Have you been defrauded? Has your money invested in an escrow or trust
Who can you turn to for compensation: the individual bank customer who
committed the fraudulent scheme or, the bank, whom allowed the fraudulent
activity to occur?
There is good news for Florida victimswho have been defrauded through fraudulent
schemes by a bank’s customer. You may be able to recover your losses
from the bank, according to the recent case of
Chang v. JP Morgan.
Chang, the Eleventh Circuit recently ruled that a non-customer alleged sufficient
facts to assert claims against a bank for negligence and aiding and abetting
fraud when a bank’s customer engaged in fraud.
Although the Eleventh Circuit acknowledged Florida, like other jurisdictions,
recognizes that as a general matter, “a bank does not owe a duty
of care to a noncustomer with whom the bank has no direct relationship,”
the court also stated that there is an exception to this rule: “a
bank may be liable to a noncustomer for its customer's misappropriation
when a fiduciary relationship exists between the customer and the noncustomer,
the bank knows or ought to know of the fiduciary relationship, and the
bank has actual knowledge of its customer's misappropriation.”
Chang, the non-customer/investor alleged that the customer owed it a fiduciary
duty; the bank, through its vice-president, was aware of this fiduciary
relationship; and the bank, through its vice president, knew that customer
was misappropriating funds held in escrow account into which non-customer/investor
wired money. Further, the court held that under Florida law, the vice-president’s
knowledge could be imputed to the bank because the interests of the vice-president
were not entirely adverse to those of the bank, which gained some benefit
from the vice-presidents conduct.
Further, the Eleventh Circuit stated that “[b]ecause banks do have
a duty to safeguard trust funds deposited with them when confronted with
clear evidence indicating that those funds are being mishandled, a bank’s
inaction — that is, its failure to stop the theft of such trust
funds — can constitute substantial assistance.” Thus, the
court concluded that bank’s alleged inaction was sufficient to constitute
the “substantial assistance” element for aiding and abetting fraud.
For more information about bank liability and how to protect your funds
to speak with our knowledgeable Florida business litigation attorneys at
Rosenthal Law Group today.