Rubber-check artist bounces into dispute; scammer uses stop payments to skip paying for goods.

Rubber-check artist bounces into dispute

Salesman Robert Wood may soon get his wheels back, but he is still angry at Great Western Bank, which he says allowed a customer to bilk him of more than $2,000 - after the man had repeatedly conned local merchants out of thousands of dollars worth of goods by stopping payment on a number of checks.

Beverly Hills-based Great Western allowed the con artist to stop payment on more than $40,000 in checks after buying merchandise, said Wood, owner of West Los Angeles-based tire seller Robert W. Wood Inc.

Wood's difficulties have illustrated loopholes which allow fraudulent operators to bilk merchants because banks protect depositors' confidentiality and some merchants rely on unsecured personal checks in payment for goods.

Wood accepted a check on March 8 for $2,337.68 from a man who identified himself as Seth Murdock after a Great Western Bank teller confirmed over the phone that the man had enough in his account to cover the check.

Ten days later, the check returned with a notice stating that a |stop payment' had been placed on it.

Wood called the Beverly Hills-based savings and loan and was shocked when bank manager Francia Schwartz told him that Murdock had stopped payment on Great Western checks to 34 other merchants worth more than $40,000 in aggregate purchases over a two month period before the check to Wood was signed.

At least one other merchant had complained to Great Western Bank that a man who signed as Seth Murdock had stopped payment on a check to pay for an item, before Wood sold his wheels.

Ron Sacilioc, store manager for San Fernando Valley-based Cycleworld, said that he notified the bank a week after Murdock stopped payment on a check for a $250 bicycle on Jan. 18.

Schwartz confirmed that a pattern of stop payments had taken place.

"He has done a number of stop payments . . . but the numbers you quoted me are inflated," Schwartz told the Business Journal.

Wood may soon get his wheels back; a repossession team found them last week on a Porsche that was bought March 5 from Bob Smith Volkswagen/Porsche/Audi/Mitsubishi with a $11,099.99 check that later returned with a stop payment notice.

Wood, however, claimed that he will have to halve the custom-fitted wheels' original sales price if he sells them as used, and threatens to sue Great Western if it does not foot the difference.

The bank, he said, was negligent in failing to warn him of the buyer's past practices.

The bank, however, said that customer account information is confidential and that it is difficult to determine when customers are stopping payment in good faith and when fraudulently.

"There's a lot we can't talk about because it is under investigation internally," said Great Western Bank spokesman Steve Hawkins. "Our policy is that we look at each case individually. It's very difficult to know what's going on and we have to respect customer confidentiality."

Hawkins said that he could not comment further about the case.

An official at the Porsche dealership where a 1979 Porsche 928 was fraudulently bought with a bounced check said that he does not feel the bank is to blame. He partially faulted his own company for not following the standard company procedure of using a check guarantee service to insure the check.

Such procedures, however, can cost 2.5 percent of each check guaranteed, leaving many merchants to calculate which costs more - letting hustlers bounce checks or paying for the guarantee service.

A banking lawyer at another major bank said that Wood will just be spinning his wheels if he expects Great Western to pay for the wheels.

"There are no guarantees with a personal check," said the lawyer, who requested anonymity. "When you accept a personal check, you're giving a loan. A bank can guarantee a certified check or a cashier's check. With a personal check, all the bank can do is tell you |yes' or |no' when you call up" to question if there are funds to cover the check.

Furthermore, the lawyer noted, it can be months before a bank's computer system can determine whether a pattern of stop payments appear fraudulent.

Stop payment fraud is particularly difficult to deter because it is normally classified as a civil offense, with penalties limited to the amount of the check plus $500.

Even when check stoppers are indicted, the penalties can be minimal, said Detective Leanor Lindsey of the Los Angeles Police Department. There is no penalty in the penal code for writing stopped checks, but the accused could be indicted on charges of grand theft if the amount stolen exceeded $400.

While Wood said that Schwartz told him Murdock's account was closed by the bank on March 26, the man who identified himself as Murdock apparently remains on the loose.

Detective Kris Hosford of the Los Angeles Police Department's West Los Angeles Division said that she would meet with a representative of Great Western Bank last week to determine whether to launch an investigation of the alleged fraud.