Scenario 5 - Liability on Negotiable Instruments

Brown and Connor hired a bookkeeper, Erika, and gave her general authority to issue company checks drawn Regions Bank so that Erika can pay employees' wages and other company bills.Erika decides to cheat her employers out of $15,000 by issuing a check payable to East Tennessee Packaging (ETP), the supplier of the boxes and other paper goods.Erika does not intend for ETP to receive any of the money, nor is ETP entitled to the payment.Erika endorses the check in ETP's name and deposits the check in an account that she opened at Wells Fargo Bank in the name "East Tennessee Packaging Dist. Co."Wells Fargo accepts the check and collects payment from the drawee bank, Regions.Regions charges [Name of Restaurant] account $50,000.Erika transfers $15,000 out of the ETP account and closes it.[Name of Restaurant] discovers the fraud and demands that the bank return the money.

• Evaluate which party or parties bear the loss

Please provide references or relevant cases