An investment management firm that lost more than $275,000 to fraud is suing TD Bank for what it characterizes as the bank’s complete lack of preparedness for a common type of scam.
Moore Capital Holdings alleges that the case illustrates TD's “total and systemic failure to respond” to schemes in which criminals use fake email addresses to steal money from business customers.
A TD spokesperson said Wednesday that the bank does not comment on litigation.
The lawsuit, filed Tuesday in federal court, stems from events that unfolded in April.
A Moore Capital employee, victimized by a multi-vector fraud scheme, logged into what he thought was TD’s platform and then answered a phone call from what appeared to be TD Bank, prompting a second employee to enter his credentials at the bank, according to the complaint.
The firm’s principal, Zachary Moore, later received two email alerts stating that two transactions of more than $90,000 had been initiated, according to the complaint.
Moore called TD Bank, as he was directed to do in alerts he received from the bank, to report the fraudulent activity. But he was routed to a general automated answering system rather than the fraud department, according to the lawsuit.
He instead decided to call a local TD branch, where an assistant manager was unavailable, and another employee told him that he would immediately report the issue internally, the complaint states.
Minutes after that phone call, Moore received a third alert about a $91,450 wire transaction, and the TD assistant branch manager was still unavailable to address the issue, according to the complaint, which states that the investment management firm has yet to recover any of the wired funds.
“It is clear that TD Bank is systemically incapable of protecting its customers from the known, foreseeable and extraordinarily prevalent risks that businesses face in the age of cyber-crime,” the lawsuit states.
Moore Capital also alleges that after the fraud occurred, TD provided company officials little information, refused to connect them with fraud investigators and failed to respond to follow-up messages.
The investment management firm decided to undertake its own investigation, working with the FBI, police and three major banks that initially received the fraudulent money, according to the complaint.
As a result of that investigation, the victimized company learned that almost all of the funds were en route to Silvergate Bank in La Jolla, California, which has
When Moore Capital informed TD Bank of its findings, the response from a TD representative included a request for the investment management firm to pass along the name of a contact at the $12 billion-asset Silvergate, prompting a frustrated email from Moore declaring that TD “has completely dropped the ball.”
While Moore Capital worked with the FBI and other banks to recover the funds, “TD Bank’s inexplicable ineptitude, delay and lack of preparedness or a plan had already doomed that effort,” the lawsuit says.
A Silvergate spokesperson said the company has a policy not to publicly discuss individual banking relationships. Gemini Trust did not respond to a request for comment.
