Central Trust Co. v. Shepard

29 B.R. 928 (1983)

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Nature of the Case

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Facts

D contacted P and told them that he was engaged in a new business venture, JDS to sell computer programs to consumers at a cost of between $50 and $250. A standard merchant agreement for processing credit cards was entered into by D and P which allowed D to deposit Mastercharge, and VISA charge slips into his account and receive instantaneous credit in the face amount of the slips. D opened a checking account in the name of JDS and began depositing charge slips into the account. Between November 19, and December 7, 1981, D deposited approximately $274,000. Between November 20, 1981, and December 11, 1981, D withdrew approximately $250,000. Security at P did not like what they saw. They telephoned several of the persons whose names appeared on the charge slips and discovered that either they had ordered $5 worth of phonograph records pursuant to a newspaper advertisement or that they had ordered nothing from JDS but, at some time previously, had ordered something from Shepard Electronics, Inc., another business owned by and under the control of D. P learned that D had placed advertisements in the Times and other newspapers of national circulation offering to sell the 'top ten record albums in the country' for $5. Upon receipt of the orders, D altered the $5 orders (charge slips) to read either $50 or $250. From June through December 18, 1981, D employed McCormick as a secretary. McCormick is the person who actually made the deposits into the JDS account at P and in many instances cashed the checks to make the withdrawals. As per her last instructions, McCormick cashed three checks, each in the amount of $10,000 and put the monies into a filing cabinet in D's home. She last saw it on December 18^th. On the 22^nd Postal Inspectors obtained a search warrant and found $28,440 still in wrappers from D, dated and stamped by tellers who worked for P. P has been damaged, to date, by the fraudulent conduct of D in excess of $210,000.