Late Return of Stolen Cashier's Check

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Question:

We issued a cashier's check on the 6th of the month and it cleared our bank on the 15th. We were notified by a family member that the cashier's check was fraudulently obtained and endorsed. Am I correct in thinking that we have no recourse since it has been more than 24 hours since it was received and it would be considered a late return?

Answer:

Further inquiry revealed that another member of the family (someone who does not sign on the account) withdrew the funds to purchase the cashier's check. So, the cashier's check was fraudulently obtained. The issuing bank would ordinarily not have been able to refuse payment when the check was presented for payment on the 15th by anyone other than the thief (that, of course, assumes it learned of the fraudulent withdrawal before the check was presented for payment).. Even if it had the right to refuse payment then, it's now long past the midnight deadline for doing so.

The issuing bank will need to reimburse its true customer's account unless it can prove he or she was complicit in the fraudulent withdrawal. It has no recourse other than to pursue the imposter in civil court or to press criminal charges against him or her.