A recent email funds transfer fraud case illustrates a novel claim against a bank dismissed at the pleading stage. Beins, Axelrod, PC v. Analytics, LLC, 2020 U.S. Dist. LEXIS 71713 (D.D.C. Apr. 23, 2020). After a D.C. law firm, seeking its share of $5,966,250 in fees and costs arising from a class action settlement, sent wire instructions for payment to another firm, the lawyer’s email account was hacked, and a cybercriminal fraudulently emailed new wire instructions. Using the new information, the sender initiated a wire transfer to a Citibank account controlled by the hacker.
The law firm filed a pro se claim against Citibank under the Computer Fraud and Abuse Act (“CFAA”), requiring a showing that Citibank aided and abetted the hacker by “knowingly and with intent to defraud, access[ing] a computer without authorization, . . . and by means of such conduct further[ing] the intended fraud….” 18 U.S.C. § 1030(a)(4). The firm alleged the bank’s maintenance of the hacker’s account, allowing the deposit of stolen funds and permitting their withdrawal, constituted the requisite assistance. The district court rejected the allegations of Citibank involvement as insufficient “even under a willful-blindness theory,” noting the plaintiff did not allege “facts that indicate that the bank ‘closed its eyes’ to the hacker’s obvious crime” nor did it “allege any unusual activity that might have raised the bank’s suspicion or any vetting irregularities,” and dismissed the claim without prejudice. 2020 U.S. Dist. LEXIS 71713, at 10.
While this claim under the CFAA is novel, it is also serves to show that banks can be subject to aiding and abetting liability when properly plead. L&R has successfully brought aiding and abetting claims, including in a major, serial loan fraud case, representing bank no. 2 against bank no. 1, where bank no. 1 discovered the fraud, forcing the fraudster to commit the same fraud against bank no. 2 in order to be repaid, with bank no. 1 later paying a substantial settlement.
For further information, contact Salvatore Scanio at sscanio@ludwigrobinson.com or 202-289-7605 or Robert Ludwig at rludwig@ludwigrobinson.com or 202-289-7603.