KeyCorp discloses $90M exposure from suspected fraud
KeyCorp in Cleveland warned that it faces $90 million in exposure to a client suspected of committing fraud.
The $142 billion-asset company said in a regulatory filing Tuesday that it discovered the allegedly fraudulent activity last week. The issue involves a business customer.
“The company continues to investigate this matter to determine the potential exposure,” Key said in the filing. “The ultimate financial impact could be lower and will depend, in part, on the company’s success in its efforts to recover the funds.”
The bank said that because it is working with law enforcement, it “may be limited in what information it can disclose.” It said it plans to pursue all available sources of recovery and other means to mitigate the potential loss.
The South Bend Tribune in Indiana recently reported that the bank filed a civil lawsuit against Interlogic Outsourcing, a payroll processing company, for “fraudulently initiated wire transfers.” The article said the company incurred a $122 million overdraft by setting up funds transfers when it lacked the money to cover them.
KeyCorp is scheduled to report second-quarter earnings on July 23.