Uniontown jewelry store’s lawsuit against PNC Bank will move ahead
While cyber thieves drained more than $1.6 million from the business account of Joyce’s Jewelers, a PNC Bank employee wept as she was unable to freeze the account, according to court records.
“She was completely unequipped and untrained to help, resulting in her breaking down in tears,” reads a lawsuit filed against PNC Bank by the Uniontown jewelry business, which alleges that PNC failed to safeguard the company’s funds.
Earlier last month, a Common Pleas judge in Fayette County ruled against PNC Bank’s request to dismiss the lawsuit and also decided that Joyce’s will be allowed to sue individual bank employees who did not stop the transfers while they were occurring on May 12 and 13, 2022.
“That includes the people who trained them and the people who designed the program at PNC, and selected the kind of security that would be on their accounts,” said Howard Kaplan, a Chicago-based lawyer representing Joyce’s.
PNC Bank representatives said the bank does not take responsibility for the moneyJoyce’s Jewelers lost through fraud.
“While PNC regrets any losses by a customer, we disagree with the allegations in this case and believe we acted appropriately with respect to the transactions,” said Olivia Lammel, a PNC Bank spokesperson.
PNC Bank is being represented by Kim Ross Houser at the Greensburg law firm Mears, Smith, Houser & Boyle.
The bank’s position is that a Joyce’s employee entered her account information on a bogus website, which appeared similar to PNC’s website, and gave cyber criminals the ability to siphon the company’s account. Joyce’s lawyers argue that the company had never, in all its decades in business, wired anyone more than $1 million in a single day, which should have triggered an alarm and required more verification by the bank.
Even after the fraudulent transfers were discovered by Joyce’s employees and brought to PNC’s attention, lawyers say PNC was unable to freeze the bank accounts before cyber thieves emptied them out.
According to court documents, Caren D’Amico, a Joyce’s employee, tried to access PNC Bank’s online wire transfer platform, PINACLE by googling it, and then clicking on the first link returned in the search results. But Ms. D’Amico accessed a spoofed website created by cyber criminals.
“This is someone who has worked for Joyce’s for decades — a lovely woman in her 70s, a former math teacher — the bank is pointing all the fingers at her and what she did,” Mr. Kaplan said. “But security is supposed to require multiple log-ins and verbal confirmation before you change account information and before you allow wires to go through.”
The lawsuit asserts that Ms. D’Amico entered only her credentials. PNC’s system requires two credentials.
After gaining access to Joyce’s funds, the cyber thieves consolidated Joyce’s savings account, ACH account, and merchant services account into their operating account and made a series of wire transfers.
The next day, Brandon Katzeff, CEO of Joyce’s, noticed the activity on Joyce’s accounts and realized they had been hacked. They contacted PNC Bank and employees there were unable to freeze the account, according to the lawsuit.
In all, 11 wire transfers drained Joyce’s bank accounts — and even left a $190,558 overdraft.
Some of the money was recovered from banks that received the funds — such as JPMorgan Chase and Bank of America — but Joyce’s loss came out to around $1.1 million.
Joyce’s was broke following the wire theft, but the owners used their personal funds — which were not affected — to keep it going.
“This put them in a bind where they had to work extra hard on sales and be very cautious about how they proceeded when they didn’t really have any money in the bank,” said Carl A. Frankovitch, a West Virginia-based lawyer who also represents Joyce’s.
The jewelry business Joyce Katzeff started from the trunk of her car in the early 1970s has grown to become a pillar of Uniontown’s business community. Decades later, the company operates from a 7,000 square foot storefront on the heart of Main Street and is managed by Ms. Katzeff’s son, Brandon.
It took a year to get the judge’s ruling on whether the case would proceed.
The judge’s ruling means both sides will proceed with the discovery phase, which includes exchanging documents and setting up depositions. The judge will also allow Joyce’s to sue for punitive damages and attorneys’ fees. Joyce’s also has asked for a jury trial.
“It’s a very broad and deep set of claims that Joyce’s was able to sustain against PNC,” Mr. Kaplan said. “And quite unusual because the law is quite favorableto banks generally.”
Five PNC employees are named with PNC Bank in the lawsuit. But the employees are not likely to suffer financial damages, lawyers said.
“The employees are liable, but Joyce’s is not going after these individuals’ bank accounts,” Mr. Frankovitch said. “PNC will be on the hook for the liability of its employees.”