Liam Wrote a Check Drawn on His Account at ABC

Liam wrote a check drawn on his account at ABC Bank for $500 made out to Lara Smith for payment for yard work. Liam put the check properly addressed to Lara in the U.S. mail. Through unknown means, a thief obtained the check. The thief altered the name of the payee to Tara Smith, and through expertly forged documents opened an account at XYZ Bank and obtained the funds from Liam's check along with a number of other stolen checks. When the check was then presented to ABC Bank for payment, ABC Bank charged Liam's account in the amount of $500. A few days later, Lara asked Liam for her money; and, after investigating, he became aware of the situation. Assuming the court follows the reasoning of the case in the text, Halliburton Energy Services, Inc., v. Fleet National Bank, which of the following is true regarding whether Liam is entitled to a return of his funds?

A) As a matter of law, the presenting bank is charged with notice of forgeries; therefore, XYZ must take the loss, and Liam is entitled to a return of his funds.
B) Lara, the payee, bore a risk of loss and, although Liam is not entitled to return of the funds, his debt to Lara is discharged.
C) Liam is entitled to a return of only ½ of the funds because in such cases, the collecting bank, XYZ Bank, and the drawer, Liam, must share the loss.
D) Liam is entitled to a return of the funds only if he can establish that he notified ABC Bank of the problem within 30 days of receiving the bank statement showing the alteration.
E) Liam is entitled to a refund if he can establish that XYZ Bank failed to exercise ordinary care in taking the instrument.