New York-based Citibank should be held liable for any losses suffered by a Harrisburg-based nonprofit that claims it was the victim of fraud, according to a legal filing by Mid Penn Bank.
- The nonprofit, the Center for Independent Living of Central PA, sued Mid Penn over the loss in February.
- Fraudsters allegedly managed to access two of the nonprofit’s accounts at Mid Penn and divert nearly $250,000 to Citi accounts maintained by the fraudsters.
- The center, which provides services to people with disabilities, was not able to recoup the funds.
- Now, Harrisburg-based Mid Penn is pointing a finger at Citi, one of the country’s biggest banks.
On what grounds: The rules governing ACH transactions — the kinds of transactions that siphoned money out of the center’s accounts, according to a filing last week by Mid Penn in Dauphin County Court.
- ACH payment requests typically go through several parties.
- In its filing, Mid Penn argues that under the rules, Citi was responsible for declaring that the center’s payments were properly authorized.
- Thus, the center’s loss is attributable to Citi’s alleged breach and Citi should be liable, according to Mid Penn.
- The bank is seeking to have Citi added as a defendant in the original lawsuit brought by the center.
- A Mid Penn spokesperson declined to comment beyond the filing, which also rejects the center’s initial claim that Mid Penn was responsible for its loss.
- An effort to reach a spokesperson for Citi was not successful.
What’s next: Mid Penn also is seeking to dismiss one of the three counts leveled against it by the center.
- That would be a claim that Mid Penn engaged in a bad faith breach of contract in its response to the initial loss, a response the center has claimed was inadequate.
- The other two counts are for breach of contract and for a violation of Pennsylvania’s uniform commercial code.
