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Keppler v. RBS Citizens, N.A.

Case Number: 12-10768-FDS

Court: United States District Court, District of Massachusetts

Filed on Jun 24, 2014

Plaintiff: Patricia M. Keppler

Defendant: RBS Citizens, N.A.

Case Summary:

Keppler was a victim of an online romance fraud in which one or more persons in Ghana persuaded her to use her bank accounts to launder and transfer funds. A part of these accounts were a home-equity line of credit account (“HELOC account”) and a personal checking account Kepler opened with RBS Citizens. Between December 24, 2010, and January 11, 2011, someone transferred a total of $289,732 from an account at Citibank into Keppler’s HELOC account. Then, a total of $280,136.30 was transferred from Keppler’s HELOC account into her personal checking account. Finally, three wire transfers were made from her checking account to a bank account in Ghana totaling $165,000. RBS Citizens suspected fraud. The bank notified Kepler and blocked the HELOC account from originating any further transactions. The bank reversed the payments and sent funds back to Citibank. The transfers to Ghana, however, could not be reversed. As a result, RBS Citizens faced approximately $219,000 in losses. Keppler refused to refinance the mortgage on her property to cover the losses. As a result, RBS Citizens charged the loss to her account by adding it to the principal of her loan.

Keppler brings suit against RBS Citizens for illegally charging her for losses to her account as she states she did not make those transactions. She further puts blame against the bank as it did not quickly identify and respond to the fraudulent activity. RBS Citizens contends, among other things, that Keppler authorized those transfers by giving her personal identity and banking information to the individuals who did initiate the transfers, and therefore bears responsibility for the losses.

Debates and Laws Cited:

Marie Kerr’s Testimony - Marie Kerr is the president and founder of Shamrock Consulting Group, a professional consulting firm in the field of money laundering and financial crime. Kerr is a Certified Financial Crime Specialist, a certification earned from the Association of Certified Financial Crime Specialists that requires training in detecting and dealing with financial crime. In Kerr’s expert report, Kerr opined that RBS Citizens failed to comply with the NACHA Operating Rules concerning the fifteen payments into Keppler’s account and should not have allowed them to occur. She also concluded that the bank’s authentication procedures for verifying the identity of an individual who was transferring money into a HELOC account over the telephone were commercially unreasonable. Finally, Kerr concluded that RBS Citizens’ fraud detection, risk mitigation, and regulatory compliance procedures were insufficient.

RBS Citizens seeks to strike Kerr’s testimony on the grounds that she is not qualified to opine on the subject and her methodology is unsound.

Lastly, it is unclear what legal theory Kerr is employing in order to establish liability on the part of the bank, and how the proposed testimony fits within that theory. Kerr cannot simply offer testimony that the bank should have had better systems for detecting fraud without some indication as to why that testimony is relevant to some legally cognizable claim (or in response to a legally cognizable defense). In the absence of a showing of legal relevance, the motion to strike will be granted. The Court will again defer ruling on the issue to the extent that it relates to the claim under Chapter 93A.

Court Results:

The defendant’s motion to strike is (1) DENIED as to Marie Kerr’s opinions concerning the defendant’s compliance with NACHA rules; (2) GRANTED as to her opinions concerning the commercial reasonableness of defendant’s security measures, except as to the claims arising under Mass. Gen. Laws ch. 93A; (3) GRANTED as to her opinions concerning the adequacy of defendant’s fraud detection systems, risk mitigation, and regulatory compliance procedures, except as to the claims arising under Mass. Gen. Laws ch. 93A; and (4) DENIED without prejudice to its renewal as to the claims arising under Mass. Gen. Laws ch. 93A.


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