Fraud Victim Weighs Lawsuit Against Bank

'I am Treading Water Here' After $465,000 Theft
Fraud Victim Weighs Lawsuit Against Bank
Once again, a business customer is on the verge of suing its bank in the wake of fraud losses from corporate account takeover.

Michelle Marisco, owner of Village View Escrow Inc., Redondo Beach, CA, has her attorney ready to file a lawsuit against Professional Business Bank, Pasadena, CA, after losing $465,000 in fraudulent account takeovers.

[ Note: For analysis of this incident, see Account Takeover: The New Wrinkle.]

The crimes occurred in March, when hackers were able to hack the company's network, steal bank credentials and send 26 consecutive wire transfers out of the country. Marisco says she's struggled to keep her business afloat ever since.

"I am treading water here," Marisco says. "I had to let one of three employees go because of this fraud loss."

Village View Escrow is but the latest business to step forward and threaten legal action against banking institutions following such fraud incidents. Among other high profile cases, Dallas-based Comerica Bank and Michigan's Experi-Metal Inc are exchanging court motions in their dispute. And Patco, a Sanford, Maine-based construction company, has sued Ocean Bank of Portsmouth, NH, for failing to detect and prevent over $500,000 in bogus transfers.

How it Happened

Professional Business Bank did not respond to requests for comment on the Village View Escrow incident.

But Marisco says that the 26 wire transfers were made without her knowledge, and she never received any email notification from the bank, as she normally would when money was moved out of the escrow account. The cybercriminals apparently disabled an email verification service offered by the bank.

"The whole experience is surreal and has opened my eyes to the loopholes and the lack of 'everything' that would make sense when it comes to a business banking relationship," Marisco says.

The point of infection likely occurred when Marisco received an email purportedly from UPS, stating there was a problem with a document she sent through the carrier. When she opened an email attachment, her PC became infected with a virus. She says she couldn't read the attachment, so she forwarded it to her assistant, whose PC also caught the virus. Subsequently, via malware, fraudsters were able to secure the company's banking credentials and orchestrate the fraudulent transfers.

Bank's Response

Marisco says she was stunned by the reaction she received from Professional Business Bank.

"The minute I discovered it, I called the bank and told them about it," she says. "They put me on hold for a very long time, then they came back and said that my bank reps were not allowed to talk to me unless it was on speaker phone with senior staff present on the call."

The bank then closed access to the business' bank account, Marsico says, and she has only recovered a fraction of the money lost. "Trying to run a business without access to my money was a horrible experience," she says.

Marisco recovered some of the money from money mules duped into enabling the scheme. She contacted the mules via social media, told them what had happened and managed to recover $70,000. "I was able to get that money back -- not the bank," she says.

Business in Jeopardy

When this incident first occurred, Marsico says she felt like her business was the only one to have suffered such fraud. She since has learned about the proliferation of these crimes, and her resolve to recover her losses has grown. "Even if it means that my business fails," she says, "I am going to pursue this as a legal case."

Because the money taken was being held for clients' escrow accounts, Marisco says she has had to float a loan at another bank for part of the unrecovered $395,000. She also has listed her house and has declined her salary to help cover the losses and keep the business open. She believes she is in jeopardy of having her license pulled because of the uncovered losses, "unless I come up with something pretty quick."

The incident has taught Marisco about the devastation of fraud. "I began this business three years ago and built it by myself," says the business owner, who has 22 years of experience in the mortgage escrow industry. "And we were doing really well business-wise -- until this fraud happened to the company."

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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