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Mail Fraud - Check Washing
posted on 10/22/23

Your parents or grandparents will tell you that checks used to take a while to clear through bank accounts. 

As early as the 1950s, Americans were negotiating in excess of 28 million checks every day, and those checks were processed by hand. A check written and presented to a merchant on a Friday might not clear the bank customer’s account until days later. Therefore, the bank account holder had a few days to come up with the money to back the check when it was presented for clearance.

Check Kiting

Because of this antiquated system, a practice that became known as check-kiting began and gained in popularity. Check-kiting entailed writing a check from one bank account and depositing it in another bank account. Then, a check would be written from the second bank account and a few days later deposited into the first bank account. This kind of circular check kiting could–if done correctly–rapidly and significantly create false checking account balances that a skilled check kiter might later drain.

Sometimes, consumers would write a bad check to buy a major appliance a few days before payday and then rush to the bank with the payday funds to cover the transaction. A restaurant owner might write a check from his account at one bank to an account at a second bank and use the weekend’s sales to cover the transaction.

No More

All of the above indiscretions could work because checks were cleared slowly. As computers took over check processing, however, float times were minimalized, and check-kiting was no longer a feasible thing to do.

Check Washing

During the COVID-19 pandemic, people everywhere were suffering great financial losses. As a result, several stories of check washing arose. Envelopes from mailboxes that looked like they contained checks would be taken. Using readily available chemicals, ink on the checks could be erased, and the check’s rewritten. This would then make the check-washer the new payee. Many times, the check amount was increased from the original amount that it was written for. Then, a check could be taken to a currency exchange or deposited into an ATM.

For an example of how check-washing works, a Chicago Southwest Side resident recently mailed a $30 check. The check was intercepted, the name of the payee was changed, and the amount of the check was raised. Three days after the check was mailed, the resident went online and saw that the check had cleared with a different payee and for the inflated amount.

The resident notified her bank, and the financial institution claimed it would take months to rectify the situation. However, after being contacted by a local news organization, the bank quickly settled the issue.

Common Occurrence

Check-washing is such a common occurrence that someone placed a sign outside of the Harwood Heights Post Office stating that postal customers should not put checks in mailboxes. The sign suggested that mail should be taken to the post office facility to help avoid theft.

If You Have a Problem

Sometimes, cash-strapped consumers try to bend the law, and they end up with legal difficulties. If you have been charged with a financial crime, it is imperative to speak with a qualified attorney before you do anything. If you need representation for a criminal charge in Cook County, Glasgow & Olsson is uniquely qualified to help. When you need an attorney experience matters, contact us today to learn how our experience can get you the results you deserve.