Alexandra Bogdanovic
Source: Fauquier Times-Democrat

A Warrenton business is suing Branch Banking and Trust Co. (BB&T) in federal court for negligence, breach of fiduciary duty and breach of contract.

Closing Connection, LLC., a Warrenton-based business, is listed as the plaintiff. John M. Cheatwood is the owner and managing member of the company.

Filed Jan. 5, Closing Connection is seeking at least $328,540 in compensatory damages and $1 million in punitive damages from the bank.

Kevin Carter — also known as Kevin A. Carter, Kevin Anthony Carter, or Anthony Kevin Carter — of Bloomfield Hills, Mich., is listed as a co-defendant. Carter Advisors International, Inc., also of Bloomfield Hills, is named as another co-defendant.

As of Monday, no defense lawyers were identified in the court documents.

Rand Lewis Gelber, a Fairfax attorney representing Closing Connection, said the defendants may be granted additional time to respond to the suit since Carter and Carter Advisors International Inc., are not located in Virginia.

A.C. McGraw, a representative from BB&T’s corporate communications department, said before the suit was filed that an attorney representing Cheatwood had been in contact with the bank regarding alleged wire thefts in 2007.

“The gentleman’s attorney approached BB&T well over a year ago,” McGraw said when asked about the alleged thefts several weeks ago. The bank has “no reason to change its position,” she added.

According to Cheatwood, bank representatives told his lawyer at the time that they “weren’t optimistic” about recovering the funds.

The bank has allegedly denied liability and “has failed to provide the plaintiff with any information as to where the wiring instructions originated and what user ID and passwords were used to access the account,” according to the lawsuit.

What happened?

Closing Connection, LLC handles real estate title insurance and settlement services in the Warrenton, Charlottesville and Fredericksburg areas.

The company maintained an escrow account at the BB&T branch in Warrenton for business purposes. In the lawsuit, Gelber said Closing Connection also used the bank’s wiring services, which allows customers to access their accounts through the Internet and wire funds to other banks.

On Jan. 8, 2007, Carter or someone acting at his direction, allegedly obtained access to Closing Connection’s Warrenton escrow account remotely. The perpetrator(s) then wired approximately $328,540 from that account to an account belonging to Carter Advisors International at the Fifth Third Bank in Michigan, Gelber said in the suit.

“Again, on Jan. 18, 2007, Carter or someone acting at his direction obtained access to [Closing Connection's] Warrenton escrow account remotely and wired funds in the amount of $452,540.52 to the account of Defendant Advisors [sic] at Fifth Third Bank in Michigan,” Gelber added.

Gelber said Cheatwood found out about the Jan. 18 incident that day and notified the bank, which was able to reverse the transaction. However, the first transaction couldn’t be reversed since “almost all” of the money had already been wired to a second bank in Russia, he added.

According to the suit, Cheatwood told the bank that the wires were not authorized and that Closing Connection maintained the security of the user ID and password required to access the escrow account.

An investigation performed by a computer forensic expert has determined that none of the Warrenton business’s computers were used to access the account and effectuate the wire transfers, according to Gelber

By failing to have sufficient security measures in place to prevent access to the escrow account, Gelber maintains the bank breached its “duty of care” to his client.

Furthermore, he claims that the bank breached its fiduciary duty to Closing Connection when it allegedly permitted an unauthorized person to access the account and transfer funds.

Finally, Gelber said his client and the bank had an agreement pertaining to the handling of the escrow account — including access for wiring funds — and that the bank broke that contract.

“Carter and Advisors, by gaining unauthorized access to [Closing Connection's] account and transferring $328,540.79…to Advisor’s account, converted [Closing Connection's] property to their own use…” the lawsuit alleges.

Closing Connection is suing them for at least $328,540.79 in compensatory damages, according to court documents.

A jury trial has been requested, but no hearings have been set.

– Link to Original Article –