A $1.2 Million Charles Schwab Bank Deposit Error Buys a House, and an Arrest, Officials Say

It was the kind of windfall investors crave at every Wall Street rally: $ 1,205,619.56 inexplicably landed in the brokerage account of a 911 dispatcher in Louisiana in February.

But the next day, when Charles Schwab tried to recover the money mistakenly deposited into Kelyn Spadoni’s account, authorities said about a quarter of the funds were already gone. Calls, emails and text messages to Ms. Spadoni went unanswered for about a month.

The money had been transferred to another account and used by Ms. Spadoni to buy a house and a Hyundai Genesis SUV, according to the Jefferson Parish Sheriff’s office. She was arrested on April 7 for fraud and theft and released as a dispatcher the same day, the sheriff’s office said.

In a lawsuit against Ms. Spadoni in federal court in New Orleans, Charles Schwab said it should have deposited only $ 82.56 in Ms. Spadoni’s account for Fidelity Brokerage Services, but that a software bug had caused it it had wrongly transferred the seven. Total of numbers.

“I think most people understand how much money is in their bank accounts,” said Captain Jason Rivarde, a spokesman for the sheriff’s office, in an interview Monday. “If you expect $ 80 and you get $ 1.2 million, something is probably wrong there.”

Ms. Spadoni, 33, of Harvey, La., Has been charged with bank fraud, illegally transferring funds, and theft of more than $ 25,000. She had been the dispatcher in the New Orleans community for four and a half years.

Bobbie Edmonds, an attorney for Ms. Spadoni, said in an interview Wednesday that she is still investigating various aspects of the case.

“We will respond to the submitted pleadings in a timely manner and look forward to resolving things amicably and in the best interests of my client,” she said.

According to Captain Rivarde, Ms. Spadoni was released on Thursday for a $ 150,000 bond. He said the vast majority of the missing money had been reclaimed.

A spokesman for Charles Schwab said in an email on Sunday evening that the company was working fully with authorities to resolve the issue but declined to comment.

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April 14, 2021, 3:30 p.m. ET

Recipients of mistakenly wired money usually have to send it back.

James J. Angel, associate professor of finance at Georgetown University’s McDonough School of Business, said these were examples that generally involve a recipient who has no “natural entitlement” to the funds.

“If it’s not yours, you generally have to return it,” he said, emphasizing that he was speaking generally and not specifically commenting on the Spadoni case. “Someone who wasn’t expecting it didn’t request it and suddenly it shows up? It was obviously a mistake. “

However, this year’s decision by a federal judge offers an outstanding exception. In 2020, Citigroup accidentally sent $ 900 million to a group of lenders to make a small interest payment on behalf of beauty company Revlon, but repay it in full.

Some of the lenders who sued Revlon and Citi to seek repayment of the loan refused to return about $ 500 million. In February, Judge Jesse M. Furman of the US District Court in Manhattan ruled that recipients did not have to return the money because they had reason to believe the payment was intended.

The “Citigroup case is definitely an outlier because they previously claimed the money,” said Dr. Fishing rod.

John C. Coffee Jr., a professor at Columbia Law School, said anyone who finds money is legally required to attempt a restoration.

“Even if Schwab was negligent, this does not give her the right to hold onto this found property,” he said. “These cases come up every now and then. Bank delivery vans get into car accidents and money comes out behind them and the police and others want you to return it. “

According to Schwab, Ms. Spadoni opened the brokerage account in January and the excess cash was added to a transfer application she made in February.

When Schwab realized the error, he tried to reclaim the money via a computer system, but received the message “Cash not available”. A second attempt was also rejected and Schwab received the message: “Insufficient funds, please work directly with the customer to find a solution.”

A Schwab employee called Ms. Spadoni four times, but was unable to leave a message on two of these attempts because her answering machine was full. A management consultant for Schwab then called Ms. Spadoni in the sheriff’s office, but was informed that, according to the complaint, she was unavailable. Then he sent several text messages.

In his lawsuit, Schwab stated that he had initiated arbitration proceedings against Ms. Spadoni at the regulatory authority for the financial industry, but that it would take two months to resolve the case. The company said it filed the lawsuit because it wanted to make sure Ms. Spadoni did not spend the mistakenly transferred funds prior to the arbitration hearing.

“If you take something that obviously doesn’t belong to you,” said Captain Rivarde, “it would be theft.”

Christine Hauser contributed to the coverage and Kitty Bennett contributed to the research.

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