Berkshire Bank Lawsuit

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 1 of 21
IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS
JIM JACOBS,
Plaintiff,
v.
BERKSHIRE BANK,
Defendant.
COMPLAINT
Plaintiff Jim Jacobs, by his undersigned counsel, states the following as his
Complaint against Defendant Berkshire Bank.
NATURE OF ACTION
This action seeks to hold Berkshire Bank responsible for its gross failure to keep
a depositors funds safe from theft. On three separate occasions, October 17, 2016,
October 19, 2016, and October 24, 2016, in response to fraudulent emails sent by an
imposter pretending to be Mr. Jacobs, Berkshire Bank sent large wire transfers totaling
$1,406,000 to banks in Hong Kong, and debited the account of Mr. Jacobs for the
wires. By sending those wires to a location well-known in the banking industry as high
risk for fraud without first taking any steps to verify the authenticity of the emails,
Berkshire Bank failed in its most fundamental of all obligations namely, to protect
depositor accounts from fraud. Berkshire Bank knew, or should have known, of the
high risk inherent in using email to receive orders for fund transfers. By failing to use
commercially reasonable precautions to authenticate the emails purportedly from Mr.
Jacobs, and by then refusing to make Mr. Jacobs whole for the enormous losses
resulting from those repeated failures, Berkshire Bank (i) violated statutory
requirements imposed by the Electronic Funds Transfer Act, 15 U.S.C. 1693, and its
Massachusetts analogue, M.G.L. c. 167B 18, which protect consumers from liability
for fraudulent and unauthorized electronic fund transfers; (ii) alternatively, violated its
obligation to establish reasonable security procedures for such transactions under
section 4A of the Uniform Commercial Code, M.G.L. c. 106 4A (UCC 4A); (iii)
violated its contractual duty of good faith under UCC 4A; and (iv) breached its
fiduciary duties to Mr. Jacobs.
PARTIES
1.
Mr. Jacobs is an individual who resides in Florida.
2.
Berkshire Bank is a Massachusetts corporation with its principal place of
business located at 24 North Street, Pittsfield, Berkshire County, Massachusetts.

3.
Berkshire Bank is a regional bank with over 90 branch offices in
Massachusetts, New York, Connecticut and Vermont.

4.
In its 2015 Annual Report, Berkshire Banks parent holding company,
Berkshire Hills Bancorp, reported total assets of close to $8 billion, deposits of

approximately $5.6 billion, and boasted of earning double digit returns for its
shareholders.
JURISDICTION AND VENUE
5.
This Court has federal question jurisdiction pursuant to 28 U.S.C.
1331 as Count I arises under the Electronic Funds Transfer Act, 15 U.S.C. 1693.
6.
This Court has pendent and supplementary jurisdiction over Counts II
through V pursuant to 28 U.S.C. 1367(A) because the claims contained in those

Counts are so related to the claim within this Courts original jurisdiction that they form
the same case or controversy, and because they derive from the same nucleus of
operative facts with the claim contained in Count I.
7.
This Court also has diversity jurisdiction over this action pursuant to 28
U.S.C. 1332 (a)(1), because the amount in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between citizens of different states.
8.
Venue is proper in this district pursuant to 28 U.S.C. 1391 (b)(2)
because, at all relevant times, a substantial part of the events or omissions giving rise to
the claims occurred in this judicial district.
FACTS
9.
Mr. Jacobs established a personal account (the Account) with Great
Barrington Savings Bank, then based in Great Barrington, Massachusetts, at least as

early as approximately 1980.
10.
Great Barrington Savings Bank merged with Berkshire County Savings
Bank on or about May 1, 1997, and the merged banks name was changed to Berkshire
Bank.
11.
Over the years, Mr. Jacobs Account with Great Barrington Savings
Bank and then Berkshire Bank grew substantially, with Berkshire Bank enjoying the
benefit of those significant deposits for many years.
12.
Ms. Terri Andersen, a longtime employee, first of Great Barrington
Savings Bank and then of Berkshire Bank, came to act as Mr. Jacobs personal banker
at Berkshire Bank.
13.
In that role, Ms. Andersen, regularly facilitated Mr. Jacobs banking
transactions, including the initiation of both domestic and international wire transfers
from the Account that could involve hundreds of thousands of dollars.
14.
As part of Mr. Jacobs regular transactions with Berkshire Bank, he
would, from time to time, contact Ms. Andersen by email during normal business hours
in order to give her instructions to make a wire transfer from the Account.
15.
These emails were sent to Ms. Andersen at her Berkshire Bank email
address.
16.
Ms. Andersen accessed and responded to those emails from her
Berkshire Bank email address using Berkshire Bank computer equipment while at her
Berkshire Bank office during her normal working hours at Berkshire Bank.
17.
Ms. Andersen was paid by Berkshire Bank for the time she spent
facilitating wire transfers for Mr. Jacobs, including the time spent reviewing and
responding to email requests for wire transfers sent to her at the bank.
18.
Berkshire Bank was aware of and authorized Ms. Andersen to provide
these personal banking services to Mr. Jacobs, including her facilitation of wire
transfers.
19.
Receiving and responding to emails from Mr. Jacobs directing her to
cause wire transfers to be made from his Berkshire Bank Account fell within Ms.
Andersens scope of employment as a Berkshire Bank employee.
4
20.
Following its merger with Great Barrington Savings Bank, Berkshire
Bank began charging Mr. Jacobs a fee for wire transfers sent or received by Mr. Jacobs
through Berkshire Bank.
Berkshire Bank Warned of Escalating Internet Fraud
21.
Commencing at least as early as 2001, Berkshire Bank was aware of, or
should have been aware of, wide-spread and escalating Internet fraud involving fund
transfers.
22.
In August 2001, the agencies of the Federal Financial Institutions
Examination Council (FFIEC) (which included the Board of Governors of the Federal
Reserve System, Federal Deposit Insurance Corporation, National Credit Union
Administration, Office of the Comptroller of the Currency, and Office of Thrift
Supervision) issued a guidance entitled Authentication in an Internet Banking
Environment, which focused on risk management controls necessary to authenticate
the identity of retail and commercial customers accessing Internet-based financial
services.
23.
The guidance urged [f]inancial institutions offering Internet-based
products and services to their customers [to] use effective methods to authenticate the
identity of customers using those products and services with the authentication
techniques appropriate to the risks associated with those products and services.
24.
That guidance warned that single-factor authentication, as the only
control mechanism, [was] inadequate in the case of high-risk transactions involving

access to customer information or the movement of funds to other parties.
25.
In October 2005, the FFIEC agencies issued a supplement to this
guidance, again warning of the increasingly hostile online environment, and

recommending that institutions perform periodic risk assessments [at least once every
twelve months] and adjust their control mechanisms as appropriate in response to
changing internal and external threats.
26.
The agencies reported heightened expectations regarding customer
authentication, layered security, or other controls in the increasingly hostile online

environment.
27.
The agencies defined high-risk transactions as electronic transactions
involving access to customer information or the movement of funds to other parties,

and concluded that financial institutions should implement more robust controls as the
risk level of the transaction increases.
28.
The agencies further recommended that institutions use layered security
programs, including the use of dual customer authorization through different access
devices.
FBI Warns of More Sophisticated Internet Fraud
29.
As Internet fraud in the financial industry escalated and became more
sophisticated, the Federal Bureau of Investigation (FBI) published additional

announcements warning financial institutions of the need to take heightened
precautions.
30.
In January 2015, the FBI released a public service announcement,
describing the characteristics of a scam identified as Business E-Mail Compromise,

and offered specific suggestions for protection.
6
31.
The FBI warned about, and gave specific descriptions for recognizing, a
sophisticated scam that targeted businesses working with foreign suppliers or businesses
that regularly perform wire transfer payments.
32.
The FBI described one version of this scam, in which [t]he e-mail
accounts of high-level business executives . . . are compromised. The account may be

spoofed or hacked. A request for a wire transfer from the compromised account is
made to a second employee within the company who is normally responsible for
processing these requests.
33.
In this announcement, the FBI warned that [i]ndividuals responsible for
handling wire transfers within a specific business are targeted, and that [f]raudulent
emails received have coincided with business travel dates for executives whose email
were spoofed.
34.
The FBI urged implementation of protective measures that included
establishing a two-step verification process, such as a telephone call, to verify all

significant transactions.
35.
The FBI further urged the implementation of protective measures in
responding to emails from those purporting to be authorized persons that included using
the Forward option instead of the Reply option.
36.
About six months later, in June 2015, the FBI and the Financial Services
Information Sharing and Analysis Center issued a second alert.

37.
The June 2015 fraud alert warned that [m]ost of [these fraudulent
email] incidents involve the compromise of an email account belonging to a businesss
CEO/CFO, in order to send an e-mail to an employee with the ability to conduct wire
transfers.
38.
To mitigate risk, the fraud alert urges, among other things, that dual-
approval (for example, telephone authentication) for any wire transfer involving any
new trading partners be implemented.
39.
Less than three months later, in August 2015, the FBI issued a third
announcement, reporting the escalation of victims since October 2013, and warning that
the majority of the transfers are going to Asian banks located within China and Hong
Kong.
Berkshire Banks Knowledge of Risk
40.
Commencing as early as 2001, Berkshire Bank was aware of, or should
have been aware of, the wide-spread use of Internet fraud to initiate unauthorized fund
transfers.
41.
On information and belief, Berkshire Bank received multiple public
announcements and alerts specifically warning of email fraud in connection with wire
transfers.
42.
By October 2016, Berkshire Bank was aware of, or should have been
aware of, increasingly sophisticated spoofing scams used to trick recipients into
sending unauthorized wire transfers.
43.
aware of, the need for dual control authentication of payment orders before sending
any wire transfers pursuant to the orders.
44.
aware of, the particularly high risk associated with wire transfers of funds to Asian
banks located in Hong Kong.
45.
Berkshire Bank never warned nor notified Mr. Jacobs of any of these
46.
Mr. Jacobs was not otherwise aware of the nature and prevalence of
risks.
these sophisticated email scams used by imposters to commit this type of fraud.
47.
Notwithstanding its being aware of the escalating risks of communicating
instructions for fund transfers by email, Berkshire Bank never provided Mr. Jacobs
with any security protocols or procedures that Mr. Jacobs could use to avoid or
minimize those risks.
48.
On information and belief, Berkshire Bank did offer such security
protocols and procedures to other of its customers who sent wires both domestically and
overseas.
Berkshire Bank Falls for Spoofing Scam; Makes Unauthorized Transfers
49.
On Monday morning, October 17, 2016, returning from a vacation, Ms.
Andersen arrived at her office at Berkshire Bank, and began reviewing her emails.
50.
At this time, Mr. Jacobs was traveling in Europe.
51.
In Ms. Andersens Berkshire Bank inbox was an email addressed to her
that purported to be from Mr. Jacobs.

52.
In fact, that email was from an imposter pretending to be Mr. Jacobs.
53.
The email, which Ms. Andersen received at or about 9:14 a.m., had as
its subject heading Agnes martin, and asked that Ms. Andersen arrange to wire
$580,000 to a bank in Hong Kong.
54.
Attached to the email were wiring instructions.
55.
Neither the bank in Hong Kong (HangSeng Bank) nor the purported
beneficiary (Jun Hong (HK) Trading Co. Limited) listed in those wire instructions were
entities with which Mr. Jacobs had ever before transacted.
56.
The spoofed email falsely stated that Mr. Jacobs was in Europe for the
International Contemporary Art Fair. Not only was Mr. Jacobs not at that art fair, upon
information and belief, there was no art fair by that name in Europe.
57.
No one from Berkshire Bank made any attempt to call Mr. Jacobs or
take any other action to authenticate the email instruction before sending the wire to the
bank in Hong Kong, a location well known in the banking industry to be high risk for
fraudulent wire transfers.
58.
Rather, Berkshire Bank, relying only on the spoofed email, sent the wire
to the bank in Hong Kong, and debited Mr. Jacobs Account $580,000.00.
59.
The following morning, Tuesday, October 18, the imposter sent Ms.
Andersen another email under the subject heading Agnes Martin, asking (in odd,
jumbled language) for a bit of confirmation for the Hong Kong (Agnes Martin) wire as
reference to the beneficiary. The imposter also asked Ms. Andersen to provide the
current balance in Mr. Jacobs Account.
60.
In response, Ms. Andersen confirmed the name and address of the
beneficiary, and disclosed that the balance in the Account was $1,590,500.
10
61.
Mr. Jacobs was unaware of this exchange of emails, or of the $580,000
that Berkshire Bank had debited his Account in connection with the unauthorized wire it
had sent to Hong Kong.
62.
On October 19, 2016, two days later, the October 17, 2016 wire was
returned to Berkshire Bank (less $38.74).

63.
On information and belief, again without making any attempt to
authenticate the original wire instruction, or to determine why the first wire had been
returned, Berkshire Bank resent a $580,000.00 wire transfer to the same bank in Hong
Kong.
64.
Mr. Jacobs was unaware of the first bounced wire on October 19,
2016, or of Berkshire Banks decision to resend that wire later that same day.
65.
The following Monday morning, October 24, 2016, at approximately
9:38 a.m., Ms. Andersen received in her Berkshire Bank inbox another email
purporting to be from Mr. Jacobs directing that an additional $826,000 be wired from
his Account to a different bank in Hong Kong.
66.
Like the emails on October 17 and October 18, this email was not in fact
from Mr. Jacobs but from an imposter.

67.
The October 24 email urged in uncharacteristic language that the funds
be wired swiftly in order for the payment to be received as soon as possible.

68.
As was the case with the October 17 wire instructions, neither the Hong
Kong bank (DBS Bank) nor the beneficiary (Triptex Globe Limited) designated in the
wire instructions were entities with which Mr. Jacobs had ever before transacted.
11
69.
No one at Berkshire Bank attempted to call Mr. Jacobs or take any other
action to authenticate the October 24 payment order.

70.
Rather, Berkshire Bank sent another wire to this second bank in Hong
Kong, and debited Mr. Jacobs Account an additional $826,000.00.

71.
At the time, Mr. Jacobs was unaware of the October 24 fraudulent email
and of the $826,000 that Berkshire Bank had debited his Account in connection with
this wire.
72.
On Tuesday October 25, 2016, after returning from Europe, Mr. Jacobs
spoke with Ms. Andersen at Berkshire Bank by telephone. During this call, Mr. Jacobs
learned for the first time of the unauthorized wires. Mr. Jacobs immediately advised
Ms. Andersen that he had not authorized the wires.
Berkshire Bank Denies Responsibility for its Unauthorized Wires
73.
Soon after the fraud was discovered, Berkshire Bank told Mr. Jacobs
that it would not accept responsibility for any portion of the unauthorized wires.
74.
Berkshire Bank told Mr. Jacobs that it was the Banks position that when
Ms. Andersen asked the wire department within Berkshire Bank to send the
unauthorized wires, Ms. Andersen was acting as an agent of Mr. Jacobs, rather than as
an agent and employee of Berkshire Bank, notwithstanding that Ms. Andersen took that
action while at her Berkshire Bank office, during Berkshire Bank working hours, using
Berkshire Bank equipment, on Berkshire Bank time, and with Berkshire Banks
knowledge and authority.
75.
When it made that statement, Berkshire Bank knew, or should have
known, that Ms. Andersen was in fact acting within the scope of her employment at
12
Berkshire Bank in connection with the sending of the wires in that it knew, or should
have known, that Ms. Andersen facilitated the transfers in her role as personal banker
for Mr. Jacobs, for the benefit, at least in part, of her employer Berkshire Bank, and
without intention to defraud, or otherwise improperly benefit in connection with those
transfers.
76.
Berkshire Bank is therefore responsible for the actions of Ms. Andersen
in connection with those transfers.

77.
Berkshire Bank knows that Mr. Jacobs had no knowledge of the
fraudulent emails that instructed Ms. Andersen to make the wires, and that he had no
personal involvement in the mistakes that Berkshire Bank made in response to those
emails.
78.
Berkshire Bank has nevertheless refused to credit any part of the
$1,406,000.00 it has debited against Mr. Jacobs Account in connection with the
unauthorized transfers.
Berkshire Bank Pressures Mr. Jacobs to Waive his Rights
79.
Shortly after discovery of the fraud on October 25, 2016, a wire transfer
supervisor at Berkshire Bank, Leonard ODea, told Mr. Jacobs that the Bank would
attempt to recover the wired funds only if Mr. Jacobs agreed to execute a letter that
Berkshire Bank had prepared requesting such action.
80.
That letter included unconscionable language that would have prejudiced
the position of Mr. Jacobs, including a requirement that Mr. Jacobs indemnify, defend
and hold harmless Berkshire Bank against any losses or costs that the Bank might
incur in connection with its efforts to recover the stolen funds, even if such loses were
13
caused by the negligence, gross negligence, willful misconduct or bad faith of

Berkshire Bank.
81.
No one from Berkshire Bank offered to explain to Mr. Jacobs the import
of that language or suggested to Mr. Jacobs that he engage counsel before signing the
letter Berkshire Bank had prepared.
82.
Shocked by Berkshire Banks improper attempt to condition any effort to
recover the funds on securing a waiver from Mr. Jacobs of rights against Berkshire
Bank, Mr. Jacobs declined to sign Mr. ODeas letter.
83.
Instead, Mr. Jacobs handwrote a letter that same day confirming that the
instructions to make the wires did not come from him, and asking Berkshire Bank to
immediately credit his Account in the amount of the unauthorized wires.
Berkshire Bank Stonewalls
84.
To date, Berkshire Bank has declined to identify precisely what steps, if
any, it took to attempt to recover the unauthorized wires, when it made any such
attempt, and why any such efforts proved unsuccessful.
85.
To date, Berkshire Bank has failed even to provide Mr. Jacobs with
requested information about the unauthorized wires, and the history of his Account at
Berkshire Bank.
86.
Despite due demand by Mr. Jacobs, Berkshire Bank has refused to credit
Mr. Jacobs Account with the amount of the unauthorized wires, causing a loss to Mr.
Jacobs in the amount of $1,406,000.00, plus interest.
COUNT I
Electronic Funds Transfer Act 15 U.S.C. 1693
87.
Mr. Jacobs repeats the allegations contained in Paragraphs 1 through 86.

14
88.
Mr. Jacobs established the Account at Berkshire Banks predecessor
bank as a personal account.

89.
Mr. Jacobs is therefore entitled to the protections of the Electronic Funds
Transfer Act 15 U.S.C. 1693 and its implementing Regulation E (collectively, the
EFTA) with respect to that Account.
90.
The October 17 and October 24 fraudulent emails were initiated through
a computer.
91.
Those fraudulent emails purported to instruct and/or authorize Berkshire
Bank to debit Mr. Jacobs Account in the amount of the unauthorized wires.
92.
The unauthorized fund transfers that Berkshire Bank completed in
furtherance of those fraudulent instructions were unauthorized electronic fund

transfers within the meaning of the EFTA.
93.
Mr. Jacobs provided Berkshire Bank with both oral and written
notification of the error immediately after he discovered the fraud.

94.
Accordingly, Mr. Jacobs has no liability for the unauthorized transfers
under the EFTA.

95.
Berkshire Bank has violated the EFTA by (i) failing to timely report to
Mr. Jacobs the full results of its investigation into the unauthorized transfers, and (ii)
failing to credit the Account in the amount of those transfers.
96.
Mr. Jacobs is entitled to recover from Berkshire Bank (i) the full amount
of the unauthorized transfers in the amount of $1,406,000.00, (ii) interest on that

amount from the date of such transfers, and (iii) reasonable attorneys fees and costs
incurred in enforcing his rights under the EFTA.
15
COUNT II
Massachusetts Electronic Branches and Electronic Funds Transfers Act
M.G.L. c. 167B 1 et seq.
97.
98.
Mr. Jacobs is entitled to the protection of the Electronic Branches and
Electronic Funds Transfers Act, M.G.L. c. 167B 18 (the Massachusetts EFTA).

99.
The electronic funds transfers from Mr. Jacobs Account were
unauthorized within the meaning of the Massachusetts EFTA.

100.
Mr. Jacobs immediately notified Berkshire Bank of the fraudulent emails
and unauthorized fund transfers upon his discovery thereof.

101.
Mr. Jacobs therefore has no liability for the unauthorized transfers.
102.
Berkshire Bank has violated the Massachusetts EFTA by failing to credit
the Account of Mr. Jacobs in the amount of the unauthorized fund transfers.
103.
Accordingly, Mr. Jacobs is entitled to recover from Berkshire Bank (i)
the full amount of the unauthorized transfers in the amount of $1,406,000.00, (ii)
interest on that amount from the date of such transfers, (iii) up to treble damages for
Berkshire Banks failure to timely correct the error resulting from the unauthorized
transfers, and (iii) reasonable attorneys fees and costs incurred in enforcing his rights
under the Massachusetts EFTA.
COUNT III
Liability under Uniform Commercial Code M.G.L. c. 106 4A;
Failure to Establish Reasonable Security Procedure
104.
Mr. Jacobs repeats the allegations contained in Paragraphs 1 through
103.
16
105.
Mr. Jacobs did not authorize either of the two payment orders to the banks
in Hong Kong.
106.
Mr. Jacobs did not engage in any activity that would cause Mr. Jacobs to
be bound by the fraudulent payment orders.

107.
Berkshire Bank failed to establish commercially reasonable security
procedures for the communication of payment orders from Mr. Jacobs to Berkshire
Bank.
108.
Berkshire Bank knew, or should have known, that email communication
alone was not a commercially reasonable procedure for receiving payment orders.
109.
Berkshire Bank knew, or should have known, that email communication
was especially inappropriate for communicating payment orders for the transfer of large
amounts to banks located in Hong Kong.
110.
Because the security procedures employed by Berkshire Bank in
connection with the payment orders were not commercially reasonable, Berkshire Bank
is liable for the loss associated with the unauthorized transfers under UCC 4A.
111.
On information and belief, Berkshire bank knew, or should have known,
that the return of the October 17 wire on October 19 raised additional concerns about
the authenticity of the payment order, and should have taken additional steps to
investigate and attempt to authenticate the original payment order.
112.
Berkshire Banks failure to conduct such an investigation under these
circumstances was commercially unreasonable.

113.
Mr. Jacobs has suffered damages in the amount of $1,406.000.00 plus
interest as a direct and proximate result of Berkshire Banks failure to use commercially
17
reasonable security procedures in connection with (i) its receipt of payment orders
purportedly from Mr. Jacobs, and (ii) its failure to investigate the return of the October
17 wire, and authenticate the payment order before resending the October 17
$580,000.00 wire and thereafter sending the third $826,000.00 wire on October 24.
114.
Under UCC 4A, Berkshire Bank is strictly liable to Mr. Jacobs in the
full amount of those damages.

COUNT IV
Liability under Massachusetts UCC M.G.L. c. 106 4A
Breach of Contractual Duty of Good Faith
115.
Mr. Jacobs repeats the allegations in Paragraphs 1 through 114.
116.
By failing to provide a reasonable security procedure for authentication
of the payment orders that initiated the wire transfers, Berkshire Bank failed to adhere
to objectively reasonable commercial standards of fair dealing.
117.
Such failure constitutes a breach of its contractual duty of good faith
under UCC 4A.

118.
As between Mr. Jacobs and Berkshire Bank, Berkshire Bank was in the
best position to appreciate the high risk involved in serving a customer who regularly
performed international electronic transfer transactions involving hundreds of thousands
of dollars, and to determine a commercially reasonable security procedure.
119.
Berkshire Banks failure to provide any such reasonable procedure, or
even to alert Mr. Jacobs to the need for such a procedure, failed to meet Mr. Jacobs
reasonable expectations concerning the management and security of transactions with
Berkshire Bank.
18
120.
Upon information and belief, Berkshire Bank does employ measures to
provide appropriate security measure to minimize the risk of Internet fraud for other of
its customers.
121.
Berkshire Bank did not provide or offer comparable security procedures
to Mr. Jacobs, even though it was aware of the high risk nature and size of his fund
transfers.
122.
Such failure constituted a breach of the duty of good faith under UCC
4A and under common law.

123.
Mr. Jacobs suffered damages in the amount of $1,406,000.00 plus
interest as a direct and proximate result of that breach.

124.
Berkshire Bank is liable to Mr. Jacobs in the full amount of those
damages.
COUNT V
Breach of Fiduciary Duty
125.
126.
Mr. Jacobs reposed his faith, confidence and trust in Berkshire Bank to
establish and maintain appropriate security measures for the protection of the funds in
his Account.
127.
Berkshire Bank, by affirmatively recommending, or by failing to
recommend against, email as the protocol for banking communications with it, by
failing to provide a reasonable security procedure for authentication of payment orders
made by e-mail, and by failing to take reasonable steps to investigate the bounced wire
on October, 19, 2016, breached its fiduciary duty owed Mr. Jacobs.
19
128.
Berkshire Bank, by failing to exercise the care of a reasonably prudent
person in connection with the sending and resending of wires to Hong Kong without
authenticating the transfer orders, breached its fiduciary duty owed Mr. Jacobs.
129.
Mr. Jacobs suffered damages in the amount of $1,406,000.00 plus
interest as a direct and proximate result of that breach.

130.
Berkshire Bank is liable to Mr. Jacobs in the full amount of those
damages.
WHEREFORE, Mr. Jacobs respectfully requests that this Court enter judgment
in his favor and against Berkshire Bank as follows:
a. damages in the principal amount of $1,406,000.00;
b. interest on the principal amount of such damages at the highest
interest rate allowed by law from the date of the unauthorized
transfers until the date of refund or repayment;
c. reasonable attorneys fees and costs;
d. up to treble damages for the knowing violation of the Massachusetts
EFTA; and
e. such other and further relief as the Court deems just and appropriate.
PLAINTIFF DEMANDS TRIAL BY JURY OF ALL ISSUES SO TRIABLE.
20
December 19, 2016
JIM JACOBS,
Plaintiff,
By his Attorneys,
/s/ Lucy Prashker
Lucy Prashker (BBO# 405330)
lprashker@cainhibbard.com
CAIN HIBBARD & MYERS PC
66 West Street
Pittsfield, MA 01201
Tel: (413) 443-4771
Fax: (413) 443-7694
lprashker@cainhibbard.com
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Case
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3:16-cv-30190-MGM
3:16-cv-30190 Document
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12/19/16
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of Business In This State
u 2
Incorporated and Principal Place

of Business In Another State
u 5
u 5
Citizen or Subject of a
Foreign Country
u 3
Foreign Nation
u 6
u 6
&OLFNKHUHIRU1DWXUHRI6XLW&RGH'HVFULSWLRQV
FORFEITURE/PENALTY
BANKRUPTCY
OTHER STATUTES
TORTS
110 Insurance
120 Marine
130 Miller Act
140 Negotiable Instrument
150 Recovery of Overpayment
& Enforcement of Judgment
151 Medicare Act
152 Recovery of Defaulted
Student Loans
(Excludes Veterans)
153 Recovery of Overpayment
of Veterans Benefits
160 Stockholders Suits
190 Other Contract
195 Contract Product Liability
196 Franchise
DEF
u 1
Citizen of Another State
IV. NATURE OF SUIT (Place an X in One Box Only)

CONTRACT
Berkshire County, MA
(IN U.S. PLAINTIFF CASES ONLY)

IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.
PERSONAL INJURY
u 365 Personal Injury Product Liability
u 367 Health Care/
Pharmaceutical
Personal Injury
Product Liability
u 368 Asbestos Personal
Injury Product
Liability
PERSONAL PROPERTY
u 370 Other Fraud
u 371 Truth in Lending
u 380 Other Personal
Property Damage
u 385 Property Damage
Product Liability
PRISONER PETITIONS
Habeas Corpus:
u 463 Alien Detainee
u 510 Motions to Vacate
Sentence
u 530 General
u 535 Death Penalty
Other:
u 540 Mandamus & Other
u 550 Civil Rights
u 555 Prison Condition
u 560 Civil Detainee Conditions of
Confinement
u 625 Drug Related Seizure

of Property 21 USC 881
u 690 Other
u 422 Appeal 28 USC 158

u 423 Withdrawal
28 USC 157
PROPERTY RIGHTS
u 820 Copyrights
u 830 Patent
u 840 Trademark
LABOR
u 710 Fair Labor Standards
Act
u 720 Labor/Management
Relations
u 740 Railway Labor Act
u 751 Family and Medical
Leave Act
u 790 Other Labor Litigation
u 791 Employee Retirement
Income Security Act
u
u
u
u
u
SOCIAL SECURITY
861 HIA (1395ff)
862 Black Lung (923)
863 DIWC/DIWW (405(g))
864 SSID Title XVI
865 RSI (405(g))
FEDERAL TAX SUITS

u 870 Taxes (U.S. Plaintiff
or Defendant)
u 871 IRSThird Party
26 USC 7609
IMMIGRATION
u 462 Naturalization Application
u 465 Other Immigration
Actions
u 375 False Claims Act

u 376 Qui Tam (31 USC
3729(a))
u 400 State Reapportionment
u 410 Antitrust
u 430 Banks and Banking
u 450 Commerce
u 460 Deportation
u 470 Racketeer Influenced and
Corrupt Organizations
u 480 Consumer Credit
u 490 Cable/Sat TV
u 850 Securities/Commodities/
Exchange
u 890 Other Statutory Actions
u 891 Agricultural Acts
u 893 Environmental Matters
u 895 Freedom of Information
Act
u 896 Arbitration
u 899 Administrative Procedure
Act/Review or Appeal of
Agency Decision
u 950 Constitutionality of
State Statutes
V. ORIGIN (Place an X in One Box Only)

u 1 Original
Proceeding
u 2 Removed from
State Court
u 3
u 6 Multidistrict
Litigation Transfer
(specify)
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
Remanded from
Appellate Court
u 4 Reinstated or
Reopened
u 5 Transferred from
Another District
u 8 Multidistrict
Litigation Direct File
Electronic Funds Transfer Act 15 U.S.C. Section 1693
VI. CAUSE OF ACTION Brief description of cause:
Unauthorized transfer of electronic funds
u CHECK IF THIS IS A CLASS ACTION

VII. REQUESTED IN
UNDER RULE 23, F.R.Cv.P.
COMPLAINT:
VIII. RELATED CASE(S)
(See instructions):
IF ANY
JUDGE
DATE
DEMAND $
1,406,000.00
CHECK YES only if demanded in complaint:

u Yes
u No
JURY DEMAND:
DOCKET NUMBER
SIGNATURE OF ATTORNEY OF RECORD
/s/ Lucy Prashker
12/16/2016
FOR OFFICE USE ONLY
RECEIPT #
AMOUNT
APPLYING IFP
JUDGE
MAG. JUDGE
JS 44 Reverse (Rev. 0/16)
Case
Case
3:16-cv-30190-MGM
Document
1-11-1
Filed
Filed
12/19/16
12/19/16
Page
Page
2 of22of 2
INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet
The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as
required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is
required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of
Court for each civil complaint filed. The attorney filing a case should complete the form as follows:
I.(a)
(b)
(c)
Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use
only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and
then the official, giving both name and title.
County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the
time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land
condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.)
Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting
in this section "(see attachment)".
II.
Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X"
in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.
United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.
United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.
Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment
to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes
precedence, and box 1 or 2 should be marked.
Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the
citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity
cases.)
III.
Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this
section for each principal party.
IV.
1DWXUHRI6XLW3ODFHDQ;LQWKHDSSURSULDWHER[,IWKHUHDUHPXOWLSOHQDWXUHRIVXLWFRGHVDVVRFLDWHGZLWKWKHFDVHSLFNWKHQDWXUHRIVXLWFRGH
WKDWLVPRVWDSSOLFDEOH&OLFNKHUHIRU1DWXUHRI6XLW&RGH'HVFULSWLRQV
V.
Origin. Place an "X" in one of the seven boxes.

Original Proceedings. (1) Cases which originate in the United States district courts.
Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441.
When the petition for removal is granted, check this box.
Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing
date.
Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.
Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or
multidistrict litigation transfers.
Multidistrict Litigation Transfer. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C.
Section 1407.
Multidistrict Litigation Direct File. (8) Check this box when a multidistrict case is filed in the same district as the Master MDL docket.
PLEASE NOTE THAT THERE IS NOT AN ORIGIN CODE 7. Origin Code 7 was used for historical records and is no longer relevant due to
changes in statue.
VI.
Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional
statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service
VII.
Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P.
Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction.
Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.
VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket
numbers and the corresponding judge names for such cases.
Date and Attorney Signature. Date and sign the civil cover sheet.
Case
Case
3:16-cv-30190-MGM
Document
1-21-2
Filed
Filed
12/19/16
12/19/16
Page
Page
1 of11of 1
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
1. Title of case (name of first party on each side only) Jim Jacobs v. Berkshire Bank
2. Category in which the case belongs based upon the numbered nature of suit code listed on the civil cover sheet. (See local
rule 40.1(a)(1)).
I.
410, 441, 470, 535, 830*, 891, 893, 895, R.23, REGARDLESS OF NATURE OF SUIT.
II.
110, 130, 140, 160, 190, 196, 230, 240, 290,320,362, 370, 371, 380, 430, 440, 442, 443, 445, 446, 448, 710, 720,
740, 790, 820*, 840*, 850, 870, 871.
III.
120, 150, 151, 152, 153, 195, 210, 220, 245, 310, 315, 330, 340, 345, 350, 355, 360, 365, 367, 368, 375, 385,
400,422, 423, 450, 460, 462, 463, 465, 480, 490, 510, 530, 540, 550, 555, 625, 690, 751, 791, 861-865, 890, 896,
950.
*Also complete AO 120 or AO 121. for patent, trademark or copyright cases.
3. Title and number, if any, of related cases. (See local rule 40.1(g)). If more than one prior related case has been filed in this
district please indicate the title and number of the first filed case in this court.
4. Has a prior action between the same parties and based on the same claim ever been filed in this court?
YES
NO
5. Does the complaint in this case question the constitutionality of an act of congress affecting the public interest?
2403)
YES
NO
YES
NO
(See 28 USC
If so, is the U.S.A. or an officer, agent or employee of the U.S. a party?
6. Is this case required to be heard and determined by a district court of three judges pursuant to title 28 USC 2284?
YES
NO
7. Do all of the parties in this action, excluding governmental agencies of the United States and the Commonwealth of
Massachusetts (governmental agencies), residing in Massachusetts reside in the same division? - (See Local Rule 40.1(d)).
YES
A.
NO
If yes, in which division do all of the non-governmental parties reside?

Eastern Division
B.
Central Division
Western Division
If no, in which division do the majority of the plaintiffs or the only parties, excluding governmental agencies,
residing in Massachusetts reside?
Eastern Division
Central Division
Western Division
8. If filing a Notice of Removal - are there any motions pending in the state court requiring the attention of this Court? (If yes,
submit a separate sheet identifying the motions)
YES
NO
(PLEASE TYPE OR PRINT)

ATTORNEY'S NAME Lucy Prashker, Esq.
ADDRESS Cain, Hibbard & Myers PC, 66 West Street, Pittsfield, MA 01201
TELEPHONE NO. (413) 629-1305
(CategoryForm-201.wpd )

Berkshire Bank Lawsuit

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Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 1 of 21

IN THE UNITED STATES DISTRICT COURT

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 2 of 21

Mr. Jacobs is an individual who resides in Florida.

Berkshire Bank is a Massachusetts corporation with its principal place of

business located at 24 North Street, Pittsfield, Berkshire County, Massachusetts.

Berkshire Bank is a regional bank with over 90 branch offices in

Massachusetts, New York, Connecticut and Vermont.

In its 2015 Annual Report, Berkshire Banks parent holding company,

Berkshire Hills Bancorp, reported total assets of close to $8 billion, deposits of

This Court has federal question jurisdiction pursuant to 28 U.S.C.

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 3 of 21

This Court has pendent and supplementary jurisdiction over Counts II

through V pursuant to 28 U.S.C. 1367(A) because the claims contained in those

Venue is proper in this district pursuant to 28 U.S.C. 1391 (b)(2)

Mr. Jacobs established a personal account (the Account) with Great

Barrington Savings Bank, then based in Great Barrington, Massachusetts, at least as

Great Barrington Savings Bank merged with Berkshire County Savings

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 4 of 21

Ms. Terri Andersen, a longtime employee, first of Great Barrington

In that role, Ms. Andersen, regularly facilitated Mr. Jacobs banking

As part of Mr. Jacobs regular transactions with Berkshire Bank, he

Ms. Andersen accessed and responded to those emails from her

Berkshire Bank was aware of and authorized Ms. Andersen to provide

Receiving and responding to emails from Mr. Jacobs directing her to

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 5 of 21

Following its merger with Great Barrington Savings Bank, Berkshire

Commencing at least as early as 2001, Berkshire Bank was aware of, or

In August 2001, the agencies of the Federal Financial Institutions

The guidance urged [f]inancial institutions offering Internet-based

That guidance warned that single-factor authentication, as the only

control mechanism, [was] inadequate in the case of high-risk transactions involving

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 6 of 21

In October 2005, the FFIEC agencies issued a supplement to this

guidance, again warning of the increasingly hostile online environment, and

The agencies reported heightened expectations regarding customer

authentication, layered security, or other controls in the increasingly hostile online

The agencies defined high-risk transactions as electronic transactions

involving access to customer information or the movement of funds to other parties,

The agencies further recommended that institutions use layered security

As Internet fraud in the financial industry escalated and became more

sophisticated, the Federal Bureau of Investigation (FBI) published additional

In January 2015, the FBI released a public service announcement,

describing the characteristics of a scam identified as Business E-Mail Compromise,

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 7 of 21

accounts of high-level business executives . . . are compromised. The account may be

In this announcement, the FBI warned that [i]ndividuals responsible for

The FBI urged implementation of protective measures that included

establishing a two-step verification process, such as a telephone call, to verify all

The FBI further urged the implementation of protective measures in

Information Sharing and Analysis Center issued a second alert.

email] incidents involve the compromise of an email account belonging to a businesss

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 8 of 21

Commencing as early as 2001, Berkshire Bank was aware of, or should

On information and belief, Berkshire Bank received multiple public

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 9 of 21

Notwithstanding its being aware of the escalating risks of communicating

On information and belief, Berkshire Bank did offer such security

On Monday morning, October 17, 2016, returning from a vacation, Ms.

At this time, Mr. Jacobs was traveling in Europe.

In Ms. Andersens Berkshire Bank inbox was an email addressed to her

that purported to be from Mr. Jacobs.

In fact, that email was from an imposter pretending to be Mr. Jacobs.

Case 3:16-cv-30190-MGM Document 1 Filed 12/19/16 Page 10 of 21