Defendant Duped by Fraudster in Settlement Must Still Pay Sum

A California restaurant that settled a personal injury lawsuit for $475,000 but was duped into wiring the money to a fraudster must still pay the settlement total to the plaintiff in the case, a California state appeals court ruled in an issue of first impression.

The restaurant was the party in the best position to prevent the fraud and therefore bears the risks of loss when an imposter escaped with settlement funds, a panel of justices for the California Court of Appeal, Fourth District, ruled Monday.

“This case demonstrates that parties to modern, high-tech financial transactions must remain vigilant in ...