Bank Of America Says It Shouldn’t Have To Pay For School Employee Who Stole $840K

For more than four years, an employee of a Catholic school in Connecticut got away with siphoning hundreds of thousands of dollars from the school’s account at Bank of America. In 2012, a court ordered BofA to pay $840,000 to the diocese for its failure to catch on to the swindle. Today, the bank was scheduled to appear in court to make its case for why it shouldn’t have to pay that tab.

Back in 2002, the St. Bernard School of Montville, CT, was already banking at Fleet Bank, but an accounts payable employee for the school took it upon himself to open up a second account for “Saint Bernard’s High School Norwich Diocese Camp Sunshine” at a second Fleet branch. Even though the employee had no authority to access the school’s account, he was able to shift funds from the legitimate account to the bogus one. Additionally, he told some people who wrote checks to the school to make them out to the Sunshine Camp so the funds would be deposited straight into the scam account. He also wrote checks from the school’s account to the fraudulent account to pay invoices that didn’t exist.

While all this was going on, Fleet Bank merged with Bank of America in 2004.

It wasn’t until after the man lost his job when his position was cut that the school caught on to the sizable swindle. He was arrested in 2007 and convicted of first-degree larceny in 2008.

That same year, the Roman Catholic Diocese of Norwich, CT, which runs the school, sued BofA for negligence, saying it failed in its obligation to protect its customers’ money.

The bank argued that the school’s deposit agreement includes a time limit for making claim disputes and that it had waited too long before filing its claims.

But according to the Norwich Bulletin, the judge instructed jurors that the time limit could be waived if they found that the bank’s later conduct was related to its first actions or if Bank of America had a “special relationship” of continuing trust and duty toward St. Bernard.

In the end, the jury sided with the diocese. However, BofA has appealed the decision, saying that the time limits should apply and that the total awarded to the school should be reduced by $100,000 because of funds paid out by the school’s insurer.

Court to hear Bank of America appeal in St. Bernard case [Norwich Bulletin]

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  1. econobikerredux says:

    The thief opened an account as “Saint Bernard’s High School Norwich Diocese Camp Sunshine, c/o Sal Licitra.” and the bank never thought to review this?

    Obviously , BOA did not have adequate procedures in place to review the Fleet Bank account holders upon acquiring that bank.

    BOA should have to refund the entire amount of money and consider the $100,000 paid by the insurer to be for the school’s attorney fees etc.

    • Cara says:

      Why should it be the bank that repays the money? Why not demand it from the actual thief?

      • MathManv2point0 says:

        Also, it was Fleet, not BoA that the account was opened with. My guess is the the merger doc between Fleet and BoA included a whole affirmation section in which Fleet affirmed that all opened accounts were subject to proper banking procedures and review…etc. However, good luck going after them.

      • furiousd says:

        I agree [Cara], I don’t see how it’s logical to attack the bank when internal procedures at the diocese should have caught the fraud. Bank of America shouldn’t be on the hook for anything and the diocese should be responsible for BofA’s legal fees for filing against them.

        • furiousd says:

          Come to think of it, I like the idea in general: when a case is found to be frivolously filed the person will then be responsible to pay the amount they were requesting in the first place. It’d cut down on frivolous lawsuits in general, and people would be more likely to sue for a reasonable amount rather than seeking millions in punitive damages.