Schwab Sues Former Client After Accidental Transfer of $1.2 Million (reuters.com) 198
An anonymous reader writes: Charles Schwab is suing one of its former customers after the retail brokerage allegedly sent more than $1.2 million to an account of the Louisiana woman and then could not get the money back. Schwab meant to send $82.56 to Kelyn Spadoni's Fidelity Brokerage Services account in February, but a computer glitch caused it to erroneously transfer more than $1.2 million, according to the lawsuit. Schwab tried to get the money back, but repeated calls and texts to Spadoni, who lives in a suburb of New Orleans, were not returned, the brokerage said in the lawsuit. "We are fully cooperating with authorities in an effort to resolve this issue," Schwab said in a statement on Tuesday. Fidelity declined comment. After receiving the money in her account, Spadoni transferred a quarter of the money to another account, after which she bought a house and a car using the funds, Jefferson Parish Sheriff's Office spokesman Captain Jason Rivarde said in an interview on Tuesday. "Obviously you are not planning to give the money back if you spent it," he said. When Spadoni signed up with Schwab in January, the agreement she signed included a section that said any overpayment of funds must be returned, said the lawsuit, filed March 30.
People are so stupid... (Score:2)
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You would leave the country as a fugitive over 1.2 million? Cutting off 2/3 of the world?
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Re: People are so friendly... (Score:3)
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You give back he principal and keep the earnings.
Sure, it's a gamble, but might be worth it....
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That's a different plan. Risking everything for the appreciation of $1.2 million in bitcoin depends a lot on a) the interest/fees/fines on top of the 1.2 million you have to pay, b) any criminal charges if you fail to repay (or if you follow through on your plan) and c) how dischargable the debt is in bankruptcy if the investment goes south and how many assets you have. It seems similar to the people who took their hugely over leveraged RobinHood accounts and bet those millions.
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Depends I suspect for most of us relatively affluent people who are able to post on slashdot during the day. The answer is no; while 1.2M is a heck of lot of money to us - its not enough to sustain us in our present life style cut off forever from the places we are most able to market our skills.
On the other hand if you are 60 something, nearly penniless without a lot of career prospects - I can totally see 1.2M being a reason to fly the coup. After all in many of those extradition free places you could g
Re: People are so stupid... (Score:2)
By my calculations, 1.2 million would last me at least 30 years. Not bad. I have no idea what everyone else is spending money on around here (Houses? multiple cars? Kids, I guess?). Of course, if I had to flee to a country that wouldn't extradite me back to the US, I might be able to stretch it further.
Personally, I would have returned the money. No company will make a mistake like that and just forget about it.
Re: People are so stupid... (Score:2)
Although, due to inflation, I doubt I would get 30 years out of it.
People are so greedy... (Score:2)
When the space shuttle blew up, some were collecting the pieces.
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when you pay for the damage to my property you can have it back.
Re:People are so stupid... (Score:4)
Leaving a stable Western nation over $1.2M is not a good idea. Assuming you make $80k a year, you're good for $2.8M in your career lifetime not accounting for inflation and career advancement. Bitcoin (recent trends notwithstanding) is also not a good idea (too volatile), although totally understand what you were getting at.
$1.2M makes $36k in interest over the course of a year at 3%, and you can probably do better than that. Given that you know for certain that they are going to come after you for the money, you put it all in GICs or something. When you have to pay it back (after the lawsuit), the judge is unlikely to make you pay back the interest given that it was their mistake, and you didn't do anything nefarious with the money.
"I was scared and didn't know what to do. I told my banker to invest it until I understood why I had it and who it belonged to."
You get $36k for free. Assuming you can drag the lawsuit out for a year...
Anyway, it'll be rich if / when the IRS looks at her taxes / audited her. It was always going to end badly no matter what.
Re:People are so stupid... (Score:4, Insightful)
Leaving a stable Western nation over $1.2M is not a good idea. Assuming you make $80k a year, you're good for $2.8M in your career lifetime not accounting for inflation and career advancement.
That may depend on which country you flee into, costs-of-living-wise.
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You might be able to live cheap on $20-30/year in Thailand (and quite comfortably on $60-70k), but you had better find a good way to avoid detection there. While I am no expert in disappearing, I would guess you need about $500k to get a valid passport in a different name for a developed nation and another $100k to shake easy tracing.
Without a valid passport in another name you would have a huge struggle to last more than a year or two on the run.
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In many parts of SE Asia you could live like a king on $25K/year. And I do mean like a king- large home, excellent food, adequate medical care (Vietnam and Thailand have world-class healthcare available).
Yes, there are tradeoffs, but if you do a little planning and choose carefully you can be set for life at a fraction of the cost of nearly any "Western" nation. And to be frank, there are tradeoffs living in the West too.
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and then you pay $72k to your lawyer.
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Is keeping money the bank sent you a crime in the US? If it's just a civil matter can you be extradited?
Just take your million and get one of those 1 euro houses in Italy. Some basic precautions and you could make yourself awfully difficult to find too.
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Yes, its theft. And Italy would extradite. I do believe there's a time limit the bank has to realize and correct the mistake after which its yours, but that period is months not days/weeks.
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It's possible that the banks have gotten the laws changed, but it definitely used to be the case that if the bank made an error in your favor, they had a deadline to correct the issue or the money was yours. Of course, you had to withdraw the money as soon as you could after the deadline, or they would just pull it out of your account and then you would have to sue them for it. For that matter, other banks might cooperate with them to pull the money out of your account if you deposited it elsewhere and then
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When you sign up for their service, you sign a contract and it has lots of get-out-of-jail-free clauses in it for Schwab, including something that says "if we screw up and give you money we didn't intend to, you have to give it back". And that's the point they're suing under.
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Lawsuits are civil.
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What's your point? If you are referring his get-out-of-jail-free comment, that's a common saying, and not intended to be taken literally.
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The government does the same thing. Don't even need a contract saying so. Burdens on the person.
Re: People are so stupid... (Score:3)
To answer your questions, yes and no. It is a crime to keep money that's not yours even if you didn't technically steal it. It's called conversion and it's a type of theft. Since it's a serious crime, that is, a felony, other countries can and will extradite you for it.
It's also a civil tort and Schwab can sue them over it and has done so. Schwab has two theories they can sue under. One is the tort of conversion and the other is breech of contract. She couldn't be extradited civilly, but she could be tried
Re: People are so stupid... (Score:2)
Re: People are so stupid... (Score:5, Insightful)
I'd give the money back because it's not mine.
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That was my thought too- why not just be honest?
I know that'll offend or confound a lot of people, but really- the money isn't hers and she knows it.
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Interesting. Lefty?
I ask because you just admitted that, given the right circumstances, you're both a thief and a liar
You forgot were talking about stealing an amount over a million. That tends to be the domain of the right, not left.
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Interesting. Lefty?
Why does it matter which of her hands is dominant? lol
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Or you put it all on red in the casino. 18/38 chances that you win. You then have 2.4 million (of which 1.2 will likely have to be paid back).
If you loose, you just declare bankruptcy, if they successfully get a court to order you to give the money back.
Sounds like the best plan for most random people with close to 0 net worth, and who doesn't want to live in a 3rd world country for the rest of their life.
Re: People are so stupid... (Score:2)
Right after you win at the casino, you settle out of court for 1.2 million. Which the bank will be happy to accept and avoid a trial.
Re:People are so stupid... (Score:5, Interesting)
It saddens me that even the people who are saying "this is not a good idea" are only talking about possible consequences rather than "it's not your money so you should return it".
If you made that sort of mistake, wouldn't you want the other party to give it back?
To quote George Costanza, "we're living in a society here!" (yeah, I know - George would have kept the money)
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It saddens me that even the people who are saying "this is not a good idea" are only talking about possible consequences rather than "it's not your money so you should return it".
That's a fair point, but there is a reason that laws exist (or existed at least, not sure of the current state of them) making money from bank errors in your favor yours if the bank didn't correct the error soon enough. That reason is that banks and other financial institutions should not be making these kinds of mistakes. If they're making mistakes in your favor, they're making other mistakes too, and it just should not be happening. So that's one of those little things that puts a little bit of skin in th
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actually.
if someone gives you money.
it is yours.
corporations are people to
make it an criminal case and then source code may (Score:2)
make it an criminal case and then source code and logs may need to be given out. But in an non criminal case then they can use an EULA to get out of it.
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This is a civil case (private entities, not the DOJ or District/General Attorneys offices), so nothing pertaining to "criminality" applies here.
That said, this boils down to tort (contract) law. If the defendant indeed violated the terms of their agreement, then they may face fines; if they fault on their repayment obligations (should they be found liable, perhaps even with prejudice), then the criminal case may be opened (assumedly for fraud or money laundering or whatever).
PS: I'm not a law
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and if say they lose the (contract) law case on some EULA BS with out being able to get to the real issues (if they even get to an real court room and not arbitration)
It can be an bad thing as any one can win an arbitration case with big fees that if you can't pay then you go to jail over EULA stuff that may not stand up in an real court?
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Re:make it an criminal case and then source code m (Score:5, Informative)
It is the usual slashdot poor summary, from the article:
Schwab filed a complaint on April 6, said Rivarde. Spadoni was arrested on April 7 and charged with bank fraud, illegal transmission of monetary funds and theft greater than $25,000. She was released from jail on April 8 after posting a $150,000 bond, Rivarde said.
So yes, she probably ends with absolutely nothing.
So the civil case is just to add on to the criminal mess.
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So yes, she probably ends with absolutely nothing.
Oh, she'll get a free place to live and 3 meals a day out of it for the next ten years or so.
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Schwab is suing her in civil court, yes, but law enforcement has gotten involved on the criminal side. From TFA:
Torts and crimes have different elements in a legal sense, but this kind of action can give rise to both civil and criminal liability.
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And if $BIGCORP (through a "computer error", of course), bills me for $1.2MM when it should be $86.52, does somebody at $BIGCORP get arrested?
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Why would they? Were you stupid enough to pay it? If so, that is on you.
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No. If $BIGCORP sucks $1.2M from your account when they should not, or you accidentally transfer it to them, and then $BIGCORP refuses to return that money, we could start figuring out who might have criminal liability. It would probably depend on who refused to return the money and why.
This case [bankingdive.com] is somewhat similar -- but note that in the Citibank/Revlon case, the people who got the money were actually owed the exact amounts transferred, the screw-up was by the sending bank, and that bank rather than the
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What logs or source code do you think are relevant here? Her bank account got $1.2M that was sent in error. She had no good-faith reason to think it was supposed to be her money. She moved it and converted it to other forms of property. Those are the facts that are relevant to the criminal case.
The relevant difference from breathalyzers are that the breathalyzer's output is direct evidence of an element of the crime -- specifically, blood alcohol content. The design of the breathalyzer, including sourc
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the code the moved the funds
the code that handles accounts
the code that does auto trades
and so on.
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That's not how this works. That's not how any of this works.
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And in case your reading comprehension isn't up to task, the civil component is SEPARATE than the criminal component. I hadn't researched this particular story with any depth (so sue me?!) but my response was specifically to the idea of disclosing money-transfer source code -- which is not related to the financial crim
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The Citibank case did not pertain to the 'same subject matters'. In the Citibank case, the entity receiving the funds was actually owed that money (it was a loan repayment). The receiver had no reason to believe that the transfer was in error or that the money was not theirs.
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In both cases, there are legitimate transfers but incorrect amounts; the senders seek to recoup overpayments; the receivers aren't so forthcoming to cooperate; the senders employ the legal system to oblige cooperation.
The only difference is that the Citibank case "defendant" was another financial institution, whilst the Schwab case it's a
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The only difference is that the Citibank case "defendant" was another financial institution, whilst the Schwab case it's a private citizen.
Only if you ignore most of the Citibank case...
The Citibank case has nothing to do with this situation, because of the contracts, debt and local laws that existed. No contract or debt exists in this case which would allow the recipient to keep the money - this quote from a news article about the Citibank case explains why in quite simple terms: "New York law has exceptions to [the normal rule regarding accidental money transfers], known as the 'discharge-for-value-defense.' If the beneficiary is entitled
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OBVIOUSLY the Citibank context is different (that was creditor debt repayment) but the matters of claw-backs is *similar.* The gist is that when monies are sent from Party A to Party B, there's some form of "good faith" cooperation and trust between the parties that the matter
Re: make it an criminal case and then source code (Score:2)
Er, what?
There is no legitimate transfer of $1.2m here. The transfer was in error and also not even âoepossibly legitimateâ. The receiver did not have good reason to think the transfer was not in error.
In the Citibank case, the receiver had a good reason to believe the transfer was legitimate because it exactly matches what they were owed.
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Schwab meant to send $82.56 to Kelyn Spadoni's Fidelity Brokerage Services account in February, but a computer glitch caused it to erroneously transfer more than $1.2 million.
And in the Citibank case, the recipient was not expecting a complete debt repayment. But it happened. Citibank still went to court to seek a claw-back of a substantial amount.
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. If you sent it somewhere and someone stole it because it ended up in the wrong place, it is still theft.
That's an interesting point. Interesting mainly because it may be wrong. There are laws on unsolicited merchandise that make it so that products sent to you unsolicited are yours. The sender can't demand it back or charge you money for it, and it's not theft to keep it. Now, the purpose of those laws is to avoid commercial scams where vendors send you things you did not order and charge you. Of course, ebay and the like are a thing. Everyone is a potential vendor. Someone might have a hard time proving that
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Community Chest (Score:5, Funny)
We were, all of us, deceived.
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Mistakes would happen less if those who made them have to live with the consequences.
However because Schwab, has the law on their side to get the money back, they are not so much interested on how such a mistake can happen and how to fix it. As the cost of the mistake for them is a lot cheaper, than what it could be, if the Finder Keepers Law was in place.
The problem isn't that the law about fixing mistaken transactions isn't a fair law. Because if you had sent the bank 200 and it didn't go into your acco
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Yes I am sure they had no internal investigation of how they lost $1.2 million and how to stop it from happening again.
Theft by conversion (Score:2)
This count?
If she had put it all in bitcoin (Score:5, Interesting)
What would have happened if she put it all in Bitcoin?
Bitcoin has gone up a ton since January. Could she have paid it back and kept the gains?
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Probably she'd be fine paying back the initial amount, possibly plus a modest facesaving interest rate.
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If she stole the money I think she has to give it back including any gains, but if given it, then it's defined in the agreement.
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Probably not, as tracing of profits is considered an equitable remedy and there's also something about disgorgement of ill gotten gains.
If she made a profit on it the bank would probably get to keep it.
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And I'm sure she is Smart enough to put it into bitcoin without loosing it all....
Going To Be Posterchild for Stupidity (Score:2)
chapter 11 or 7 keep home and car (Score:2)
chapter 11 or 7 may let you keep home and car. Even more so if no mortgage on theme.
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She bought them with money that wasn't hers. That is fraud. Bankrupcy court is not going to say 'that's OK, you can keep them'.
when the slot machine gives you to much in error t (Score:2)
when the slot machine gives you to much in error they get to say say you did not win. But in this case they Moved the cash into YOUR ACCOUNT. And the stock market is like an slot machine.
Just think if some Casino did this. Say you did not really win and we need to give back the money we put into your account.
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You don't have a contract with the casino.
online casino / sports book may but then state law (Score:2)
online casino / sports book may but then state laws governing them may help you.
But let's say you used an offshore bookie they hunt you down to get it back if they can't from the bank.
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She won't. If the house had been in the family for generations there might be some allowance to let her keep it. But since the house was bought recently it will be considered major asset and be seized and sold to cover her debit. Further more, since it was bought with arguably stolen money the house might not even be considered hers.
Take what I'm saying here with more than a grain, maybe a truckload, of salt. I'm basing it on my own Chapter 11 filing back in '98. The laws have changed since then an
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What bws111 said. Probably seized as proceeds of a crime.
"Computer glitch" (Score:2)
It was a computer glitch, boss, you gotta believe me!
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Man, that movie must've been cursed, look what happened to the three leads.
Gift cards (Score:5, Funny)
Are they asking her to return it on gift cards?
That's how these scams usually work.
crime (Score:2)
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What else can they do? The DA, however, can bring criminal charges, and they are.
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f someone hands you $20 on the street, then the next day they run up and say "my mistake, I need that back!" Is the $20 yours or not. The only reason Schwab can sue (because it's not a criminal case) is because there was an agreement signed that overpayments would be returned. Probably in fine print. Without that agreement, Schwab wouldn't have a case.
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If you RTFA, there's also a criminal case. The new thing is Schwab just filed a lawsuit.
If someone hands you $20 on the street out of the blue, it's reasonable to assume it's a gift. It would also be very strange to not ask "What's this for?" when they give you the money.
But this isn't that kind of situation. She knows she's supposed to be getting about $80, and got way more.
If someone owes you $5 and says "I'm paying you back" and gives you $20,000, it's reasonable to assume there has been an error, and
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If you RTFA, she's already been arrested and charged with several crimes. The new thing is Schwab filed a lawsuit too.
Did the money come from anywhere? (Score:2)
Here's my question: they say a computer glitch caused them to transfer $1.2M rather than $80 something. Probably a cosmic-ray induced bit-flip or some similar random, uncontrollable event. So, in these banking codes, is the transfer of money in some way guaranteed to be atomic? I.e., is there some guarantee that money is deducted from one account and deposited to another instantly, and that it is the same amount? Or is it possible they deducted $82.56 from their account, then deposited $1.2M in her accou
Serious Charges (Score:5, Informative)
From TFA: "Spadoni was arrested on April 7 and charged with bank fraud, illegal transmission of monetary funds and theft greater than $25,000. She was released from jail on April 8 after posting a $150,000 bond."
Those are some serious charges and a fairly significant bond amount. According to Louisiana law, it looks like she could be facing up to 10 yrs and/or up to $100k fine. That's the penalty for each of bank fraud[1], illegal transmission of monetary funds [2], and theft greater than $25k [3] (fine up to $3k). She'll very likely end up in a plea deal to avoid jail time (at least some portion), but wow was that a shortsighted move on her part.
[1] https://law.justia.com/codes/l... [justia.com]
[2] https://law.justia.com/codes/l... [justia.com]
[3] https://law.justia.com/codes/l... [justia.com]
If she had been smart, she'd have gone into BTC (Score:2)
Buy it 5 days ago at $59k/coin and sell it for $64k/coin the day Coinbase IPO'd. She'd have made a profit of $100k and have the funds to pay it back.
Nigerian Prince (Score:2)
Waiting for her to produce email from the Nigerian Prince that promised her the money. Anyone would be confused, right?
BITCOIN (Score:2)
So we're stuck with arbitration but they can sue? (Score:2)
We already knew things were far out of balance but this is a pretty clear example.
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I wouldn't wager on her skating without some criminal conviction. She'll be very lucky if she doesn't have to check that "convicted of a felony" checkbox on her next job application.
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This is slashdot. You know they'll overcharge so they can threaten with decades in jail to get an easy plea so the prosecuter can get another win notch on his belt.
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Maybe she got advice from a relative in the UK. I seem to remember their laws are exactly backwards. If you continue to live and spend as you would have before, you must return the money. If you did something with the money completely out of character, like immediately buy a new house, then they can't take the money back.
At least that's what my old addled brain remembers from the last time we discussed something like this.
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I think you are wrong about that.
In the UK, you can only keep the money if, I think, you spend the money without realizing that there was an error. I don't think that applies here.
But, what do I know, just another anonymous person on the Internet pontificating about the law.
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Sort of, but you've also got it backwards. If you were unaware that the money was in your account, and you spent an amount that would have otherwise put you into overdraft, then you would only be on the hook for the remaining positive balance.
You'd be left with zero balance, instead of a negative balance.
However if they can show that you were aware of the landfall, and your out-of-character spending demonstrated that you spent the money in bad faith, then you would be on the hook for everything.
IANAL, etc,
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Losing the house is the least of her worries. She's going to end up in prison.
Spadoni was arrested on April 7 and charged with bank fraud, illegal transmission of monetary funds and theft greater than $25,000.
The rest of the article was a stupid piece comparing this particular mistake to Citigroup's mistaken repayment of millions to some Revlon lenders. Citigroup had worked out a deal with Revlon and some of Revlon's creditors that would allow Revlon to get another cash infusion and put the bankers not in on the new deal in a second class debt situation with their loans (basically the new loan was guaranteed to get paid first in case
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some mumble jumble boilerplate fine print? hah. The criminal was the moron at schwab that gave away a million, someone messed up big time. Take the money out his his salary for the next 20+ years. These large corporations screw over little people all the time, it's high time they took some hits.