Berkshire Bank Sued After $1.4 Million Cyber Scam
PITTSFIELD, Mass. — A Florida-based art dealer is suing Berkshire Bank after a "personal banker" wired $1.4 million out of his account and into the hands of scammers.
The suit says the personal banker, an employee at Berkshire Bank, fell for a "spoofing" scam and made two wire transfers out of the account to Hong Kong without making an attempt to verify the authenticity of the email requests.
In a suit filed in U.S. District Court in Springfield, Jim Jacobs, who opened an account in the 1980s with Great Barrington Savings, which later merged into Berkshire Bank, says the bank failed to provide sufficient security, made the fraudulent transfers without contacting him, and then later refused to refund the loss. Jacobs is now looking for the money to be returned, plus interest and legal fees.
According to court documents, the bank provided Jacobs a personal banker as his account had grown substantially. The banker was responsible for helping the art dealer make financial transactions — and occasionally he'd make wire requests via email.
On Oct. 17, a scammer sent an email to the personal banker imitating Jacobs saying he was at a non-existent "International Contemporary Art Fair" and wanted $580,000 wired to a bank in Hong Kong. Hong Kong just a year earlier had been cited by the FBI as a common locale for banking scams. The complaint says Berkshire Bank made no attempt to contact Jacobs nor verify the veracity of the email any other way.
Instead, the personal banker went ahead with the transfer. The next day, the scammer followed up and asked for confirmation and an account balance total, which the banker allegedly provided via email.
Two days later, that transfer "bounced" back. The banker then resent the wire transfer — again without Jacob's knowledge, according to the complaint. In the following week, the banker received yet another email asking for $826,000 more to be sent to a different bank in Hong Kong. Jacobs alleges that again the banker sent the wire without attempting to verify the email or contacting Jacobs.
Jacobs' suit says he had not worked with either of the Hong Kong banks and it states that for the last 15 years or so there have been repeated warnings of an increasing number of these types of scams. Jacobs says the bank should have known about these scams and should have taken steps to prevent it.
On Oct. 25, Jacobs was informed by the banker of the wire transactions, to which he responded that he had not authorized them.
Jacobs says the bank denied any responsibility for the wires. According to the complaint, Berkshire Bank said the personal banker was representing Jacobs and not the bank at the time of the transfers even though the action was taken "while at her Berkshire Bank office, during Berkshire Bank working hours, using Berkshire Bank equipment, on Berkshire Bank time, and with Berkshire Bank's knowledge and authority."
Jacobs said the banker responded to his emails via the Berkshire Bank account and that part of her duties while employed at Berkshire Bank include facilitating his transfers.
Jacobs then says he was contacted by a Berkshire Bank supervisor who allegedly told him the bank would attempt to recover the funds, but only if he signed a letter which required Jacobs to "indemnify, defend and hold harmless, Berkshire Bank against any losses or costs that the bank might incur in connection with its effort to recover the stolen funds even if such losses were caused by the negligence, gross negligence, willful misconduct or bad faith of Berkshire Bank."
Jacobs claims he refused to sign such a document as he was "shocked" by the bank's "improper attempt to condition any effort to recover the funds on securing a waiver from Mr. Jacobs of rights against Berkshire Bank."
Instead, he handwrote a letter saying the wires had not come from him and asking for the bank to "immediately credit his account in the amount of the unauthorized wires."
Attorney Lucy Prashker of Cain, Hibbard & Myers PC filed the lawsuit on Dec. 19.
"Berkshire Bank, by failing to exercise the care of a reasonably prudent person in connection with the sending and resending of wires to Hong Kong without authenticating the transfer orders, breached its fiduciary duty owed Mr. Jacobs," the lawsuit reads.
Berkshire Bank Lawsuit by iBerkshires.com on Scribd
