LOS ANGELES (CBS) — A Laguna Beach man who failed to notify authorities after over $110,000 was mistakenly transferred into his bank account now faces jail time, prosecutors said Wednesday.

Stephen McDow is charged with one felony count of grand theft by misappropriation of lost property — with an enhancement for taking property worth over $65,000 — after finding the money in his own checking account.

Stephen McDow (courtesy Orange County District Attorney's office)

Prosecutor Matt Lockhart said a filing error was blamed after the Internal Revenue Service transferred it electronically to the wrong person.

But KNX 1070’s Mike Landa reports the money didn’t stay in there for very long.

“He received the money on Sept. 10, 2010 and on Sept. 11, 2010 he started spending the money on various bills that he had,” said Lockhart.

Lockhart said the mix-up came after an unnamed Los Angeles woman inadvertently provided the IRS with a Citibank account number that had been closed in 2004 and was subsequently reassigned to McDow.

After attempts were made by the woman’s attorneys to recover the funds, McDow told them he had already spent up to $60,000 of it on car and student loans and to keep his home out of foreclosure, Lockhart said.

McDow faces four years in prison if convicted and is being held on $110,000 bail.

Comments (144)
  1. rk says:

    I dont think the punishment fits the crime. The real criminals are the IRS and Citibank for not updating their records and putting these two in this mess. Besides the guy didnt go on some shopping spree, he was trying to pay back student loan and random bills. BILLS! Yeah criminal gain right there.

  2. greg says:

    One thing the post shows is how angry everyone is to anyone with more than they have. 1st. $110k is not a fortune 2nd. If she has it she or her spouse EARNED it, a foreign concept around here 3rd. Just because she can afford it doesn’t mean she has to accept it (payments) 4th. He stole it, period end of story, how it got to his acct. or who messed up doesn’t matter, it’s NOT HIS!! PS Jealousy is really ugly

    1. Cindy says:

      Greg- I am not saying what he did was right. I know he was wrong for what he did. the money was not his to spend and he knew it at the time of spending it.
      but, what I am saying is, the attention it has caused to him is not necessary.

      “I think” he dosn’t deserve to be punished in the way everyone seems to think he does.
      Hey times are tough. we do dumb things when we get desperate. .maybe some things seem alittle more extreme than others but, the fact of the matter is he was desperate in a time of need and atleast he didn’t go out and hurt anyone, endanger anyones safety to get what he needed it just kind of fell in his lap and he took advantage of the situation this has turned into a debate on who thinks there solution is right and in turn everyone else has to be wrong. In “my opinion” there is no right or wrong there are just a bunch of coulda, shoulda, woulda’s and whats done is done. I just hope the guy doesn’t go to prison over it. because he will loose everything. somethings he will be able to get back some he wont and the one thing I know he will never get back is, the “not knowing” what goes on inside the prison system. once you loose that you can never get it back.
      I don’t think the lady should have to wait any longer for her money. again, in my opinion I think the IRS should write her another check and let the “theif”(JK) pay the payments to the IRS. Yes the money is rightfully the ladies there should be no question about if she really needs it or how she got it. that is none of our business- White American Princess aka Bi*%ch

      1. Martin says:

        If you watch the video of his interview you will see he didn’t know it wasn’t his. Everyone has made their mind up without hearing both sides.

  3. Hoi Ki Ding says:

    He should have known this money was not his and should have checked it out with the bank and the authorities before spending it blindly. Now he is in more trouble than before.

    1. sarah says:

      He did check it out with the bank.

  4. Chuck says:

    I don’t understand why the penalty for this is so steep. had mr. McDow did anything at all to extort, steal, or con them for the money, yes. it would be a heinous crime. Simply being in the right spot at the right time is hardly a condition that should carry such a heavy load. Further, it should be more the bank’s responsiblity to make sure the funds were placed in the proper account. I have had funds disappear, only to not kept the reciept, and had them tell me, ‘well we are sorry’ there is nothing we can do.’There should be a law to protect people that need money badly enough they would consider keeping it. At the very least, the bank should offer him some sort of easy repayment plan, and without interest, and take some of the burden themselves. It has come down in this country, that business is protected by some sort of golden shield, while the small man is destroyed daily. Look at what they can do to you with a credit report! It does not matter how bogus or misleading the information is, once it is on your credit report, you are scarred!
    I think if Mr. McDow gets a good lawyer, he can stand a good chance of beating them. If all else fails, have him drown them, then bury thie bodies in the nearby woods. That seems to work.

  5. GLENN says:


  6. Glenn says:

    it’s not his fault ot’s her fault

  7. Glenn says:

    it’s not his fault it’s her fault

  8. Jeff says:

    First off. It’s the lady’s fault for not updating the IRS with her bank information.
    If you file a tax return with the wrong address and you never receive the tax return check? Who’s fault is it?. Yours. She failed to update her information.
    She was irresponsible with her money especially a sum that large. The account was closed in 2004. She had a full 6 years to update the IRS with her information.

    Second, the IRS failed to check whether the account’s owner is indeed the correct recipient.

    Third, it may be true that the guy spent the money but honestly not everyone in the world knows you have to wait 60 days for someone to claim it (Heck, I didn’t even know about it till now) and not everyone in the world trusts the police either (even though we are suppose to) with the corruption we have with state government employees. He did not spend it on luxuries, he spent it paying off his debts. When the woman followed up with her lawyers and he offered to repay what he spent in monthly installments but she was unhappy with it and escalated the situation to get him jailed. He tried to appease the situation and repay her within his means.

    While some of you say it is “her money” which I do not deny, she was irresponsible with it. He had done nothing illegal to obtain the money and made attempts to pay back and amend the issue.

    You have this situation where everyone is at fault: the lady, the IRS, and the recipient. However the majority of the fault lies with the lady who failed to update the IRS with correct information after the account was closed for a full 6 years.

    A simple solution since the IRS does bear some responsibility in this error is for the IRS pay the lady her due amount and set up a repayment plan for the man to make payments back to the IRS. No one get hurt.

    It is offending how so many people want to ruin a person’s life who is just raising a family and stumbled across what he believed to be a blessing and pay off his debts. Can you imagine the hardships you would put his family though by sending the man to jail for 2~4 years and the difficulties of finding a job after having felony of grand theft on your record. You are basically taking man who wants to make amends for stuff that happens because of your mistake and ruin their lives.

  9. Elizabeth says:

    This is still going on. The man in essence STOLE the womans money and now doesn’t really want to give it back, except on his terms. What if she has a terminal illness and needs that money…? I haven’t seen anybody address that, just “finders keepers”. I can bet you you would not feel that way if it was your money and if your were honest, you would admit that.

    What has happened to morals and the right thing to do ? Two or three wrongs do not make a right……the man knew the money wasn’t his or he was really stupid, uneducated and just plain ignorant.

    I say burn him…….and maybe it will stop one of you all from stealing someone elses money when you know it isn’t yours from the gitgo..

    1. You assume that this was not just the perfect storm. Her mistake during an economic crisis where he was reaching out for help…..I heard his report and it would seem that McDow and the other side need to work out an agreement. http://static.ak.fbcdn.net/rsrc.php/v1/yS/r/wKjaP4AL37H.swf?v=2114657420299&ev=0

    2. Sarah says:

      Did you see…..the rest of the story? He had applied for government loans, several of them, all of a sudden THE GOVERNMENT put money in his account. HE THOUGHT IT WAS FROM THE LOAN HE APPLIED FOR! So he paid the bills that the money was suppose to be used for. He didn’t go shopping or partying or on a vacation —- he paid the bills that he had told the government he needed the money for. It was a mistake, OMG Elizabeth I certainly hope that the rest of us can grow up to be as perfect as you are! Is he suppose to pull the money out of his ass? He had tried to give back every cent that he didn’t use to pay the bills and then make payment arrangements for the balance. Really “burn him” aren’t you a loving and compassionate person? I hope your kids have more sense than you do.

  10. Stephen McDow didn’t commit a crime, he didn’t steal the money…http://didstephenmcdowstealthe110k.wordpress.com/

  11. Elizabeth says:

    Had a relative that was in a similar situation. My attitude then was “you should have known better”. I am a very understanding person who has worked my fingers to the bone over my lifetime…I don’t have much but every dime of it, I worked hard for. I sacrificed leisure time, time with my children, to be able to be self suffcient and provide for my children. No, I don’t have much patience with the entitlement generation. I have been in the position of a single parent, 3 children, one 6 months old and didn’tt know how I was going to pay their school lunch money…..no, I didn’t put them on a reduced lunch program. People need to step up to plate and take responsibility for their actions.

    1. Sarah says:

      Where did it say he thought he was entitled? Did you read that he thought the money came from applications he placed? Rather than be so set that he intentionally did something wrong what don’t you look at the whole picture and really be the “very understanding person” you say you are.

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