CHICAGO (CN) – An insurance company cannot sue a bank for accepting checks from an embezzler, the 7th Circuit ruled.
Robert Carter embezzled money from his employer, National Accident Insurance Underwriters. He intercepted claim checks and fraudulently placed the money into his account with Citibank.
Citibank settled with Underwriters but was sued by American National Insurance Co (ANICO), Underwriters’ insurance company.
Although the bank unwittingly cashed 44 checks worth nearly $15.8 million, the insurance company cannot sue the bank, Judge Wood ruled.
“ANICO asserts that it is the ‘true owner’ of the checks,” Wood noted, but “ANICO admits that the checks were never made out to it, nor was it ever an endorsee.”