Stolen Check Accepted By A Currency Exchange But Blocked By The Bank. Exchange Is Now Claiming My Organization Is Liable
Location: Chicago, IL
I am the treasurer of a small 501(c)(3) non-profit in Chicago. A few weeks ago a new book of checks I ordered for our organization was stolen from our mailbox. A police report was promptly filed, the bank was notified and our account was frozen while our balance was moved to a new checking account.
The process took about a week, and during that time a forged check was accepted by a local currency exchange, only to be subsequently blocked by the bank. It was for a relatively small amount - $235. It was signed using a name that is clearly not that of an authorized signer on our account.
The currency exchange has now sent us a notarized affidavit claiming that under Illinois Law 810 ILCS 5/3-302 they qualify as a Holder in Due Course, and as the check had “no irregularities or notice of dishonor” we are now liable to honor the check and pay them the $235.
I intend to inform the bank and share this new information with the police tomorrow morning, but is the currency exchange right? Are we liable because they didn’t know the check was stolen and forged?
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