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"Case Studies" > Professional Liability > Bank Failed to Detect Embezzlement Despite Numerous Warning Signs

Bank Failed to Detect Embezzlement Despite Numerous Warning Signs

Summary:


Each of the transactions was summarized in a “red flag” matrix. The jury
was able to conclude that after a period of familiarization, the embezzler
became more bold—effectively raising more red flags as time passed—
which the bank failed to respond to.

Plaintiff accused its primary financial institution of failing to exercise reasonable care and ignoring its internal procedures to detect serial embezzlement of funds by the company bookkeeper. Plaintiff demonstrated that on at least 16 different occasions over a three month period, banking “red flags” related to every fraudulent transaction were ignored.


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