Reference - Angry Employee

question 71

Multiple Choice

Reference - Angry employee. Martin is in charge of payroll and other expenses for ABC, Inc. He becomes very angry with his boss Adam because Adam started dating Martin's girlfriend Stacy. Martin decided to quit but not before he got some extra money from ABC, Inc. Martin wrote five checks from the account of ABC, Inc. to pay off the five credit card companies that Martin owed money. The credit card companies took the checks without reason to be suspicious as to the source of payment. The checks to the credit card companies in total amounted to $30,000, and each check was in an amount under $10,000. Martin also made out ten checks on the account of ABC to twenty alleged employees who did not really exist. Each of these checks was in the amount of $5,000. Martin took the checks, endorsed and cashed the checks in the names of the various fake employees, and kept the cash. Finally, Martin discovers through office gossip that Adam has been looking for another job with XYZ, Inc. located in a neighboring state and that Adam is supposed to go there for an in person interview in a few weeks. Martin sets up an interview with XYZ, Inc. pretends to be Adam, and induces XYZ, Inc. to give him, posing as Adam, a check for $5,000 as a signing bonus. Martin immediately endorses the check pretending to be Adam and pockets the cash. Finally, Martin leaves town heading for the Caribbean. Is ABC, Inc. entitled to a refund from its bank for the checks the bank paid written to fake employees?

• A) Yes, because Martin forged the names of the employees.
• B) Yes, because Martin posed as an imposter in regard to the employees.
• C) Yes, because the bank has a cause of action against Martin and can likely get a default judgment.
• D) No, because of the imposter rule.
• E) No, because of the fictitious-payee rule.

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Definitions:

Profit

The financial gain realized when the revenue generated from business activities exceeds the expenses, taxes, and costs.

Convergence

The movement of the price of a futures contract towards the spot price of the underlying asset as the delivery date approaches.

Futures Contracts

Legal agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Spot Price

The current market price at which a particular asset can be bought or sold for immediate delivery.