Another trick is purchasing something at one chain store with a bad check and returning it at another location for a cash refund, Cleek said.

"A real hot button right now is that people are able to go to an office supply store and purchase a software package that allows them to set up their own company and make their own checks. The package comes with check stock. A lot of people try to cash those checks like they are real payroll checks," said Kirk Bossert, senior vice president at Signature Bank.

Bossert said that the criminal trying to cash such a fake payroll check wouldn't get far at a bank, but they might at a liquor store or grocery store. "It looks pretty real," he said.

Bossert's concern was echoed by Bowden. "We've discussed it with different financial institutions and merchants. Grocery stores are hit hard with them. If you are involved in the grocery industry, I'd make a trip to the office supply stores and ask to view their paper stock for check printing. Educate yourself as to what the paper looks like and educate your employees. Then decide whether or not you want to accept those types of payroll checks," Bowden said.

One of the most effective ways to guard against bad checks is to obtain adequate identification from the person submitting the check. "Get at least the Social Security number and date of birth and make sure the photo on their driver's license or other identification is indeed that of the person standing before you. Make some indication on the check that you looked at the ID," Cleek said.

He warned that if there has been no gathering of such information, then it is harder to apprehend the guilty party. "You have to show beyond reasonable doubt that the person accused actually wrote out the check," Cleek said.

Bowden added that IDs can be counterfeit. "Make sure the person passing the check looks like the photo on the ID. Make sure the printing on the ID doesn't have any smears and if it is laminated make sure it doesn't look like someone has opened the lamination to tamper with the document," he said.

If a check turns out to be bad, then either the prosecutor's office or police department gets involved.

"Bad checks that deal with insufficient funds and closed accounts, unless there are extenuating circumstances, get turned in to the Greene County Pros-ecutor's Bad Check Office. The Police Department takes the reports of forged checks, stolen checks, bogus accounts and counterfeit checks," Bowden said.

At the Police Department, the cases are tracked in a database and investigated if there are leads, such as ID information.

Complex cases with a ring of people involved can be time-intensive.

"We have to go back and get documents from all the institutions involved, which sometimes requires subpoenas. It takes time to gather records, time for the checks to make their way to the investigators. We have to be able to gather photos of suspects if the banks have them, talk to witnesses and try to develop who the suspect might be," Bowden said.

For bad checks that will be handled by the prosecutor's office, the business needs to take a few steps on its own first. The prosecutor's office advises the merchant to send a 10-day notice letter to the person passing the check.

Doing this, Cleek said, does two things: 1. notifies the person to make good on the amount within 10 days or face legal recourse, and 2. establishes a paper trail.

By sending the notice by certified mail with a return receipt the merchant gains prima facie evidence that the check was bad.

If nothing comes of that letter, the business owner needs to fill out a form supplying all the information he or she has to the prosecutor's office. Then the office sends out a second 10-day letter.

If the amount isn't paid within that time, a follow-up letter is sent specifying the person must show up on a certain day with money orders for all the bad checks they've written. Finally, if person doesn't show up, a charge is filed and warrants go out.

The Greene County Prosecutor's Office has a pretty good collection rate 60 percent, Cleek said.

But to prevent problems, the key is to educate employees on the importance of getting ID and on the need to be aware. "The typical con artist uses behavior to get tellers (or cashiers) to be confused, make exceptions, and lower their security awareness," Bossert said.