Bank of New York Escapes Liability Due to Court's Application of The Imposter Rule

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On July 14, 2010, Justice Bernard J. Fried granted Bank of New York’s motion to dismiss a complaint alleging conversion in connection with the cashing of false checks. See Tripp & Co., Inc., v. The Bank of New York (Delaware) Inc., N/K/A BNY Mellon Trust of Delaware, N.A., and Citibank South Dakota, N.A., Index No. 114110-2009 (Sup. Ct., NY County July 14, 2010). Tripp is a small brokerage firm that retained the check clearing services of non-party Pershing, LLC (“Pershing”). At Tripp’s request, Pershing issued checks payable to Tripp’s customers and drawn on Pershing’s account maintained by Bank of New York. Tripp’s former employee, Michael Axel (“Axel”) misappropriated $624,244.78 through a series of fraudulent checks between June 2002 and December 2007. Axel accomplished the foregoing by requesting checks from Pershing, forging the payees names, and cashing and depositing the checks into his own personal account at Citibank. Citibank accepted for deposit and made payments on the checks, while Bank of New York accepted and cleared the checks. As a result, Tripp filed an action alleging conversion against Bank of New York and Citibank.

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