Diebold Loses Insurance Suit In $50 Million ATMs Theft
PHILADELPHIA – A federal appeals court yesterday dismissed a suit by Diebold Inc. requesting its insurer cover $6 million in losses from the theft by ATM supplier Tri-States Armored Services of some $50 million of cash it was supposed to be using to replenish ATMs for credit unions and banks.
The U.S. Court of Appeals for the Third Circuit ruled that Diebold is not entitled to coverage under a policy it held with Continental Casualty Co. because it continued to do business with Tri-State Armored even after several credit unions alerted the company about suspected fraud, even reimbursing Sharonview FCU $100,000 and NIH FCU $120,000 they thought the cash carrier had stolen from them.
In granting the insurer’s motion for summary judgment the court of appeals cited a clause in its insurance policy stating "There is no coverage under this bond for any loss caused by a wrongdoer after discovery of an actual or potential loss caused by that wrongdoer." In other words, the coverage stopped once Diebold learned of the thefts and continued to do business with Tri-State Armored.
The Tri-State Armored case is considered one of the biggest bank robberies in history, with partners of the New Jersey cash carrier siphoning some $50 million in cash from $150 million of funds it was managing for 130 institutions, including 60 credit unions, from New York to Florida. The thefts occurred around 1998 to 2000. The three partners in the cash service were all convicted of felonies and are currently serving federal prison terms.