WINFIELD – Mountaineer 4x4 Unlimited is suing City National Bank after it claims it was negligent in allowing someone to defraud the company out of nearly $500,000.
Mountaineer has been a business since September 1989 and banks at City National, according to a complaint filed in Putnam Circuit Court.
The company claims Claude Brian Ellis, the president and sole shareholder of Mountaineer, has run the business since its inception and did not enroll the company in City National’s eBanking or online banking services because he was not computer literate.
Ellis maintained Mountaineer’s financial records solely in paper format, including paper checks for all accounts payable and payroll purposes, according to the suit.
The company claims in November 2007, Mountaineer reached an agreement with Sandra K. Ball where Ball took over the day-to-day bookkeeping tasks previously provided by Ellis, including record keeping for accounts receivable and accounts payable, preparing written checks for Ellis’ review and signature and assisting with the calculation and payment of Mountaineer’s business taxes.
Ball served as a part-time bookkeeper for Mountaineer from 2007 until November 2013 and she was never held out nor identified as an agent of the corporation, according to the suit.
The company claims at all times, Ellis was still the only authorized party on the City National checking account and Ellis reviewed and signed every paper check generated from the account.
Ball’s only interaction with Mountaineer’s City National checking account was for the sole purpose of preparing unsigned paper checks for the payment of Mountaineer’s business expenses.
Between 2007 and 2008, Ball fraudulently gained electronic access to Mountaineer’s checking account without the knowledge or consent of Mountaineer and from 2008 until 2013, she requested electronic funds transfers from Mountaineer’s City National bank account to her personal Capital One Mastercard Platinum credit card without the knowledge or consent of Ellis or Mountaineer.
The company claims pursuant to the unauthorized payment orders or funds transfer requests made by Ball between January 2008 and November 2013, City National transferred money by wire transmissions from Mountaineer’s account to Ball’s card approximately 514 times, resulting in a loss of $445,164.
Ball was charged with eight counts of computer fraud and one count of fraudulent schemes and in March, Ball pleaded guilty to wire fraud and in June she was sentenced to three years in prison for her illegal conduct, according to the suit.
As City National was aware that prior to January 2008, Mountaineer conducted a limited amount of banking, all of which was done via traditional, non-electronic methods, according to the suit.
The company claims City National had a legal obligation to monitor all customer accounts for unusual or uncharacteristic behavior and had a legal obligation to enact commercially reasonable security procedures to protect the funds deposited with it from unauthorized and/or fraudulent access.
City’s failure to employ commercially reasonable security procedures to prevent unauthorized access to Mountaineer’s checking account and to detect such fraudulent transfers, Mountaineer suffered extensive monetary damages in the amount of $445,164, according to the suit.
Pursuant to West Virginia law, City National is unable to enforce the unauthorized payments from Mountaineer’s checking account and must refund these payments to Mountaineer, according to the suit.
Mountaineer is seeking compensatory and punitive damages. It is being represented by Harry F. Bell Jr. of the Bell Law Firm PLLC.
The case is assigned to Circuit Judge Phillip Stowers.
Putnam Circuit Court case number: 15-C-276