Recently our fraud dept officer placed a hold on 2 business accounts in an attempt to offset the account owners relative who has had past charged off accounts. can this be done ? are we within our rights to take funds from a relative to offset an account that has no ties to the charge off accounts in the past ?

Not in the slightest way can you do this. It doesn't even make sense to hold an innocent person responsible for someone elses problem.

I sure hope you haven't returned any items and I would recommend you get the money back in the accounts post haste.

This officer has exposed the bank to a potential big law suite which it will loose.