Legal Question in Credit and Debt Law in Utah

My son was on SSI and I was designated as the payee of the account for medical reasons. When SSI switched to SSDI, the payee process reset and dropped me as a payee. SSA did not know where to send the check, so it sent it to the last known bank account that my son had with the state over a year ago, Chase. This account was closed over a year ago and he had an active balance on it that he never paid. Chase decided to cash his check, subtract the balance he owed them over a year ago, and cut him a cashier's check for the difference. The cashier's check came with no explanation, no notes, just the check written to him. Because the amount was different from the SSDI amount, I didn't think anything of it, and he thought it was back payment from his unemployment account.

When SSA first told me that Chase had deposited the check, I went to the local Chase branch and spoke to the manager. He assured me that they rejected the check (even turned his monitor around to show me) and they would never cash a check on a closed account. After a month of digging, I did in fact get a loan officer at Chase to admit that they had cashed the check (they cashed it on 11/12, my initial visit to the bank was on 11/14), kept a portion to pay off his closed account and forward the rest to him.

Is this legal? Can a bank actually cash a government issued check that did not belong to them, someone whose account was closed over a year ago? And then send out the difference in a whole different check, not indicating that this was initially a government issued check? What rights do I have to go after this money? Losing an entire month's worth of pay set him back tremendously.

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