Tom Ott, president/CEO of the $66 million Universal City Studios Credit Union, reacted to a recent appellate decision that ruled for CUMIS Insurance Society Inc. in a case involving a fraudulent wire transfer.
At issue was a Court of Appeals upholding a ruling from the Los Angeles Superior Court that said CUMIS had a right to deny a bond claim from UCSCU after $243,000 was fraudulently transferred in January 2008 from William Ryder's account at the credit union to a bank account in Hong Kong.
The transfer was later discovered to be fraudulent when a person posing as Ryder was able to provide a new phone number to UCSCU in Universal City, Calif., and other personal identification information for the transaction to go through.
"We thought we had coverage and the court thought not, CUNA Mutual thought not," Ott said. "The only thing I can say about it is we want to congratulate CUNA Mutual and its attorneys on a job well done."
While Ott accepted the outcome, he commented on the issue at the heart of the case.
"Credit unions have difficulty dealing with identify theft. This is what the case was about," Ott said.
UCSCU said it was not able to recover the $243,000 and submitted a claim to CUMIS. The insurance firm said there was no coverage between the bonding period of February 2007 to February 2008 because new security measures in place during that time required wire transfers to be made through a secure phone number in place for at least 30 days prior to a transfer request.
In its suit against CUMIS, the credit union cited breach of contract. However, Los Angeles Superior Court Judge Terry A. Green ruled for CUMIS saying that UCSCU failed to comply with security measures during the bonding period.
In an appeal, Justice Robert Mallano upheld the ruling saying the credit union received notification months before the bonding period went into effect in February 2007.
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