MERS Problems (Continued)

Let's say you make out a check to your friend, let's call him Oscar Originator, for $10,000.00.  In return, Oscar will install in your back yard a Cardboard Palace – a large toy for your kids to play in.  Your friend Oscar then does not cash the check immediately because he was just a middleman in the transaction.  Instead, Oscar gives the check to a company specializing in "storing documents," and moves permanently to the Cayman Islands after collecting his middleman fee.

A few years later, Barry Bankster decides to cash your check.  Barry had facilitated the delivery of the Cardboard Palace to you by borrowing money from your neighbors through a process called "securitization."  Barry borrowed your neighbors' money, pocketed some of it, and used the rest to pay for the delivery of the Cardboard Palace to you.  Barry promised your neighbors some profit if they lent him their money, but that promise was not a guarantee, and now your neighbors are so out of luck, even though Barry had made a handsome profit for himself putting their money at risk.

Now Barry has looked at the situation and determined that he can assert a claim to your $10,000.00 check and cash it.  Further, Barry decided that if there is no longer enough money in your account for the check to clear, he will take the Cardboard Palace, sell it, and make more profit.  He might even share some of this profit with the screwed-over neighbors as a consolation prize covering a fraction of their losses. Or he might not...

When Barry goes to cash the check, he faces a problem: the check is made out to Oscar, not Barry.  For Barry to cash the check, he needs Oscar's endorsement of the check over to him.  The easiest solution for Barry is to forge Oscar's endorsement on the check.  And Barry may or may not have done so with other checks.  But then, Barry remembers that Oscar used to be a member of their local country club called "the MERS Club" and that Oscar used MERS' printer to print the $10,000.00 check before he signed it.

Barry goes to MERS and says: let's stick this check into your printer and put Oscar's endorsement on it.  I know Oscar is no longer here, and we can't get his approval to do it, but he used to be a member of this Club after all.  The Club Secretary then tells Barry: I don't know how to do it, and it could never be part of my job to do it.  Here is the complete control over our printer for you, you do whatever you want with it.  You can print stuff on behalf of Oscar, as if it were the Club acting on Oscar's behalf.  This will solve your problem with the lack of Oscar's authorization.  He doesn't care anyway, he is in the Caymans.  You can do it for the Club, claim that the Club did it, claim that the Club did so for Oscar and not you, and claim that Oscar authorized it.  Just leave the Club's fee on my desk when you are done.

Barry does as instructed and is happy.  Barry says to himself: what a wonderful creature is our club... Now I can cash checks that were never endorsed to me. I better see if I can dig out more of these.  Those silly neighbors certainly won't be able to...