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March 31, 2021

Whoops: Schwab Sues Former Customer It Accidentally Sent $1.2 Million

by Jake Martin
|
News
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Charles Schwab, Fidelity
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Comments (25)
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Mistake

Charles Schwab & Co. is suing a former client in hopes of recovering $1.2 million it says it had “inadvertently” transferred to her account at another online brokerage. 

In its lawsuit, filed on Tuesday in U.S. District Court for Eastern Louisiana, the discount brokerage claims Kelyn Spadoni of Harvey, Louisiana, has avoided Schwab’s calls and has “taken steps to prevent Schwab from recovering the funds.” The complaint does not name Fidelity Brokerage Services, where Schwab inadvertently sent the funds, as a party. 

San Francisco-based Schwab, which said it has also filed a complaint in arbitration, is seeking an emergency order from the court to prevent Spadoni from spending the funds in question before the firm’s claims can be heard by arbitrators. Allowing Spadoni to spend the funds in the meantime would render the arbitration process a “hollow formality,” it said. 

Judge Jay C. Zainey on Wednesday granted Schwab’s request to conduct discovery, including deposition of Spadoni, on an expedited basis in pursuit of its sequestration request, according to the case docket. The judge did not rule on the emergency motion. 

“After many attempts to recover the funds from the defendant directly, we are now pursuing all legal steps to reach that outcome,” a Schwab spokesman said.

Spadoni, who had no listed representation in the matter as of Wednesday afternoon, could not be reached for comment.

Spadoni’s case for holding onto the money is a long shot because she does not have a reasonable legal claim to the funds, according to Bill Singer, a securities lawyer.

“I hope Spadoni’s attorney has advised their client that not only could they be facing punitive damages and sanctions depending on whether or not they convert the funds, but that this could also easily wind up as a criminal case,” Singer said. 

Spadoni opened a Schwab One account—a “basic” brokerage account with no account minimums, according to Schwab’s website—in January. She closed the account after a month, and Schwab was attempting to transfer the $82.56 balance it said she was actually owed when it mistakenly sent the additional $1,205,536.84. 

Schwab representatives, who discovered the error the following day, tried to reclaim the errant transfer by contacting Fidelity, but it was too late, they said. Schwab attributed the error to “an issue created by a software enhancement” it had installed about a week before, causing “excess cash” to be added to a pending transfer request from Spadoni.

Schwab said Spadoni has not responded to its “numerous” attempts to contact her, including by telephone, text message and email. The firm’s corporate counsel called Spadoni at her work number, but her employer said she was “present but could not come to the phone,” according to the complaint.

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Comments (25)
  • on Mar 31 2021, CarlT says:

    Sounds like spandoli is a criminal?

    > Reply to CarlT
    • on Apr 1 2021, Gpsser says:

      Doesn’t Schwab have an arbitration requirement and their customer agreement? Seems that the arbitration requirement would override ability to sue.

      > Reply to Gpsser
      • on Apr 1 2021, Frank Cagle says:

        Where’s my million $$ mistake ? Frank

        > Reply to Frank Cagle
      • on Apr 1 2021, David says:

        She is not being sued for Schwab’s mistake, she’s being sued for (suspectedly) trying to force a worst case outcome on Schwab which could easily be fixed. I ​can’t imagine a situation where Schwab would not be willing to compensate her fairly + a little extra for her inconvenience and time. Deliberately forcing an outcome into it’s most damaging state when you can easily prevent that outcome on another party is grounds for civil action.

        She has no legal or morale right to the entire funds and undoubtedly agreed to return the funds in such a situation when she opened the account. There are very good reasons it could become criminal, but it’s based now on the choices SHE makes.

        Imagine your purse/wallet accidentally falls in someone’s shopping cart. You will shortly realize what happens, but the owner of the cart attempts to hide and pocket the wallet before you even have a chance to see where it landed.

        Everyone would love a big payout, but what ever happened to acting justly and with common courtesy?

        I have never used Schwab and have no ties to the company, but assuming the facts of the article are correct, I wish Schwab the best possible outcome.

        > Reply to David
        • on Apr 2 2021, Mark J Hill says:

          Common courtesy? Schwab or any bank deserves what lever they get.. their mistake tough luck…if i lost my wallet and someone picks it up…bad on me for not keeping better track of my belongings. Ad I am sure schwab can afford it… Take it from the bonuses.

          > Reply to Mark J Hill
    • on Apr 1 2021, Joan says:

      She didn’t do it
      It was Schwab mistakes. Schwab incompetence

      > Reply to Joan
      • on Apr 1 2021, Renaldo Garcia says:

        I bet you wouldn’t say the same if Schwab had caused an error in their favor from your account.

        > Reply to Renaldo Garcia
        • on Apr 2 2021, Mark J Hill says:

          Of course he would say the same thing…schwab should pay for their mistake in both situations…how hard is that to understand? Schwab would be stealing from a customer… This lady didnt steal it she was given the money so your not thinking logically.

          > Reply to Mark J Hill
        • on Apr 2 2021, john says:

          Legally title does not change due to errors. She is mortally and legally obligated to return the funds.

          > Reply to john
      • on Apr 1 2021, David says:

        …She is not being sued for Schwab’s mistake, she’s being sued for (suspectedly) trying to force a worst case outcome on Schwab which could easily be fixed…

        Apparently I accidentally posted my reply to the wrong thread. The rest of my comment is elsewhere, but I can’t fix it since advisorhub.com won’t give me my comment back. If only there were some coders who could program a feature that let me move my comment….

        > Reply to David
    • on Apr 2 2021, Ex STS says:

      The root cause per Schwab was an issue created by a software enhancement it had installed about a week before. In other words poor quality software making its way to live environment. In addition to trying to sue the client, Schwab’s CIO needs to get a call. No blame shifting.

      > Reply to Ex STS
  • on Apr 1 2021, Annn says:

    Not surprised. Schwab mistakes more tham often. I was trying to enter trades. Schwab website totally went butserk. It costed me thousands of dollars due to Schwab incompetence.
    Where could I go to complain?
    I ended transfer my account out, out & out.

    > Reply to Annn
    • on Apr 1 2021, Stable Genius says:

      @Annn, Your post complaining about Schwab’s mistakes is riddled with spelling and grammatical errors.

      > Reply to Stable Genius
      • on Apr 2 2021, Mark J Hill says:

        So what dont be an asshole

        > Reply to Mark J Hill
  • on Apr 1 2021, Ferd says:

    If Im Spadoni, time to leave US for good t9 non extradition country, today

    > Reply to Ferd
  • on Apr 1 2021, Jaxx says:

    Schwab doesnt like me.. Said i was not the kind they wanted as a customer.

    > Reply to Jaxx
  • on Apr 1 2021, John Caldwell says:

    It seems they are both criminals, the girl for not returning the money and scwab will have the loss covered under insurance and probably get half the money back that she couldn’t spend

    > Reply to John Caldwell
  • on Apr 1 2021, Mark Dedrick says:

    She go to prison if she spends one cent over what should’ve been sent to her and return the rest. I see this nothing less than theft on her part.

    > Reply to Mark Dedrick
    • on Apr 6 2021, Pat Ridge says:

      Despite claiming on social media to “love God”, woman is a thief, pure and simple. She’s doing everything in her power to keep money she knows does not rightfully belong to her. Not only keeping it, but has been on a spending spree. I know for a fact that she’s entered into a contract to purchase a house for $245,000 in cash, and I’ve also heard that she bought not just one but 3 new cars. The closing date on the purchase of the house is currently scheduled for this Friday, April 9th, so I hope the lawyers are successful in their attempt to get an emergency ruling forbidding her from spending any more of this ill-gotten money, if for no other reason than for the sake of the decent people in that Harvey neighborhood who are rightfully upset about the prospect of having a thief for a neighbor.

      > Reply to Pat Ridge
      • on Apr 6 2021, Pat Ridge says:

        Correction: …*the woman is a thief…

        > Reply to Pat Ridge
  • on Apr 1 2021, Perry S says:

    I would love to hit a false lottery, if only for a day or two

    > Reply to Perry S
  • on Apr 1 2021, David says:

    I had a friend who looked like a complete Bum (almost as bad as Jack Dorsey!) He requested a $20K transfer and they sent him $20 Million! Before they reclaimed it, he cashed a $100 check and told the teller she needed to check his balance. Her eyes got as big as saucers! Epic moment. And no, he made no attempt to keep money he knew wasn’t his…

    > Reply to David
    • on Apr 1 2021, Piper says:

      David, this is a great story! I laughed out loud (for real) reading it!

      > Reply to Piper
      • on Apr 1 2021, David says:

        I should have mentioned, the firm in question was NOT Schwab…
        Glad you enjoyed the story. It’s been almost 40 years and it still cracks me up

        > Reply to David
  • on Apr 6 2021, Pat says:

    Btw, there seems to be some confusion about her last name; is it Spadoni or Spaldoni? I’ve seen it spelled both ways in multiple Internet articles on this story. Maybe she uses both; heard that one of her potential new neighbors, in doing an online search, discovered that she’s used multiple similar spellings of her name, plus another, completely different first and last name that doesn’t even come close to resembling Spadoni or Spaldoni. How many honest people do you know who feel the need to use multiple aliases?

    > Reply to Pat

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