Questions about how un-endorsed third-party cheques and cheques signed by someone without signing authority cleared a Burnaby school’s bank account for two years were raised at a fraud trial in B.C. Provincial Court last week.
Former Alpha Secondary School bookkeeper Jodi Fingarsen is on trial for bilking the school of about $67,000 by fraudulently depositing school cheques into her personal bank account at President’s Choice (PC) Financial.
After she was suspended by the school district in April 2010, district investigators got online access to the school’s bank account at Vancouver City Savings Credit Union (Vancity) and discovered electronic copies of 78 cheques with Fingarsen’s personal account number stamped on the back.
All had been deposited at automated teller machines (ATMs).
“Whoever deposits the cheque, their information is automatically stamped by the bank on the back of the cheque, so the only way the information could have been put on the back of the cheque is if she deposited it into her account,” former school district financial services manager Patricia Bisset told the court.
Most of the cheques had been made out either to businesses owed money by the school for goods and services or to individuals connected to the school seeking reimbursement for school-related out-of-pocket expenses.
Defence lawyer John Banks argued it was an assumption to say Fingarsen had deposited the cheques into her account, since the deposits were all made at ATMs and neither Bisset nor any other school official to testify so far has ever seen a photo or video of the former bookkeeper making the deposits.
One fact that hasn’t been disputed in court, however, is that the cheques deposited into Fingarsen account – the same account the district used to pay her salary – all cleared the school’s Vancity account.
Former vice-principal Sandi Lauzon, who worked as a bank teller for 10 years before starting her teaching career, said she didn’t expect cheques she signed to pay bus companies and reimburse staff members would be deposited into Fingarsen’s personal account as third-party cheques.
“I would have thought, having worked at a bank, that you can’t actually do that,” she said.
But a third-party cheque can be deposited through an ATM whether or not it has the proper endorsement from the payee on the back, confirmed Craig Woodward, area manager for PC Financial – Fingarsen’s bank.
Woodward couldn’t say if there was any process at his financial institution to look at third-party cheques deposited at ATMs to make sure they’ve been properly endorsed before they’re processed.
“I wouldn’t be privy to that. I’m sure there is some process…,” Woodward told the court.
Not long after Fingarsen was suspended, a CBC investigation into another case of third-party cheques fraudulently deposited at ATMs in Maple Ridge in 2011 revealed staff at Vancity routinely did not verify or even look at payee names, signatures or endorsements on ATM-deposited cheques before sending them to central clearing centres, where the amounts are transferred between banks electronically.
A Vancity account manager at the time said that was standard practice at Canadian banks because of the sheer volume of cheques deposited through ATMs.
That clearly appeared to be the case with Alpha’s cheques.
After Fingarsen was suspended, the school learned former vice-principal Dianne Carr had been signing cheques for a year without having proper signing authority at the bank.
Last week, Fingarsen’s lawyer questioned how that could have happened if school and bank officials were doing their jobs.
But Carr, Lauzon, former principal Ron Hall and former office manager Maria Jensen all testified Carr had signed the school’s Vancity business account signature form so she could be added as a signatory, only she had done it in the school office – on Fingarsen’s recommendation – instead of at the bank branch.
School officials said they later learned the new signature page had never been added to the account.
But that didn’t stop cheques signed by Carr from clearing the school’s account.
“To put it in a general sense, Vancity is not taking any responsibility for the cheques going through someone’s account, whether they’re the wrong signatures or whatever; that’s the responsibility of the account holder,” Banks said to Vancity loss prevention manager Sascha Santos.
“That is correct,” she said.
That was news to Hall when it was revealed in 2010 that Carr had not actually been a signing authority.
“I assumed, if she was not a signing officer, that the bank would have contacted us and said, ‘You have someone signing your cheques that is not a signing officer,’” Hall said.
But Santos said the bank’s cardholder agreement states account holders are responsible for reviewing their statements every 30 days and for reporting any inconsistencies to the bank.
Hall, however, told the court he had been hamstrung because he said Fingarsen did not provide him with bank statements regularly and, when she did, she didn’t include copies of cleared cheques.
Banks suggested Hall could easily have gotten access to Alpha’s online account and simply clicked on debit entries to see electronic copies of cleared cheques.
“My job does not entail that,” Hall said. “The bookkeeper is managing that. ... I’ll be honest, with the duties of a principal – I listed maybe six or seven of them at the beginning; that’s six or seven of probably 50 or 60 – you have to rely on the people that you work with to be managing the work properly. There are checks and balances that’ll only go so far.”
Fingarsen’s trial continues Nov. 16, 17 and 18.
