Digital Double Dip Tried With Wall Street Paychecks
December 11, 2015
Every so often, someone finds a new way to do an old thing. Mind you, that's not necessarily a prescription for success in life because a lot of bad guys put their minds toward finding ways over, under, and around the law but, regardless, it's nice to know that the entrepreneurial spirit is still alive. Consider a recent regulatory settlement involving an enterprising fellow who found a way to cash the same paycheck twice!
Case In Point
For the purpose of proposing a settlement of rule violations
alleged by the Financial Industry Regulatory Authority ("FINRA"),
without admitting or denying the findings, prior to a regulatory hearing, and
without an adjudication of any issue, Thomas J. Hind, Respondent, Respondent
submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which
FINRA accepted. In the Matter of Thomas J. Hind, Respondent (AWC 2015045049101,
November 30, 2015).
Hind was first registered in 2006 and by November 2015 was
associated with FINRA Member Firm MBSC Securities Corp., where he remained
until his April 7, 2015 discharge.
The Ol' Double Dip With A New Digital Twist
As set forth in the AWC:
In January and February 2015, Hind misappropriated funds by depositing three paychecks via a mobile application and also cashing the physical copies of those same checks. Hind previously received paychecks from MBSC via direct deposit to his checking account. In January 2015, Hind notified MBSC that he had closed his checking account and wished to receive physical paychecks going forward. The firm issued Hind physical paychecks on January 16, January 30, and February 27, totaling $5,109.15. For each paycheck, Hind first deposited the check into his checking account via a mobile application on his cellphone and then cashed the same check at a check cashing center. Through this strategy, Hind received double payment from each of the three paychecks. Because each paycheck had already been deposited and paid, the paychecks were returned unpaid to the check cashing centers, resulting in losses to the check cashing centers. FINRA Rule 2010 provides that"[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade." By reason of the conduct described above, Hind misappropriated funds in violation of FINRA Rule 2010.
SIDE BAR: According to online FINRA BrokerCheck records as of December 11, 2015, MBSC "Discharged" Hind on March 9, 2015, based upon allegations that:
MR. HIND MANIPULATED PAYROLL COMPENSATION. THERE WERE TWO SEPARATE INSTANCES OF THIS ACTION. THIS ACTION IS NOT CONSISTENT WITH THE FIRM'S POLICY. IT WAS NOT SECURITIES RELATED.
In accordance with the terms of the AWC, FINRA imposed upon
Hind a Bar in all capacities from associating with any member firm.
Bill Singer's Commentary
Who a thunk it? Hind's employer directly deposited his paycheck into his bank account. Ah yes, how convenient that is. On the other hand, Eureka!, Hind apparently was hit by the realization that there now existed a mobile app that would allow him to take a snapshot of his paycheck and digitally deposit his salary into his bank account. What if . . . yes, our young FINRA respondent may have had ia "what if" moment . . . Hind could get his hands on a physical, hard-copy, old-fashioned, analog paycheck? Hmmmm, if he could take the photo of that check and digitally deposit it into his personal bank account via his cellphone and, quickly, run like a jack-rabbit to one of those check-cashing places and cash that paycheck, well, yeah, maybe, you know, yeah, maybe it would work: the Digitized Double Dip!!!
Alas, not all that bad an idea but, perhaps, Hind could have -- should have -- thought things through a bit more? At some point, his employer would be presented with two demands for payment of the same paycheck. Then, of course, there could be that whole other problem involving that guy who is standing outside your apartment building, the guy with no neck, the guy wearing a long, black raincoat on a hot, sunny August day, the guy that's normally sent to get the Vig you owe and didn't pay on time, the guy who was paid by some guy who knows some guy who knows the guy who owns the check-cashing place?
For now on, when you take a paycheck, just take one dip and end it!