Bank of America May Have Aided Fraudster

     (CN) – A car dealership operator that says its former chief financial officer embezzled millions of dollars can pursue claims that Bank of America helped the fraud, a federal judge ruled.



     Simi Management dba Connell’s Auto Center says it discovered that its chief financial officer Roger Reichart had embezzled $4 million from the company after it sold the last of its franchises in 2007.
     Reichart was allegedly sentenced in Alameda County Superior Court for grand theft and tax evasion last year. The auto center sued a Bank of America branch in Oakland, Calif., around the same time, claiming that it helped Reichart embezzle.
     “Stealing millions of dollars by checks made payable in amounts less than $10,000 requires lots of trips to the bank,” the complaint says.
     “Reichart was in Oakland Main Branch numerous times a week, every week of the month, presenting Connell Auto checks that individually did not exceed $10,000.”
     After the Northern District of California dismissed Connell’s aiding and abetting claims, the company filed an amended complaint, and Bank of America again moved to dismiss.
     This time, U.S. Magistrate Judge Donna Ryu refused.
     Though the bank claimed it could not be held liable for legal duties it did not have, Judge Ryu said that argument “misses the point.”
     “California law does limit the duties of a bank toward its depositors. Nevertheless, a bank’s actions, even if they do not independently give rise to liability, may serve as indicia of actual knowledge that buttress an aiding and abetting claim,” Ryu wrote Monday.
     The court also refused to dismiss the breach of contract claim, concluding that the 2007 contract between the parties “remains unclear.”
     Connell’s claims the bank breached its contract by destroying banking records when it received notice of Reichart’s embezzlement, and refused to provide copies of canceled checks.
     The bank claimed a signature card with Reichart’s name proves that Connell authorized the alleged theft.
     “After examining the parties’ submissions, the court finds that various statements on the signature card suggest that it may not be the full valid contract between Connell and [the bank],” the 10-page decision states.
     “Within this hazy factual context, BofA has failed to show that there is ‘no cognizable legal theory’ by which plaintiff could prevail on this claim.”

%d bloggers like this: