Once-prominent disbarred lawyer sues bank for allegedly failing to stop his employee’s embezzlement

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Once-prominent disbarred lawyer sues bank…

Banking Law Once-prominent disbarred lawyer sues bank for allegedly failing to stop his employee's embezzlement

By Debra Cassens Weiss

April 13, 2022, 2:18 pm CDT

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A once-prominent lawyer in Washington, D.C., has sued PNC Bank for allegedly ignoring “red flags and serious irregularities” that allowed an employee to embezzle money from him.

The former lawyer, Bernard Grimm, agreed to disbarment last year following an ethics investigation spurred by a bounced check. He claims that his employee embezzled $725,000 from accounts at PNC Bank, and that part of the money was stolen after he put the financial institution on notice of a fraudulent scheme in his accounts.

Reuters and Law.com have coverage of Grimm’s April 11 lawsuit.

The suit says some of the money was taken from Grimm’s IOLTA account, which holds money in a trust for clients. Money was also taken from two other accounts at PNC Bank.

The employee, Katherine Ross, pleaded guilty to one count of bank fraud in 2021, according to Reuters and Law.com. The lawsuit identified her as the office manager and bookkeeper at Grimm’s firm from 2016 to 2020.

Grimm’s suit says Ross did not have authority to initiate disbursements from his accounts, and she had no signature authority over the accounts. Yet Ross allegedly created checks payable to herself and forged Grimm’s signature. She also allegedly used IOLTA funds to pay her credit card at a different institution.

In one month in October 2019, Ross cashed at least eight checks totaling more than $17,000 in which she wrote “compensation” in the subject line, including checks drawn on the IOLTA account, the suit says. At other times, she cashed checks payable to herself that included “cash for [plaintiff]” in the subject line.

Grimm lost the embezzled funds, and he also had to make whole the stolen IOLTA funds and had to pay payroll taxes on funds disguised as legitimate compensation, the lawsuit says.

The checks accepted by PNC Bank were “high-risk checks, payable to a person other than the account holder named; drawn to a payee whose name did not match the account holder named; and required manager approval prior to being cashed or accepted for deposit,” the lawsuit says.

The suit alleges lack of ordinary care and good faith, unlawful trade practices, breach of contract, negligent hiring, violation of the Electronic Fund Transfer Act, and aiding and abetting fraud.

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