Bankmanagers Corp. v. Fed. Ins. Co., No. 12-3202 (7th Cir. 2013)
Annotate this CaseFrom 1997 through 2009 Sachdeva, the vice president for accounting at Koss, instructed Park Bank, where Koss had an account, to prepare more than 570 cashier’s checks, payable to Sachdeva’s creditors and used to satisfy personal debts. She embezzled about $17.4 million, pleaded guilty to federal crimes, and was sentenced to 11 years’ imprisonment. The SEC sued Sachdeva and an accomplice because their scheme caused Koss to misstate its financial position. Koss and Park Bank are litigating which bears the loss in Wisconsin. In this suit, Park Bank argued that Federal Insurance must defend and indemnify it under a financial-institution bond (fidelity bond) provision that promises indemnity for “Loss of Property resulting directly from . . . false pretenses, or common law or statutory larceny, committed by a natural person while on the premises of” the Bank. Sachdeva did not enter the Bank’s premises. She gave instructions by phone, then sent employees to fetch the checks. The district court entered judgment in the insurer’s favor. The Seventh Circuit affirmed; every court that has considered the subject has held that a fraud orchestrated from outside a financial institution’s premises is not covered under the provision, which is standard in the industry.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.