Tax refund lost for three years

April 20, 2011 7:00:35 PM PDT
If you're expecting a tax refund, here's a word of caution for you -- be careful how you deposit that check. For one man, it took three years to get his money from the IRS. He finally got it after 7 On Your Side stepped in.

Nathaniel Carter had two tax refund checks, but no bank account. So his friend, Clovia Bailey, tried to help by cashing the checks at her bank. Little did they know the money would disappear for three long years.

"I really couldn't get anyone at this particular branch where this transaction happened to give me an answer about where the money was. I kept running into dead ends," said Carter.

"And I was so stressed out because this man, where is his money?" said Bailey.

It all began in 2008 when Bailey deposited the checks totaling $1,118 into the ATM machine at her bank -- the former Washington Mutual bank. However, the bank does not accept checks made out to a third party -- like Carter. That's when the money disappeared.

"It was in her account, it was available to her or a short period of time and all of a sudden it was removed from the account," said Carter.

The bank took the money out of Bailey's account and after that the money wound up crisscrossing the country -- twice. The bank sent the money to the U.S. Treasury Department, which returned the funds back to the bank, which sent the money back to the Treasury Department, which again returned the funds to the bank.

"So, it was difficult trying to figure out where the money actually was," said Carter.

While all that was happening, Chase Bank bought Washington Mutual. Bailey moved and her account was closed, and nobody could find Carter's money.

"I told Nate, let's try 7 On Your Side," said Bailey.

We contacted Chase Bank which dug into the matter. They said the Washington Mutual had issued a check to Bailey two years ago, but no one had ever cashed it. So, Chase issued a new check and now, finally, Carter has his tax refund.

"I felt relieved," said Carter.

Chase Bank said: "This was a complicated case involving several third parties, but we're glad that we could resolve the situation to the customer's satisfaction."

"I was about to go crazy and I'm glad he got his money," said Bailey.

"7 On Your Side was really helpful in getting the process started," said Nathaniel.

"Tell Michael Finney thank you!" said Bailey.

This case shows just how important it is to look at a bank's policies before making a deposit. Many banks do not accept written to a third party.

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