Spring 2005-04 Bank practice of honoring overdrafts defeats criminal bad check conviction

Number 59
Spring 2005

Bank practice of honoring overdrafts defeats criminal bad check conviction

In the case of People v. McCloskey, 2005 T.S.P.R. 23, the Supreme Court of Puerto Rico concluded that it is necessary for the prosecutor to prove that the accused had the specific intention of defrauding in order for a crime to be committed, when a check is issued with insufficient funds.

Essential elements

The Court stated that the essential elements for a crime to be committed under Art. 264 of the Puerto Rico Penal Code (33 P.R. Laws Ann. § 4551) are:

to draw, endorse, or deliver a check, draft, note, or order for the payment of money, on any bank or other depositary institution,

with the knowledge that there are insufficient funds to cover the full payment,

absent express authorization to overdraw,

with the intent of defrauding.

Facts

The facts of the case are the following. Rafael Betances Rexach complained that on December 14, 2000, Joseph P. McCloskey and two other persons drew a check in the amount of $85,715.79l. The check in question had actually been signed by the other two persons, but not by McCloskey. When Betances tried to cash the check, the bank did not pay the same, indicating that the account lacked funds to cover the same. Betances tried again to cash the instrument after McCloskey told him that it must have been an error on the part of the bank, but the bank again refused to pay, for the same reason.

Betances’s lawyer then sent a letter to McCloskey, requiring payment, as mandated by Article 266 of the Penal Code.

Trial court

McCloskey and the two other persons were accused for the crime of drawing a check that lacked funds. McCloskey was found guilty, was imposed the maximum fine of $5,000.00, and was ordered to pay court costs plus an additional penalty of $5,000.00. The other two accused were acquitted. McCloskey then appealed the sentence to the Supreme Court.

Supreme Court

The Supreme Court overturned the sentence. It first stated that because the check had been signed by the other two accused and not by McCloskey, McCloskey had actually not drawn the check. One of the elements of the crime was, thus, missing.

Second, the Court said, the code requires a specific intention to defraud. Evidence had been presented to the effect that the bank in question had previously paid checks when sufficient funds were not present, a practice that it had generally observed in the past. Thus, the accused could reasonably expect the bank to honor the check in question. This expectation meant that McCloskey did not have the intention of defrauding Betances.

© 2005 Goldman Antonetti