Experienced Securities And Financial Fraud Lawyer In Pittsburgh, PA

Guidance From An Experienced Bank Fraud Attorney

For more than four decades, attorney Michael J. Betts has provided legal guidance in numerous claims involving the misappropriation and diversion of funds from the bank accounts of corporate and individual clients. He has dedicated a part of his private practice to pursuing litigation involving banks, and he previously served as senior litigation counsel for a large retail bank, providing guidance in numerous account-related fraud claims.

Understanding The Scale Of Bank Fraud

Banking fraud is a pervasive and costly issue. The Federal Bureau of Investigation (FBI)’s Internet Crime Complaint Center (IC3) reported that Business Email Compromise (BEC) scams resulted in more than $2.7 billion in losses for victims in 2023. These scams are often a precursor to wire transfer fraud, as they involve deceiving businesses into authorizing fraudulent wire transfers. Losses to bank fraud and other types of payment fraud schemes amount to billions of dollars annually.

A key distinction in bank fraud is between authorized and unauthorized transactions. Authorized fraud occurs when a victim is tricked into voluntarily initiating a payment, such as a wire transfer or Automated Clearing House (ACH) payment, to a scammer. In these cases, the bank may not be held liable because the transaction was technically authorized by the account holder.

Unauthorized fraud, by contrast, involves transactions that are not initiated by the account holder, such as those resulting from identity theft, check fraud or credit card fraud. A different set of legal rules applies to each type of fraud, which can significantly affect the available avenues for recovery.

Protecting Against Common Bank Fraud Schemes

The types of banking fraud claims that attorney Betts handles at Michael J. Betts LLC include:

Forged Or Altered Checks

Articles 3 and 4 of the Uniform Commercial Code (UCC) determine which party must bear the loss in most of these cases. A check that is drawn on the bank account of an entity or individual must be honored by the customer’s bank (the “payor bank”) if – and only if – the check is “properly payable” under UCC Section 4-401(a).

In many cases, checks that have been forged or altered are not “properly payable,” and if they are paid, the customer may have a claim against the bank for releasing the funds from the account. There are time limitations for asserting claims based on forged or altered checks, based on provisions of the UCC and/or the customer’s account agreement. If fraud is suspected, the customer should notify the bank promptly and diligently pursue his or her rights through legal counsel.

Fraudulently Induced Wire Transfers

Businesses and individuals are more and more frequently the victims of fraud through wire transfers and ACH payments that they are fraudulently induced to make. This type of fraud can take various forms, including:

Investment scams
Real estate transactions
Bogus notifications concerning supposed account-related issues
Overpayment schemes

A number of these scams are highlighted in consumer alerts published on the Federal Trade Commission’s website. The FTC has also published a helpful article entitled “What to Know Before You Wire Money.”

A complex web of federal and state statutes governs most of these cases and determines the allocation of risk of loss among the parties. Article 4A of the Uniform Commercial Code generally governs the allocation of loss in connection with fraudulently induced wire transfers. Article 4A has been adopted in all states. As enacted in Pennsylvania, UCC Article 4A is found at 13 Pa.C.S. section 4401, et seq.

Many of the legal principles applicable to fraudulent wire transfers were discussed by the Honorable Nora Barry Fischer in her scholarly opinion issued in September 2024 in the case of Elkin Valley Baptist Church v. PNC Bank, N.A., No. 23-1798 (W.D. Pa.).

Fraudulent ACH, ATM And Debit Card Transactions

These claims are generally governed by the federal Electronic Fund Transfer Act (EFTA), which has been in effect since 1978, and Regulation E issued by the Federal Reserve. Fraudulent fund transfers using the Automated Clearing House (ACH) Network have become more and more common, as criminals have devised ways to gain access to a business’s or an individual’s banking information.

ACH payments are electronic payments that move funds between bank accounts using the ACH Network. The types of ACH fraud scams in use are virtually unlimited. Fraudulent ACH transactions can arise from:

Phishing attacks: Where criminals defraud victims to share their account information
Data breaches: Which enable criminals to access banking information
Theft of checks and debit cards and account takeover (ATO): Where criminals manipulate payment systems to take over an account and then execute fraudulent transactions from within the account

The National Automated Clearing House Association (NACHA) manages the ACH Network by issuing and enforcing the NACHA Operating Rules, which set forth the roles and responsibilities of the parties using the ACH Network, including consumers, businesses, banks and government entities.

Embezzlements Of Business Funds By Corporate Insiders

Attorney Betts advises businesses and, when necessary, assists them in the pursuit of litigation to enforce their rights and recover losses from embezzlement schemes and insider fraud orchestrated by corporate officers and employees. In addition to the more obvious, direct claims that can be brought against the embezzler, other remedies may be available against banks and other financial institutions that were involved in processing the fraudulent transactions.

Depending on the specific facts of a given case, claims may be asserted under the Uniform Fiduciaries Act (UFA), the Uniform Commercial Code (UCC), and for aiding and abetting fraud and breaches of fiduciary duties. Pennsylvania has also adopted the UFA, which is found at 7 P.S. sections 6351 through 6404.

Various Pennsylvania cases support the proposition that a bank can be liable under the UFA not only when it has actual knowledge of a fiduciary’s fraud but also when it acts in bad faith by ignoring, or acting in reckless disregard of, irregularities or “red flags.”

Frequently Asked Questions About Bank Fraud Claims

Below are answers to common questions individuals and businesses ask after discovering suspicious or fraudulent banking activity.

What steps should I take immediately if I suspect unauthorized transactions on my bank account?

If you believe unauthorized transactions have occurred, time matters. Your first step should be to notify your bank in writing as soon as possible and request that the transactions be investigated. Many laws and account agreements impose strict notice deadlines, and missing them can limit recovery options.

Next, preserve all relevant records, including bank statements, emails, wire instructions, login alerts and communications with bank personnel. Avoid attempting to reverse or negotiate transactions on your own without understanding the legal consequences.

A bank fraud lawyer can help evaluate whether the activity qualifies as unauthorized under applicable law and determine which statutes, including the Uniform Commercial Code or federal regulations, govern your claim. Early legal involvement also helps prevent mistakes that banks later use as defenses.

How can businesses protect themselves from fraudulently induced wire transfers and ACH scams?

Businesses face heightened risk from business email compromise schemes and account takeover fraud. While internal controls are critical, legal protection begins with understanding how loss allocation works when a fraudulent payment is authorized under false pretenses. Companies should implement dual authorization protocols, written wire verification procedures and employee training on phishing indicators.

From a legal perspective, it is important to review account agreements, security procedures and compliance with Article 4A of the Uniform Commercial Code. When fraud occurs, a bank fraud attorney can analyze whether the bank followed commercially reasonable security procedures and whether the loss should legally rest with the bank or the customer. Prompt legal review also helps businesses respond strategically rather than relying solely on bank investigations.

What legal options are available for recovering losses from embezzlement by corporate insiders?

Embezzlement by trusted employees or officers often involves layered transactions designed to avoid detection. Recovery options may include direct claims against the individual wrongdoer and, in certain circumstances, claims against financial institutions that processed suspicious transactions.

Depending on the facts, claims may arise under the Uniform Commercial Code, the Uniform Fiduciaries Act or theories such as aiding and abetting breaches of fiduciary duty. A bank fraud lawyer evaluates whether warning signs were present that a bank ignored or processed in bad faith. In addition to civil litigation, coordinated efforts with forensic accountants can help trace diverted funds and identify additional recovery sources. Acting quickly increases the likelihood of preserving evidence and maximizing recovery.

Let Michael J. Betts LLC Be Your Partner In Financial Recovery

Fraudulent transactions are complex, but your legal support doesn’t have to be. Attorney Michael J. Betts provides personal guidance and focused attention to every client. If you have been a victim of bank fraud, a seasoned lawyer is ready to help you pursue a positive outcome. Contact his Pittsburgh office today for a confidential consultation. Call him at 412-899-6827 or fill out this online form to get started.