Author: Daniel A. Lublin
Stealing millions from the bank and giving it to his friends, executive Rodney Chen said he was doing his customers a favour. But when the money was discovered lining Chen’s own pockets, losing his job was the least of his worries.
Chen was the executive branch manager of the Taiwanese International Commercial Bank. He used his authority and high level access to the bank’s computer system to make multi-million dollar loan advances to branch customers, many of whom he knew would be unable to repay the funds. Chen carefully and deceitfully planned the transactions to secretly profit himself. The customers on the receiving end of the loans were people Chen knew, including a woman who ultimately became his lover. As a result of Chen’s ‘philanthropic efforts,’ the bank lost upwards of $8 million.
Chen’s scandal came to a screaming halt when the bank’s new president ordered a routine compliance check performed. Chen’s report revealed his many loan advances, in violation of the bank’s policies. Afterwards, an audit was carried out and the bank’s million dollar losses where exposed with all fingers pointing directly at Chen. Chen was fired for embezzlement and breach of trust.
The story really gets interesting when Chen claimed he had done nothing wrong. He argued he was simply providing a benefit and convenience for many of the bank’s customers. The court disbelieved Chen entirely and found him liable for the bank’s losses to the tune of over $8 million for acting in a fraudulent, deliberate and manipulating fashion.
The case of Rodney Chen demonstrates how courts tend to frown on high level executives who use their position and power to exploit the companies they work for. Since Chen was in a position to make decisions on behalf of the bank, he was viewed as a fiduciary, or someone in a special position of trust. He had an obligation to act only in the best interests of the bank, which he disregarded when he fraudulently authorized loans he knew would never be repaid for his personal gain. Given his departure from the standards required of an executive placed in a money managing situation, the court awarded the bank nearly all of its estimated damages; an award usually reserved for only the worst offenders.
Not all terminations result in the employer getting sued. As Chen’s case illustrates, fraudulent events causing direct losses to the employer can prompt a suit against a former employee. Although these lawsuits are infrequent, they set a serious example for the type of conduct that courts will go out of their way to punish.
Embezzling costs more than job