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Press Release

TRC Operating Company Prevails in Cyber-Theft Case in Settlement With United Security Bank of Fresno

TAFT, CA--(Marketwired - Jun 12, 2014) - "In the past decade, there has been a significant push by California financial institutions to have customers conduct their banking online. While banks save money, customers are convinced that online banking will allow them to conveniently and safely complete their banking from virtually any location at any time. This is a fallacy," said Julie Rogers, attorney with The Dincel Law Group, which specializes in these types of cases.

"Cybertheft is rampant. The headlines in today's papers are just the tip of the iceberg. When an outside intruder hacks into an online corporate banking account and diverts funds away from an unsuspecting business, a Corporate Account Takeover (CAT) occurs. CAT is a real and ongoing threat to California businesses of all sizes who engage in online banking. After a business is hit with CAT, one of its only options to recover the missing funds is to sue its bank under Division 11 of the California Commercial Code which enables a business to recover only the amount that went missing plus interest. When this happens, the business is prevented from seeking consequential damages or attorney fees," according to Rogers.

"If your business falls prey to a CAT and loses, the only way to recover any lost money is to spend more money on an attorney to sue your bank (a formidable opponent). Whether you've lost $500 or $5 million by a CAT -- the most any small business can recover under California law is the amount stolen from their account, plus interest -- even if the company expends significant sums in attorney fees attempting to recover the money, has lost business, or been unable to pay its bills, or any number of other losses incurred due to a CAT. Although TRC ultimately prevailed, this is exactly the uphill fight TRC Operating Company faced," said Charlie Comfort, a co-owner of the company. TRC Operating Company is an independent oil production company located in Taft, California."

"As TRC Operating Company established itself in an oil industry dominated by much larger corporations, it consciously chose to maintain its banking accounts at United Security Bank of Fresno (USB), a local financial institution, due to the personal relationships that had been developed between TRC and the USB bankers over the years. That all changed when over a period of 5 days, twelve (12) fraudulent wires (Totaling $3,450,670.00) were wrongfully processed through TRC's accounts at USB in November 2011. Ultimately, $299,600.00 went missing from TRC's corporate account at USB. USB denied liability despite numerous 'red-flag' indicators that the wire transfers were fraudulent. To bolster their position, USB retained an out of state security analyst who flew to California under the guise of an unbiased investigation. Promptly thereafter, the security analyst prepared an 'Incident Report' which contained misrepresentations and material omissions," said Charles Comfort.

Infuriated by the treatment they received from their longtime bank, United Security Bank of Fresno, TRC Operating Company owners Tracy Rogers, Ronnie Rogers and Charles Comfort hired legal counsel to negotiate for the recovery their missing money. Due to USB's refusal to discuss this matter and also refusing an offer to use mediation to resolve this matter without filing a lawsuit, TRC felt it necessary to file a lawsuit against USB for the principle of the matter knowing the law made it impractical to recover much more than $299,600. On May 17, 2012, TRC filed a complaint for damages in the Kern County Superior Court alleging that USB failed to offer a "commercially reasonable" security procedure to protect TRC's funds and that USB failed to process the fraudulent wires transfers in "good faith."

"Nearly two years after litigation began; USB has agreed to pay $350,000.00 to TRC for its losses. The settlement offer came just a few days before the Kern County Superior Court was to rule on a summary judgment motion filed by TRC which, if granted, would have entitled TRC to the $299,600.00 plus substantial interest and a finding that USB failed to provide a 'commercially reasonable' security procedure for its online banking customer," said TRC attorney Julie Rogers.

"While TRC was in a financial position to hold USB accountable for its ineffective online banking, many other California businesses are not. All too often, a business hit by CAT cannot afford to hire legal counsel to sue its bank and either absorbs the loss or goes into bankruptcy. For this reason, TRC's success against USB is something to appreciate and to celebrate, and perhaps most importantly, from which to learn," concluded Karen McCarthy, President, YourMoneyIsNotSafeInTheBank.com

Julie Rogers
Dincel Law Group
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