IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

MEDFORD DIVISION 

WELLS FARGO BANK, N.A., 

Plaintiff, 

vs. 

LEROY WILLOUGHBY, et al., 

Defendants. 

AIKEN, Chief Judge: 

Case 1:15-cv-129-AA 

ORDER 

Plaintiff Wells Fargo Bank brings this action against 

Defendant LeRoy Willoughby to recover money lost because of 

a check-cashing scam. Defendant accepted an offer to work 

part-time as a "payment officer" for a business in Japan, 

but the job offer was actually a check-cashing scam, "in 

which the victim is asked to accept what appears to be a 

legitimate check on behalf of a foreign corporation, deposit 

the funds, then wire some or all of the proceeds to a 

1 - ORDER 
foreign account before the victim's bank realizes that the 

check is, in fact, counterfeit." Branch Banking & Trust Co. 

v. Witmeyer, 2011 WL 3297682, at *1 (E.D. Va. 2011) 

(footnote omitted). The scam here followed the pattern: 

Defendant deposited a $150,000 check to open an account with 

Plaintiff. When Plaintiff made the funds available, 

Defendant wired more than $95,000 to a bank in Japan. A few 

days later the $150,000 check was dishonored as counterfeit, 

and the wired funds could not be recovered. Those 

responsible for the scam have not been identified. 

Plaintiff now moves for summary judgment on its claims 

for breach of contract, breach of warranty, conversion, 

account stated, and statutory violations. Defendant 

responds that he was a victim of the scam and had no intent 

to defraud Plaintiff. 

The most culpable party is not before the court, so the 

issue is whether Plaintiff or Defendant should bear 

responsibility for the loss. Because Defendant was the 

party best able to prevent the loss, the Uniform Commercial 

Code, which governs the transaction here, holds Defendant 

responsible. See Ed Stinn Chevrolet, Inc. v. Nat'l City 

Bank, 28 Ohio St.3d 221, 226, 503 N.E.2d 524, 530 (Ohio 

1986) (per curiam), modified on other grounds, 31 Ohio St. 

3d 150, 509 N.E.2d 945 (1987). I grant Plaintiff's motion 

2 - ORDER 
for summary judgment. 

I. Defendant Has Not Submitted Sworn Statements 

Because Defendant is representing himself, I issued a 

notice explaining summary judgment procedures. ECF No. 21. 

The notice instructed Defendant to "set out specific facts 

in declarations, depositions, answers to interrogatories, or 

authenticated documents, as provided in Rule 56(e), that 

contradict the facts stated in Plaintiff's declaration and 

documents and show a genuine issue of material fact for 

trial." ECF No. 21 at 2 (original emphasis). The notice 

explained that Defendant could "submit a declaration 

stating, under penalty of perjury, any relevant facts that 

you have personal knowledge of, that is, something you 

personally saw, heard, did, or wrote (or did not do, see, or 

hear, if you are denying that an incident occurred)." ECF 

No. 21 at 2 (emphasis added). 

Defendant states that his factual allegations are "true 

and correct to the best of my knowledge." Def.'s Mem. at 1, 

ECF No. 26. But Defendant does not make his factual 

allegations under penalty of perjury, as required by this 

court's order. Cf. LeBoeuf, Lamb, Greene & MacRae, L.L.P. 

v. Worsham, 185 F.3d 61, 65-66 (2d Cir. 1999) (when ruling 

on a summary judgment motion, the court may consider a 

letter made "under penalty of perjury" even though the 

3 - ORDER 
letter did not state that its contents were "true and 

correct") . 

I agree with Plaintiff that Defendant's allegations are 

not properly sworn. I will consider them here only to 

resolve Plaintiff's motion for summary judgment. I will 

also consider, for this motion only, Defendant's copies of 

his email correspondence with the person or persons behind 

the check-cashing scam. 

II. Factual Background 

In 2008, Defendant, then living in Colorado, searched 

the internet for part-time work he could perform at home. 

After receiving job offers by email, Defendant states he 

"found out from the FBI that the part time work at home jobs 

were scams and most of the scams were originating from 

Nigeria as well as South Africa." Def.'s Mem. 2, ECF No. 

26. Defendant "became very suspicious of any emails for 

part time jobs." Id. 

On January 7, 2009, Defendant received an email 

ostensibly from Itochu Corp., a large multinational business 

based in Japan, offering part-time work depositing checks 

and wiring funds in exchange for a 5% commission. Defendant 

states that he worked more than twenty-five years in Japan 

and "was very familiar with the companies and practices over 

there." Id. Furthermore, Defendant was "familiar with 

4 - ORDER 
[Itochu Corp.] because he had taught English to some of 

their managers and executives." Id. Even though the job 

offer resembled a typical check-cashing scam, Defendant 

states that he was "more trusting of emails from this 

company and their needing a part time employee to help them 

with their overseas business." Id. 

The initial email 1 to Defendant explained that because 

most of Itochu Corp.'s board members did not understand 

English, the company sought a "noble and trusted 

representative client from CANADA AND USA." Id. at 5 (copy 

of email). The email stated, "Most of our customers pay out 

in check and we do not have an account in your country that 

will clear this money. Again, this is the problem of 

language." Id. 

The email described the work required: "Your tasks are 

Receive payment from Customers Cash Payments at your Bank. 

Deduct 5% which will be your percentage/pay on Payment 

processed. Forward balance after deduction of 

percentage/pay to any of the offices you will be contacted 

to send payment to." Id. 

Defendant responded with an email expressing his 

1

As Plaintiff notes, applicants were told to send information 

to a Yahoo.com webmail address based in Hong Kong, not a corporate 

email address based in Japan. See Pl.'s Reply 6 & n.2, ECF No. 28. 

5 - ORDER 
interest in the work. Defendant stated that he "used to 

teach English to your staff in Japan and am familiar with 

Itochu Corp." Def.'s Mem. 4, ECF No. 26. 

On January 8, 2009, the false Itochu Corp. sent 

Defendant an email accepting him as a "payment officer." 

The email instructed Defendant to deposit checks and to 

notify the company when his bank made the funds available. 

Defendant would then be told where to transfer the funds. 

On January 13, 2009, Defendant responded by email, 

stating "the percentage for my participation has usually 

been 10-15%. Therefore, unless there is the 10-15%, I am 

not interested in continuing further with our venture." 

Def.'s Mem. 7 (copy of email). 

As shown by the email correspondence submitted by 

Defendant, the scam's success depended on Defendant 

believing that (1) a multinational corporation based in 

Japan would forfeit 5% of payments received from North 

American customers because its board members did not 

understand English; (2) the multinational corporation had no 

access to banks in North America, so it used blind email 

solicitations to hire payment officers whose only 

qualifications were access to a bank account and the ability 

to understand English; and (4) the corporation had no 

mechanism, other than "trust," to prevent a payment officer 

6 - ORDER 
from keeping the entire amount of the payment rather than 

only the 5% commission. 

On January 27, 2009, Defendant received the $150,000 

check that gave rise to this action. See Compl., Ex. A, at 

1, ECF No. 1 at 9 (copy of check). On its face, the check 

appeared legitimate, payable to Defendant, issued by a 

business called MDS in Ontario, Canada, and drawn on an 

account at the Canadian Imperial Bank of Commerce (CIBC) . 

After Defendant received the check, he was apparently 

instructed by email that he was working for CNOOC Oil Base 

Group Ltd. China, rather than Itochu Corp. Responding to 

this new development, Defendant stated that he did ~not want 

to process [the check] until I know what this is all about. 

I didn't know I was working as a rep for CNOOC Oil." Def.'s 

Memo. 9 (copy of email). Despite this discrepancy, and the 

other red flags, on January 28, 2009, Defendant endorsed and 

deposited the check in a newly opened account at a Wachovia 

Bank (Plaintiff's predecessor in interest) in Pueblo, 

Colorado. 

Defendant states that when he opened the account, he 

told bank employees that he ~was suspicious of the check and 

with [Plaintiff's] advice proceeded with the deposit." 

Def.'s Am. Memo. ~ 9, ECF No. 27. Defendant alleges that 

Plaintiff's employees told him ~if the check clears, the 

7 - ORDER 
funds were okay." Def.'s Memo. ! 7, ECF No. 26. Defendant 

does not allege that he told anyone why he thought the check 

was suspicious. 

On January 28, 2009, Defendant notified 

"boydbarrett@consultant.com," apparently another contact 

with his employer, that Plaintiff would make funds from the 

$150,000 check available to Defendant on February 5, 2009. 

Defendant stated, "I am still waiting for an answer to prior 

email for more details of my involvement." Def.'s Mem. 10. 

On February 5, 2009, Plaintiff credited $150,000 to 

Defendant's account. Defendant withdrew $5,500, depositing 

$5,000 in a new account and taking $500 in cash. 

That day, Defendant emailed "Boyd Barrett" again, 

stating that the check had cleared. He wrote, "I await 

further direction from you or CNOOC Oil Base Group Ltd 

China. I await the next transfer as well." Def.'s Mem. 11. 

Defendant then received an email supposedly from Eizo 

Kobayishi, the president of Itochu Corp., instructing 

Defendant to wire $96,905 to Resona Bank, in Hiroshima, 

Japan, to the account of Asako Tradings. Defendant wired 

the funds as instructed, and notified "Kobayishi-san." 

As of February 6, 2009, Plaintiff had not received 

payment for the $150,000 check from CIBC, the "payor" bank. 

On February 9, 2009, CIBC returned the check as dishonored. 

8 - ORDER 
Plaintiff promptly notified Defendant that the check had 

been dishonored. The next day, one of Plaintiff's employees 

told Defendant that his accounts were on hold and that 

Plaintiff suspected fraud. 

Defendant states that Plaintiff's employees told him 

"not to worry about anything, since it had been turned over 

to their fraud department." Def.'s Mem. ~ 14. On February 

10, 2009, Plaintiff's investigator spoke to Defendant about 

the fraudulent check. Defendant told the investigator he 

had been suspicious about the check. 

On February 26, 2009, the Japanese bank that had 

received the wired funds notified Plaintiff that the 

transfer could not be reversed and the funds would not be 

returned. Asako Tradings was a fictional entity. The money 

was never recovered. 

In April 2009, Plaintiff sent Defendant an account 

statement showing a negative balance of $97,448.99. That is 

the amount Plaintiff now seeks as damages. 

STANDARDS 

The court must grant summary judgment if there are no 

genuine issues of material fact and the moving party is 

entitled to judgment as a matter of law. Fed. R. Civ. P. 

56. If the moving party shows that there are no genuine 

issues of material fact, then the nonmoving party must go 

9 - ORDER 
beyond the pleadings and designate facts showing an issue 

for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 

( 1986) . 

DISCUSSION 

I. Claims Under the Uniform Commercial Code 

Because this action arose in Colorado, Plaintiff brings 

its claims under the Colorado law. Like other states, 

Colorado has adopted the Uniform Commercial Code (UCC) , 2 

whose provisions govern here. See Bank of Am. Nat'l Trust & 

Sav. Ass'n v. United States, 552 F.2d 302, 303 n.1 (9th Cir. 

1977). 

A. Indorser Liability 

"[I]f an instrument is dishonored, an indorser is 

obliged to pay the amount due on the instrument (I) 

according to the terms of the instrument at the time it was 

indorsed." Colo. Stat. § 4-3-415 (a) ("Obligation of 

indorser"). Here, Defendant endorsed and deposited the 

counterfeit check, and the check was later dishonored. 

Although the wired funds were lost, Plaintiff was able to 

prevent further losses after learning the check was 

dishonored. Defendant is not liable for the entire amount 

2Because the UCC provisions at issue have been adopted 

nationwide in substantially identical form, decisions from other 

jurisdictions are instructive here. See Duke Enerqv Roval, LLC v. 

Pillowtex Corp. (In re Pillowtex, Inc.), 349 F.3d 711, 718 n.8 (3d 

Cir. 2003). 

10 - ORDER 
of check but for $97,448.99, the amount lost. 

Defendant argues that he never intended to defraud 

Plaintiff. But intent to defraud is not relevant to 

Plaintiff's claims under the UCC. See Vadde v. Bank of 

America, 687 S.E. 2d 880, 886 (Ga. App. 2009) (rejecting 

argument that "ignorance of a fraud or counterfeit is a 

defense to a collecting bank's claim for recoupment"); 

SunTrust Bank v. Bennett (In re Bennett), 517 B.R. 95, 104 

(Bankr. M.D. Tenn. 2014) (bankruptcy court noted that debtor 

would have been liable for endorsing and presenting bad 

checks "regardless of any fraudulent intent") . 

Defendant argues he is also a victim of the scam. But 

when the true culprit behind a scam is not before the court, 

the Uniform Commercial Code assigns responsibility to the 

party who was best able to prevent the loss: 

In resolving the unfortunate dilemma presented by 

this case, we remain cognizant that the Uniform 

Commercial Code is a delicately balanced statutory 

scheme designed, in principle, to ultimately shift 

the loss occasioned by negotiation of a forged 

instrument to the party bearing the responsibility 

for the loss. Ideally, the thief is held 

accountable. The unfortunate reality is that the 

loss is often shifted to the innocent party whose 

conduct or relationship with the forger most 

facilitated the risk of loss. 

Ed Stinn Chevrolet v. Nat'l City Bank, 28 Ohio St.3d 221, 

226, 503 N.E.2d 524, 530 (Ohio 1986) (per curiam), modified 

on other grounds, 31 Ohio St. 3d 150, 509 N.E.2d 945 (1987). 

11 - ORDER 
"The provisions of article 3 of the Uniform Commercial Code 

ensure the ready negotiability of commercial paper. In 

addition, the provisions relating to check fraud further a 

policy of assigning loss based upon the relative 

responsibility of the parties 'by establishing commercially 

sound rules designed to place the risk of loss attributable 

to fraud such as forged indorsements with the party best 

able to prevent them.'" Guardian Life Ins. Co. of Am. v. 

Chern. Bank, 94 N.Y.2d 418, 421, 727 N.E.2d 111, 114 (N.Y. 

2000) (quoting Getty Petroleum Corp. v. Am. Express Travel 

Related Servs. Co., 90 N.Y.2d 322, 326, 683 N.E.2d 311, 324 

(N.Y. 1997)). 

Here, I agree with Plaintiff that between Plaintiff and 

Defendant, Defendant is responsible for the loss. Defendant 

chose to endorse and deposit the counterfeit check despite 

the red flags indicating it was part of a check-cashing 

scam. He then chose to wire the funds to an unknown party 

despite discrepancies in the instructions to him. 

Defendant alleges that Plaintiff's employees assured 

him that if Plaintiff credited his account, that would show 

that the check was valid. Defendant does not identify the 

employees who made these alleged statements, and there is no 

evidence other than Defendant's own unsworn allegation of 

any such statements. Even accepting Defendant's allegations 

12 - ORDER 
as true, oral statements by Plaintiff's employees cannot 

modify Defendant's obligations under his agreement with 

Plaintiff. See Sheffield Decl., Ex. 1 at 14-15 (agreement 

provides that it may not be "changed orally"). 

Plaintiff was required by the Expedited Funds 

Availability Act (EFAA) to give its customers prompt access 

to deposited funds. See Essex Constr. Corp. v. Indus. Bank 

of Wash., Inc., 913 F. Supp. 416, 418 (D. Md. 1995) 

(construing EFAA, 12 U.S.C. § 4006). When Plaintiff made 

funds available to Defendant, Plaintiff was not vouching for 

the check's validity. See id., 913 F. Supp. at 419 ("The 

EFAA requires that banks provide prompt access to valid 

deposits, not that banks assume liability for bad checks 

given to depositors."). Under the EFAA and the UCC, banks 

may make a "provisional settlement" on a deposit, crediting 

the customer's account with the amount of a deposited check 

even though the bank (called the "depositary bank") has not 

yet received payment from the "payor bank" on which the 

check was drawn. See id., 913 F. Supp. at 418; UCC § 4-

214(a). If, as here, the payor bank dishonors the check, 

the depositary bank (also called the "collecting bank" when 

it seeks payment) "retains the right to revoke or charge 

back funds that are provisionally credited to a customer 

until the collecting bank's settlement with the payor bank 

13 - ORDER 
becomes final." 913 F. Supp. at 418. 

B. Breach of Warranty 

Defendant is also liable for breach of warranty. See 

UCC § 3-417. By presenting the check to Plaintiff for 

payment, Defendant represented that he was entitled to 

receive payment. Because the check was counterfeit, 

Defendant is liable for breach of warranty up to the amount 

actually lost plus expenses and interest. See Colo. Stat. § 

4-3-417 (d) (2) ("The person making payment may recover from 

any warrantor for breach of warranty an amount equal to the 

amount paid plus expenses and loss of interest resulting 

from the breach."). 

II. Breach of Contract 

When Defendant opened the account with Plaintiff, he 

agreed to repay Plaintiff promptly for overdrafts caused by 

the return or dishonor of any check he deposited in the 

account. Sheffield Decl., Ex. 1, at 9 (copy of agreement), 

ECF No. 20. The agreement allowed Plaintiff to debit 

Defendant's account for the amount of a returned check, and 

to "overdraw" Defendant's account if he had "insufficient 

funds in [the] account to cover a returned item." Id. The 

agreement also required that Defendant reimburse Plaintiff 

for its costs and expenses incurred while pursuing the 

claim. 

14 - ORDER 
The undisputed facts are that Defendant submitted a 

check that was later returned, and that he did not have 

enough funds to cover the resulting overdraft. There is no 

evidence that the agreement is invalid, or that Defendant 

was not competent to enter into it. I conclude as a matter 

of law that Defendant is liable for breach of contract. 

I need not address Plaintiff's other claims. 

CONCLUSION 

Plaintiff's motion for summary judgment (#18) is 

granted. Plaintiff is to prepare a proposed judgment within 

fourteen days of this order. 

IT IS SO ORDEREQn 

~)~~ DATED this day of September 2015. 

Ann Aiken 

United States District Judge 

15 - ORDER