MEMPHIS, Tenn. — Depositing business checks into a personal account landed one former worker at a Memphis-based magazine in legal trouble.
Years later, the owner of the educational magazine says she is still picking up the pieces, despite being paid back money stolen.
The latest chapter
Nikki Schroeder sat at a center-fitting table in her Memphis office surrounded by some of Memphis’ iconic landscapes: two blocks from Tom Lee Park and the Mississippi River; around the corner from the Blues Hall of Fame; and blocks from the National Civil Rights Museum.
Inside her office, sunlight shines onto the table through the clear glass panels from the atrium on this clear mid-April day.
The usually clear table becomes home to stacks of documents.
Schroeder has kept hundreds to thousands of pages of bank records over the years.
Schroeder is a co-founder of “Jabberblabber.”
Jabberblabber is an earth-friendly, Mid-South-based-free-educational magazine with the slug-like green superhero as its mascot.
A stuffed, life-sized version of the mascot peers from the corner before a spiraling staircase as Schroeder begins to re-tell the story of how her magazine fell victim to a scheme and its latest battle.
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“I hesitate to even call it a fight, you know?” Schroeder said in an interview with FOX13 Investigates. “We are just – we’re out here just saying we were the victims of a crime.”
Former employee charged
According to federal records, former Jabberblabber employee Katrina Sears deposited more than 150 business checks made out to the company into her own personal Bank of America account.
Sears worked as an account receivable clerk at Jabberblabber from Feb. 2008 to Feb. 2014, expecting "to record [payments to Jabberblabber] into the company's QuickBooks accounting software program and then give the checks to the designated staff member for subsequent deposit or other action," according to charging documents filed in U.S. District Court for the Western District of Tennessee.
Per federal records, Sears was not supposed to "conduct any banking transactions…including deposits and withdrawals" for Jabberblabber.
"She was stealing in small enough increments that it wasn’t a glaring red flag in our system and she was deleting all of the evidence of the transactions on our end, so when we reconciled at the end of each month, everything was coming up fine,” said Schroeder. “Because she was going into our QuickBooks system and deleting all evidence of the transaction and the client. Period.”
Sears pleaded guilty in Oct. 2015 to one count of obstruction of correspondence.
Her family repaid Jabberblabber more than $72,000, the money stolen between Dec. 2010 and Feb. 2014, according to federal records and Schroeder.
But Schroeder contends her magazine is out nearly $100,000.
“Bank of America allowed this person to steal from us 162 times,” said Schroeder. “Not once or twice. They had all of the evidence all along and they could have put a stop to it immediately.”
Subpoena for records
Before federal charges came, Schroeder said she had to hire someone to investigate the missing money.
She first filed a civil suit in 2014.
In July 2014, her attorney sent a certified letter to Bank of America asking for Sears’ banking records.
“Bank of America’s failure to exercise ordinary care resulted in Katrina Sears engaging in the fraudulent scheme for four (4) years,” the July 2014 letter reads. “Due to Bank of America’s neglect, our client has suffered a substantial loss in which Bank of America is responsible. We have commenced legal action against Katrina Sears at this time. We will need the cooperation of Bank of America in the litigation.”
It is unknown if or how Bank of America responded to this letter.
Jabberblabber later dropped its civil case to pursue criminal charges.
In November 2014, Memphis Police subpoenaed Sears’ bank records from Bank of America.
Less than a month later, Bank of America sent Sears’ bank records from 2008 to 2014, according to a Memphis police spokesperson.
But Schroeder contends the bank’s failure to turn over records in a timely manner cost her company $98,000, including administrative costs, attorney fees and $11,000 she says it attributed directly to the bank’s failure to hand over documentation.
“I’m not asking for a million dollars and then settling for less and then asking for punitive damages,” said Schroeder. “I’m not doing that. I’m saying, ‘Please reimburse me. Please reimburse me for your negligence.’”
Complaint leads to failed negotiations
Fast forward nearly five years later and Schroeder said her lawyer’s discussions with Bank of America have gone nowhere.
That was until February when she posted a complaint on the bank’s website.
Schroeder said the bank’s resolution team contacted her and offered less than half of the $98,000 she claimed.
She turned down the proposal.
Bank of America emailed Schroeder on March 11th to officially pull out of negotiations.
“You rejected our proposal,” the letter reads in part. “Therefore, since the facts pertaining to your claim have not changed, we withdraw our proposed resolution and will make no further offers.”
As of May 14, 2019, Bank of America has stayed true to its letter emailed two months prior.
Bank of America would neither confirm to FOX13 Investigates a dollar amount it offered, nor would it commit to an on-camera interview explaining its role in the case.
Instead in a phone conversation, a Bank of America spokesperson read out a statement to FOX13 Investigates:
“We were contacted earlier this year by Jabberblabber’s co-owner with additional claims and when we proposed a resolution, she declined. That’s where we are.”
When asked how it allowed more than 150 checks to be deposited fraudulently over three years, the press contact for Bank of America said he could not answer.
Asked twice if she made the right decision in declining Bank of America’s offer, Schroeder said she didn’t know.
“I do struggle with the fact that some compensation is better than none, but I also stand by my feelings in my heart, which says that that offer was not a fair offer,” said Schroeder.
A major question remains about whether a bank can be held legally liable for this conduct.
Banks have faced civil lawsuits for compliance issues in the past, but FOX13 Investigates could not find any for this narrow of a case.
The Office of Comptroller of the Currency, an arm of the Treasury, investigates banking issues and is looking into questions raised by FOX13 Investigates.
OCC did add, in general, that there is a website for any banking complaints.
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