Two months ago, I went to a Chase bank in Houston to do a Telegraphic
transfer. They asked me to pay in cash $2500. I drew the cash and gave
them the money. They took the cash from me and that money disappeared.
They did a Telegraphic transfer by drawing money from my savings
account. After I complained, they said that they did internal
investigation including checking vedio image of transaction and said
that I didnot give them any cash. How do I pursue them to get my money
back without loosing even more money in legal fees? I have now
migrated to Australia.

You drew the cash - from where ?

You should have a bank statement (or two statements) showing TWO $2500
withdrawels within at most an hour of each other.

Actally I would expect slightly above $2500 to cover the TT fee.

You should also have some paperwork, that needs close examination.

It sounds to me like a clerical cockup
- you probably tried to send the funds from your A/C, then were told
that it was a 'cash only' deal.

I suggest a polite, but firm letter, enclosing photocopies of all
documentation (getting them notarized will cost you little - and show
you mean business).

One word of warning, check first that TWO TTs did not go through.
That video stuff sounds suspicious - those things just take snapshots.

Actually, I have already gone to the highest level in Chase/ Bank One.
I went to the Office of Chairman (to the person who investigates such
cases). That lady says that she reports to the President. She was the
one who said that they looked at the vedio and I didnot pay any cash.
At present, I am just waiting for all my funds from this bank to be
transferred to another bank before I take the next action. (Just in
case, they decide to freeze my money if I take legal action). By the
way, this transaction happened in End Jan 2005.

I do have a transaction statement from them which has 2 glaring
mistakes (the account number from which they transferred the money and
the amount of transfer.) Now these are mistakes both as per my version
and as per their version. The bank's response when confronted with
these mistakes was "Anyone can make a mistake".
Let me explain. I simplified the case a little.

My bank account statements show the following (these are within a few
hours of each other).
Checking account = -2500.00 cash withdrawl (I actually needed $2325
for TT + $20 wire transfer fees, but I wihdrew a little more)
Saving account    = -     55.80  Amount sent by Telegraphic transfer
Saving account    = -     20.00  Wire transfer fees
(I needed 2325 US$ to be converted and sent as Indian Rs (1US$= about
45 Rs). They actually sent 2325 Rs which is 55.80 US$. And this amount
was recd in India.)
The recipt that I got from Bank One shows the amount being transferred
is 2325 US$ (1st error) and shows it being drawn from my checking
account (2nd error, it went from Savings account).

The next action I am contemplating is filing a Police report and
getting a lawyer who doesnot charge too much (some kind of small
claims settlement). But I donot know exactly how to go about doing it.

Pl advise.

Yes, I think a lawyer is the right idea.  If he thinks you have a
case, it could be possible that the bank would "see the light" as the
cheaper solution before they spent money fighting it.  It there some
more public forum where one can air such complaints, on the web or in
the print or other media?  The adverse publicity can also have work.

Just to update. I am now filing a complaint with the Comptroller of
Currency www.occ.treas.gov. The Bank itself advised this as the next
level of dispute resolution.