The 7th Circuit Court of Appeals ruled a man’s claim that the National Bank of Indianapolis covered up unauthorized transfers is frivolous and said the bank can pursue sanctions against the man because of it.
NBI filed a lawsuit in state court against Christopher Paul White for check deception, check fraud, criminal mischief and defrauding a financial institution, winning that case in summary judgment. In June 2008, the state filed criminal action against White, and a jury convicted him on three counts, one of check fraud, one of fraud on a financial institution and one of theft. The Indiana Court of Appeals upheld his conviction.
White was the founder of the bankrupt development firm Premier Properties USA Inc. Reffco II L.P. was a holding company.
Shortly after entry of the state court civil judgment against White in 2008, he filed for bankruptcy protection. NBI initiated an adversary proceeding, which was granted, saying the charges White had racked up against the institution, which amounted to more than $382,000 in returned check fees, were a nondischargeable obligation.
In March of 2014, White filed a civil complaint against NBI saying the bank committed unauthorized transfers to his accounts to avoid them from overdrafting, which caused others to overdraft and caused him to incur fees. White said the bank omitted information in its reports about the timing of the deposits and withdrawals, which caused him to overdraw, and then gave its reports to the state prosecutor, which charged him with his crimes. NBI moved to dismiss, saying White detrimentally relied on the allegedly false reports, or that the allegedly false reports caused White’s damages.
District Court Judge Rebecca Pallmeyer, sitting by designation from the Northern District of Illinois, wrote the decision in the case and said there was no way White’s charges can be from NBI’s alleged actions. The allegedly false reports were not created until after the money transfers White is challenging took place.
Also, White wrote a $500,000 check from an account he knew had insufficient funds, so any statement that he had relied on false reports is not right. White also brought up on appeal that the bank’s allegedly false reports prevented him from being able to continue his business as a real estate developer, but new arguments brought up for the first time on appeal cannot be ruled on.
Pallmeyer found that White’s appeal is frivolous and sanctionable because White utterly failed to allege NBI employees’ violation caused him any harm. She said White made an improper collateral attack on his criminal conviction, passing the blame on innocent parties.
The case is Christopher Paul White and Reffco II LLP v George Keely, Joyce Morris, Tricia Rake, Terry Scott and Michael Maurer, 15-1922. Michael Maurer is a co-owner of IBJ Media.