• CSC20logograyorangenoyear
  • Conference
      • About
        • About the Conference
        • Floor Plan / Sponsor List
        • Sponsors
        • FAQ
        • Contact Us
        • Health & Safety
      • Hotel & Travel
        • Hotel Accommodations
        • Travel Information
      • Attend
        • Why Attend?
        • Registration & Pricing
        • Conference Schedule
        • MCLE Accreditation
        • Speakers
        • Speaker Resources
      • Sponsor
        • Why Sponsor?
        • Sponsor / Inquire
        • Sponsor Resource Center
        • Sponsorship & Advertising
  • News
    • Latest News
  • Subscribe
    • Newsletter Signup
    • Show Updates
  • .
  • Conference
    • About
      • About the Conference
      • Floor Plan / Sponsor List
      • Sponsors
      • FAQ
      • Contact Us
      • Health & Safety
    • Attend
      • Why Attend?
      • Registration & Pricing
      • Conference Schedule
      • MCLE Accreditation
      • Speakers
      • Speaker Resources
    • Sponsor
      • Why Sponsor?
      • Sponsor / Inquire
      • Sponsor Resource Center
      • Sponsorship & Advertising
    • Hotel & Travel
      • Hotel Accommodations
      • Travel Information
  • News
    • Latest News
  • Subscribe
    • Newsletter Signup
    • Show Updates

December 4—6, 2023
Hilton Miami Downtown, Miami, FL

Register Sponsor / Inquire
Q
POPULAR SEARCHES
News + Features
News + Features
News + Features
News + Features
News + Features
News + Features

Latest News

October 25, 2017

“Fake President” Fraud Coverage Decisions Leave Contractors in Legal Limbo

Latest News
Economic Forecasts | Ethics and Compliance | Infrastructure and Transportation | Insurance and Surety | Latest News | Litigation Strategies/Dispute Resolution | News | Risk & Contract Management | Workforce and Labor
October 25, 2017

“Fake President” Fraud Coverage Decisions Leave Contractors in Legal Limbo

Differing district court opinions make it difficult to prepare for email fraud.

Large companies with significant cash flows are increasingly the target of criminals who represent, via email, that they are the president of the company requesting that employees send large sums of money to fraudulent accounts. Contractors should take note.

James Vorhis, in a sobering article in NOSSAMAN’s INSURANCE RECOVERY REPORT, discusses this issue.

Obtaining meaningful insurance coverage for “’fake president’ fraud, which is also known as business e-mail compromise, or social engineering fraud” is problematic because the coverage is based upon the definition of a “fraudulent entry or changing of data in the policyholder’s computer system.” What this phrase means is problematic.

Mr. Vorhis details two court cases that illuminate this problem.

In Medidata Solutions, Inc. v. Federal Ins. Co., Case No. 15-CV-907 (S.D.N.Y. July 21, 2017), “a fraudster imitating the president of Medidata Solutions, Inc. directed an employee in the accounts payable department to wire money overseas for a company acquisition.” After performing standard due diligence to determine this transaction was authorized by the company president, the employee wired $4.8 million dollars.

Medidata’s insurance policy contained “a computer fraud provision” that provided protection for a fraudulent entry in the company’s computer system. Upon appeal, the District Court ruled “that the entry was indeed fraudulent because the fraudster used a computer code to alter a series of email messages to make them appear as if they originated from the company’s president.” The Court ruled in favor of the insured.

In American Tooling Center, Inc. v. Travelers Casualty and Surety Co., Case No. 5:16-cv-12108, 2017 U.S. Dist. Lexus 120473 (E.D. Mich. Aug. 1, 2017), the key provision in the insured’s computer fraud provision was also the definition of “direct loss resulting from the use of ‘any computer’ to ‘fraudulently cause’ a ‘direct loss’ by money transfer.”

The court ruled in favor of the insurer, based upon facts almost identical to those in Medidata, “because it found that the term ‘direct loss’ was synonymous with the term immediate, and there were steps in between the fraudulent emails and the wiring of the money.”

Two cases with similar facts resulted in “opposite holdings.” This places contractors in a difficult situation. Mr. Vorhis’ advises business owners to have the computer fraud provisions of their insurance policies carefully reviewed by an attorney or insurance broker.

Source—

Two Court Rulings Show Coverage Difficulties for “Fake President” Fraud, James Vorhis, NOSSAMAN’s INSURNACE RECOVERY REPORT, Aug. 2, 2017.

Economic Forecasts•Ethics and Compliance•Infrastructure and Transportation•Insurance and Surety•Latest News•Litigation Strategies/Dispute Resolution•News•Risk & Contract Management•Workforce and Labor

SHARE

Share on Email
Share on Linkedin
Share on Facebook
Share on Pinterest
Share on Twitter
← Previous Article Next Article →
Latest News Latest NewsNews

Survey: Optimism Dims For Private Sector Construction

ARLINGTON, VA - Construction contractors are less optimistic about many private-sector segments than they were a year ago, but their expectations for the public sector market have remained relatively bullish.

Latest News Latest NewsNews

Analysis: Restrictive Covenants And Non-Competes

RIVER EDGE, N.J. - The legal landscape with regard to non-compete agreements and other types of restrictive covenants has been tenuous for decades.

Latest News Latest NewsNews

Survey: Optimism Dims For Private Sector Construction

ARLINGTON, VA - Construction contractors are less optimistic about many private-sector segments than they were a year ago, but their expectations for the public sector market have remained relatively bullish.

Latest News Latest NewsNews

No Non-Compete: Good Or Bad Idea?

WASHINGTON, D.C. – With the new year came a newly proposed “no non-compete” rule from the FTC.

Latest News Latest NewsNews

Images From CSC 2022

LAS VEGAS - The next CSC is scheduled for Dec. 4-6, 2023 in Miami, but first here is a look back at images from Vegas.

Latest News Latest NewsNews

CSC 2022 – Heightened Focus On Design Practice

LAS VEGAS - This year’s Construction Super Conference is now in the books, and it was excellent. It was one of the better ones, in fact, that I’ve been to in a while.

Latest News Latest NewsNews

CSC 2022 – Force Majeure, Supply Chain, And More

LAS VEGAS - I just attended another great Construction Super Conference event in Las Vegas. It certainly feels as though the “new normal” is “back to normal.”

Latest News Latest NewsNews

CSC 2022 Networking Opportunities Abound

LAS VEGAS – Educational sessions are top notch at Construction Super Conference (CSC), but attendance at CSC is also a great opportunity to solidify existing relationships and build new ones at stellar networking events.

SHOW INFORMATION

SIGN UP

Register now for the opportunity to connect with thousands of atttendees and vendors

Register
Sponsor / Inquire
FOLLOW US ON
  • Follow
  • Follow
  • Follow
© 2023 Emerald X, LLC. All Rights Reserved.

ABOUT    CAREERS    AUTHORIZED SERVICE PROVIDERS   TERMS OF USE   PRIVACY POLICY