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Inferring Dishonesty: The Fifth Amendment and Fidelity Coverage
Dishonest employees always have posed a problem for businesses. The average business may lose 6% of its annual revenues to employee fraud, and cumulatively the impact of employee theft on the economy is estimated to be $600 billion annually. See Association of Certified Fraud Examiners (“ACFE”), 2002 Report to the Nation on Occupational Fraud & Abuse, at ii, 4 (2002), available at www.cfenet.com/publications/rttn.asp. Although the average loss through employee embezzlement is $25,000, where computerized financial records or transactions are involved, the average loss increases nearly twentyfold. See National White Collar Crime Center, WCC Issue: Embezzlement/Employee Theft, at 2 (2002), available at http://nw3c.org/downloads/Computer_Crime_Weapon.pdf.
Insurers have responded by selling employee-dishonesty or fidelity policies, which reimburse the insured for its monetary loss from the dishonest or fraudulent acts of its employees (or others in positions of trust). When claims arise, most fidelity policies require the insured to submit a detailed, sworn proof of loss. The preparation of such a proof may require the insured to conduct a significant investigation into how the loss occurred and to monetize its claim.
Where there is patent embezzlement, such as where funds are improperly disbursed by the company and are ultimately found in an employee's personal bank account, insurers routinely pay claims with little dispute. When more complex claims are involved, such as when an employee and co-conspirators participate in an elaborate fraudulent scheme, insurers often question whether the entire loss claimed is covered, usually contending that some portion of the loss resulted from the exercise of poor business judgment, rather than from covered dishonesty. See, e.g., Building One Serv. Solutions v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. 02-311-A (E.D. Va. Nov. 26, 2002) (Memorandum Opinion), reprinted in Mealey's Litig. Emp. Liab. Ins. Rep., at Sect. H (Dec. 13, 2002). In such circumstances, insurers often refuse, absent litigation, to pay some or all of the loss.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.