Different Kinds of Bad Checks
A bank can return a check for a variety of reasons. The check can be returned as a forgery (not written by the person whose name is on the account), a no account or account closed check (the account on which the check is issued never existed or was closed before the check was written) or an insufficient funds check (there was not enough money in the account upon presentation of the check to cover it).
Different Levels of Crime
If you receive a check returned as either a forgery or no account / account closed, you should contact law enforcement and make a report. It is a felony offense to pass a forged or no account / closed check. An insufficient funds check can be a felony or a misdemeanor crime, depending on the amount the check(s) was written for.
Prosecuting Bad Checks
If you should receive a check returned from the bank marked as insufficient funds, there are certain steps you must take before the individual who attempted to pass the check can be prosecuted:
- First, a “notice of dishonor” must be served upon the writer of the check by registered or certified mail, return receipt requested, or by first class mail, supported by an affidavit of mailing, sworn and retained by the sender.
- If the check has not been paid after the thirty day period following return of the receipt, the check may be presented to the State’s Attorney’s Office for prosecution. While other charges and fees may be applied by the merchant according to law, only the face value of the check will be considered when presented for prosecution. Once the legal process has begun and the check has been presented for prosecution, repayment should not be accepted without first consulting with the prosecuting attorney. Repayment is not a defense to the crime, but may be considered in mitigation of punishment.
- Several limitations apply to the filing of an insufficient funds check complaint. Prosecution of insufficient funds check must be started by the filing of a criminal complaint within six months after the merchant first receives notice of the checks dishonor by the bank. This period includes any time spent by the merchant or a check collection agency attempting to collect on the check.
- The check cannot be postdated (accepted knowing the date written on the check is later than the actual date) or a hold check (accepted with the understanding that it will not be presented for payment for a period of time, however short). The check must be received in payment for “present consideration” which is defined by law as goods or services received or completed within seven days (excluding Sundays or legal holidays) of payment. This normally excludes prosecution of checks given for rent or past accounts.
- There must be evidence that the check was passed with the “intent to defraud.” “Intent to defraud” means that the person passing the check knew or had reason to know at the time of the passing of the check that there would not be sufficient funds in the account to honor the check at the time it was presented to the bank.
- An Insufficient Funds Check Complaint can consist of one check or multiple checks, provided that the checks are written within a 30-day period. Checks must have a South Dakota address unless it qualifies as a felony offense. The levels of offense for a Theft by Insufficient Funds charge are as follows:
- Second Degree $0.01 - $400.00: Class 2 Misdemeanor
- First Degree $400.01 - $1,000.00: Class 1 Misdemeanor
- Grand Theft $1,000.01 - and up: Class 4 Felony