Don’t send it. Don’t send it. Don’t send it.
Last year, several stories emerged about executive email scams. These are the schemes where an unsuspecting accountant receives an email that appears to be from a C-suite or other high-ranking executive for an immediate transfer of funds. They would find out later, of course, that the executive had not ordered a transfer and that the money was probably gone and never coming back. The FBI estimated last year that the scam resulted in $2 billion in losses in 2 years.
So here’s a story of an L.A. accounting firm, Taylor & Lieberman, that had any employee fall for one of these scams and then tried to get their insurance company to cover it. Guess how that turned out?
A Chubb Ltd. unit is not obligated to provide coverage to an accounting firm that transferred more than $99,000 of its client’s money to criminals in response to fraudulent emails, says a federal appeals court, in affirming a lower court ruling.
Apparently this particular insurance policy didn’t cover forgery like this one (i.e. “emails inducting T&L to wire money were not financial instruments like checks, drafts and the like”); this situation didn’t qualify for “computer fraud coverage” because it wasn’t “an unauthorized entry into the recipient’s computer system,” and the one that really hurts:
There is also no funds transfer fraud coverage, said the ruling, “This coverage is inapplicable because T&L requested and knew about the wire transfer,” said the ruling in upholding the lower court’s dismissal.
Isn’t this situation one of the imaginary scenarios you think about when you purchase insurance? “You know, there’s always the possibility that we’ll make a really dumb mistake, so we should have insurance.” Any smart business person knows that there’s always a chance that someone does something colossally stupid and it results in a loss of some kind. When that happens, the person thinks, “That’s why we have insurance!”
Then it’s a real kick when the claim gets denied. And then you get mad and wind up in court because, “This is what insurance is for!” Only, this isn’t what insurance is for, based on how the contracts are written. Ned Flanders was right, insurance is just a gamble.
PwC on trial
According to the New York Post, PwC lawyers cross-examined ex-MF Global CEO Jon Corzine for 5 hours on Friday getting him to admit that MF Global had plenty of problems that had nothing to do with the firm’s role as auditor.
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If you’ve been thinking about returning to school for an MBA, Beech Valley’s Josh Tarica discussed some questions you should ask yourself.
Previously, on Going Concern…
In Open Items, a senior associate at a regional firm is considering a move to a Big 4.
In other news:
- Intel to Buy Mobileye, Maker of Sensors for Self-Driving Cars, for $15.3 Billion
- CPA business executive optimism hits highest point since 2004
- “[T]hese executives manipulated iPayment’s internal accounting systems, lied to the external auditor, and caused approximately $11.6 million in losses to the company.”
- Bugatti’s $2.2 million yacht has a Jacuzzi and fire pit, because being rich means having no shame
- Drive-thru wakes.
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