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Bank error in man's favor: $110,000

Here's what you're not supposed to do when someone else's money winds up in your account.

By Karen Datko Jun 24, 2011 11:12AM

A Laguna Beach, Calif., man was arrested after he allegedly spent more than half of a $110,000 tax refund that wasn't his but was deposited into his bank account.


Oh, my. Can we learn some personal-finance lessons from this? (Tip o' the hat to Washington Post PF columnist Michelle Singletary for alerting her many readers, including us, about this teachable moment.)


Technically it wasn't the bank's mistake. The 67-year-old Los Angeles woman who was owed the refund in 2010 gave the IRS a number for a bank account she had closed in 2004. That account was later assigned to Stephen Reginald McDow, 34, authorities said. The Orange County Register tells the rest of the story:

The error was discovered months later and McDow was asked to return the money to the rightful owner. Prosecutors say he wrote to the victim's attorney in March saying he had spent most of it.

Prosecutors said he used about $60,000 to pay student and car loans and to save a house he owns from foreclosure.

Some news accounts said McDow offered to make monthly payments, but the woman wasn't satisfied with his plan and filed a police report.


McDow now faces a felony charge of theft of lost property and up to four years in prison if convicted. What can we learn from this?

  • You have to pay close attention to detail, particularly when large sums of money are involved. The woman electronically filed her 2009 tax return in August 2010, but even with an apparent extension didn't take the time to verify the account information. Make sure you give the IRS correct and current account and routing numbers for direct deposit of your refund.
  • You've got to follow up.According to Accounting Today, the woman asked her accountant to check on the status of the refund in December. The IRS provides a website for taxpayers to monitor the status of their refund. Use it. (It's unclear how much that would have helped in this case, as prosecutors allege McDow began paying bills with the money a day after it arrived in his account in September.)
  • The IRS doesn't care if you mess up. It's your job to work this out. "The agency says it assumes no responsibility for taxpayer error," Singletary wrote.
  • Apparently the bank didn't either. Citibank apparently didn't notice that the names or other information it was provided with the deposit didn't match. Post continues after video.

No one should assume a mysterious large deposit in one's bank account won't be noticed eventually by someone else. Only in the game of Monopoly is a bank error in your favor yours to keep.


Singletary asked her readers what they would do if this had happened to them. There is no wiggle room, in her opinion:

Me, I wouldn't spend a penny until I had double- and tripled-checked that the money was mine. It's just never worth it to do the wrong thing even if you're in financial straits. It's like when people get more money back from a cashier and never say a word. I believe you will get a payback in kind eventually.

The only positive lesson here is that a windfall can be put to great use by paying off debt, rather than blowing it all on frivolous expenditures. Just make sure you've obtained it legally.


More on MSN Money:

Jun 24, 2011 6:20PM
The IRS deposited money in the account that she provided the information the gov didn't make the mistake  (who the hell gets $110,000.00 back from the IRS anyhow?) the bank failed to accurately identify and rectify the name and number of the account, and the guy probably had one of those blah blah blah e-mails that said if you pass this on to so many people, you will receive a financial windfall...he did and he did...bottom line?  Did he sign anything with the bank that said "If money appears in your account that you know is not yours, you are obligated to inform the bank and not to use it"?  The woman should be going after the bank...and kicking her own behind for her own's not like he took it from anyone...he "accepted" it....
Jun 24, 2011 5:21PM
Who gets a $110,000 refund anyway???
Jun 25, 2011 1:04AM

I think something everyone is over looking but is not at all relevant to the article...




Jun 24, 2011 9:43PM

Ok here's my two cents (wish it was 110k but hey). This guy offered to repay her, she just didn't like his terms. Some of you want him crucified. Sure he should have questioned the deposit. By the same token her and her accountant should have checked their numbers, isn't that why you have accountants? numbers? But this woman is ruining this mans life because she loves money more than fairness. Like I said he should have questioned it but again HE OFFERED RESTITUTION. So to say he should swing (which is what some of you are implying) It seems like you only read the parts that you wanted.

I don't give a damn if you give me the big thumbs down or not. He's obviously a college grad. He repaid student loans and saved his house from foreclosure. If she's a business owner, I'd hate to work for her. This whole thing is because she didn't "like his terms of repayment" Such B.S. Thumbs down This woman is a wench.

Jun 24, 2011 5:37PM

Here's a lesson for everyone with a grudge.  If you don't like someone, just go deposit some money in their bank account for them THEN TURN THEM IN FOR THEFT!  Seriously?  How do you even begin to approach the police with that one "Excuse me office, I deposited some money in this mans account, now he won't give it back all at once.....arrest him!


From a legal standpoint, I don't think he did anything wrong.  Maybe the bank or the lady, but not him.  From a moral standpoint......dudes goin to hell. 


This should be handled in civil court, certainly not with criminal proceedings.

Jun 24, 2011 5:13PM
So what was illegal about this?  The money was deposited into the correct account that was given.  Seems to me the fault belongs to the woman who can't write her own account number correctly. I think the guy ought to be allowed to keep the money -- and the "lesson learned" should be that people need to make sure they write the correct info on their tax forms.  Besides, anyone who can GET A $100K TAX REFUND can afford to be charitable.
Jun 24, 2011 5:06PM
This guy sounds like he needed the money alot more than the old bag did.  Of course what he did was wrong but I still feel sorry for him. 
Jun 24, 2011 6:07PM

Seriously! Dude was all types of wrong.

I would say...hey citizen get this money out of my account now.

I did not earn it. I did not win it and I damn sure don't want to try to pay this crap back if it does not belong to me!  Sincerely got enough problems!



The women should fire her accountant .

Jun 24, 2011 8:02PM
I just wanna know how to get a $110,000 tax refund. Smile
Jun 24, 2011 7:36PM
@I'm just saying: It wasn't HIS money. It may have been in his account, but it wasn't HIS money. I've been through foreclosure. I know what it's like to lose your house. But, I would not steal somebody else's money, no matter what the circumstances. It makes no difference how much money this lady has or doesn't have, what her annual income is, what she does for a living so that she gets so much back, etc.  That has no relevance on anything.  

I'm sick and tired of people not stepping up and taking responsibility for their own actions whenever they commit a crime.  He knew it wasn't his money, he knew he shouldn't have spent it, yet he did. Therefore, he was WRONG. He didn't make a mistake. He deliberately did this. He spent money that did not rightfully belong to him. That is stealing. That is a crime. 

If  Sears shows up at my house one day with a new refrigerator that I didn't buy and puts it in my kitchen, that doesn't mean it's mine.     

For those of you saying he shouldn't have to pay it back or that he wasn't wrong or that he should just be allowed to make payments and not be punished: if it was YOUR money, would you just let him have it? Would you feel that way if it was your mom's or your grandma's money??  I seriously doubt it. 
Jun 24, 2011 7:14PM

I think many people are not looking at the bigger picture. Yes the lady accidently gave the wrong bank account number and in return HER money was deposited into this mans account. Everyone makes mistakes no matter what and one number can throw everything completely off. But this used to be one of her old accounts and unfortunately the bank reused this account number and assigned it to someone else (which is stupid to be honest).  We shouldnt be saying that the lady shouldnt get her money back because she made a mistake by giving the wrong number. In the end its her money and who really cares what she is doing to get 110,000.00 refund its none of our business. The man should have known that if 110,000 just shows up in you account to call your bank and see whats going on. You just dont go spending 60,000 paying off bills nothing. He knew he was wrong. Money in that large amount just doesnt come out of no where. and while yes he did offer to pay her back to be honest if it says he had to pay bills and his house is in foreclosuer...what really makes you think he was going to be paying a big monthly payment each month to pay back the 60,000 he used. If he said he could only pay a 100.00 a month that would take nearly 50 years to pay it back in full. Even if he said he could pay 500.00 to 1000.00 a year that would still take 5 to 10 years to pay off.


I dont see why everyone says she is going to ruin his life, make him lose his home, etc....Apparently his life was already bad to begin with before he even got the money he already spent 60,000 to get him out of debt. I just think if the shoe was on the other would be pissed if YOUR money no matter how much it was it could be 1000.00, 5000.00 or even 1 million was put into another account, you would be upset that someone spent it knowing it was not theirs.


Yes it was her fault for not double checking but again mistakes do happen. But in the end its not like she freely gave him money and is now taking it back...its hers and belongs to her no matter how much money she makes or has without that tax refund.

Jun 24, 2011 6:16PM
The problem here is no one in this situation wants to take responsibility for their mistake(s).  Our society rewards whiners and penalizes those who would tell the truth.  Shame on the system!
Jun 24, 2011 6:08PM
Why does the headline read "Bank error in man's favor"? He has to pay the money back and everything he did pay off will now go into default so nothing is in his "favor".
Jun 24, 2011 6:31PM
This is just careless. The woman is at fault, the entire thing was sloppy. She provided a false account number. Bottom line. If I was expecting 100,000 back from the government(unheard of!!), you better believe I'm checking the numbers  3 and 4 times for accuracy. The guy who inadvertently received this money failed a moral test. But I don't think he should be in prison either.
Jun 24, 2011 6:40PM
How can she file a theft report if he did not steal it. It was her mistake of putting it in his account. What happened to possession is 9/10ths of the law. In my opinion it was her mistake and she has no right to charge the guy with anything. I think she is a greedy old woman who should count her blessings that he was willing to return some of the money. I say it was her mistake and not his. She should pay the price not him.
Jun 24, 2011 7:38PM
There are lots of posts from people that would use the ill-gained money on themselves. That kind selfishness and lack of morals shows the true character of these dishonest individuals. There is no excuse for such dishonesty and not attempting to find out why you've come across such a large and unexpected windfall is criminal. Ignorance is no defense, it's just stupidity.
Jun 24, 2011 5:06PM
Granted it was a mistake she should have understood that even if he did spend it all and he couldn't pay it back she she have taken the payment arrangements at least towards the end he was trying to right a wrong... besides people in these times need to be more understanding and kindness in these times. But money makes people do crazy things i guess.
Jun 24, 2011 11:19PM
The old bittie closed this account in 2004 and was getting a $100,000 refund transferred into this account.  Then, she did not discover it until months later.  In my opinion, she is way too stupid to have this kind of money, the young man made good use of it.  And, he offered to pay it back, give him a break.  If the bank and to old hag had not made a mistake, he would not have gotten the money in his account.  He ought to sue them for fraudently using his account to transfer funds and fine them in the amount of the $60,000 he spent.
Jun 24, 2011 6:11PM
Seriously, you ask him to pay the money back and he agrees; but he says he has to make monthly payments. I think they are taking this way to seriously in prosecuting him. If you put him in Jail, your going to get nothing. 
Jun 24, 2011 6:04PM

Any time Citibank is involved, people's lives are going to get ruined.  It's a basic process to confirm that the name on the check matches the name on the account.  If it doesn't, the deposit cannot happen.  Period.  This is especially the case with deposits this large.


Every bank teller with a high school degree knows this.  But somehow Citi's IT system for processing deposits doesn't do this comparison?  It's criminal negligence.


Clearly he shouldn't have spent the money, but now the guy's life is ruined.  All would have been prevented if a multi-billion dollar company knew how to do a basic comparison.

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