By James Clark - email
LUBBOCK, TX (KCBD) - An Oklahoma-based company responds in court records after being sued by a Lubbock bank.
City Bank claims that BancInsure improperly denied a claim for indemnification after a bank employee embezzled nearly $1 million. Mary Francis Dunn pleaded guilty to a charge of Misapplication of Bank Funds By a Bank Employee this year and will be sentenced at a later date.
BancInsure provides financial institution bonds to protect the bank in the event that an employee's dishonesty results in a loss. However, the bonds do not cover loan losses. Dunn was stealing money by manipulating a customer's line of credit. At first she was stealing from PlainsCapital for roughly five years. When she left PlainsCapital and went to work at City Bank she found a way to transfer the losses from PlainCapital to City Bank.
According to official records in her criminal case, Dunn then continued stealing from City Bank for about two years. BancInsure quotes its contract with City Bank, saying, "If some or all of the Insured's loss results directly or indirectly from Loans, that portion of the loss is not covered unless the Employee was in collusion with the one or more parties to the transactions..."
BancInsure freely admits Dunn was stealing money, but because it was money related to a line of credit there is no coverage. BancInsure asks the judge to rule that City Bank "take nothing."
Copyright 2011 KCBD NewsChannel 11. All rights reserved.