D2 Contracting Ltd. (D2) has filed suit against the Toronto-Dominion Bank (TD) in Victoria, alleging that the bank didn't act to limit fraud-related losses when it had the opportunity.
The plaintiff is seeking damages from TD for allegedly refusing to freeze an account after fraud was discovered, according to a claim filed April 30 in the BC Supreme Court.
The court document alleges that company co-founder Lindsay Cooper discovered in March 2009 that his business partner, David Lawrence Copeman, was defrauding the company.
The suit claims that Cooper discovered that Copeman had opened an "unauthorized" account at TD Bank and was using it to cash cheques made out to the company.
The claim states that, after reporting the situation to Victoria Police Department's financial crimes unit, Cooper went to the Fairfield Plaza branch of TD Canada Trust and spoke with branch manager Bernadette Wallace.
"[Cooper] advised her that he and Copeman were partners in [D2] and that Copeman was apparently committing a fraud with [D2] funds," the suit claims. "Cooper also advised her that there was an ongoing police investigation into Copeman's activities."
The document alleges that Wallace refused Cooper's request that she freeze the account.
"Apparently," the claim contends, "Cooper was no longer identified as a director of [D2] and the TD Bank refused to provide Cooper with any information about the unauthorized TD Bank account."
The court document alleges that Cooper later learned that Copeman had fraudulently signed and filed documents removing Cooper as a named director of D2 in late March.
D2 is alleging that at least one payment – for $78,908 – went through the unauthorized TD account.
"This and other transactions in that account were misappropriated by Copeman for his personal use," the claim contends. "They represent losses to the plaintiffs, losses caused by the failures of the defendant TD Bank."
The suit further alleges that, by failing to freeze the account, TD "caused further financial and reputational harm to [D2], which was subsequently unable to pay creditors."
D2 is seeking general and punitive damages against TD for "knowing assistance and knowing receipt of funds in the name of the client [D2], funds that the TD Bank was advised were the subject of a fraud."
It is also seeking further damages, plus tracing and return of money paid out or cashed from the account after the bank was asked to freeze the account.
The court document claims that in a subsequent legal action, Cooper obtained judgment against Copeman for fraud. It claims that Cooper then succeeded in reinstating himself as director of D2 and removing Copeman.
None of these allegations has been proven.
