Credit Union’s $550,000 Fraud Judgment Reversed by Appeals Court

A credit union that was ordered to pay half a million dollars for alleged fraud against a building materials manufacturer is off the hook after a federal appeals panel reversed a judgment against the lender.

1st Advantage Federal Credit Union wasn’t liable for depositing payments into an alleged fraudster’s account because Studco Building Systems US LLC had specified that account, even though it wasn’t in fact held by purported vendor Olympic Steel Inc., the US Court of Appeals for the Fourth Circuit ruled Wednesday.

Under those circumstances, 1st Advantage had no liability under the Uniform Commercial Code because it didn’t ...