In a case involving a fraudulent wire transfer and a creditunion seeking a claim for the loss of $243,000, a Los AngelesSuperior Court has ruled for CUMIS Insurance Society Inc.

According to the ruling, in January 2008, $243,000 wastransferred from William Ryder's account at the $66 millionUniversal City Studios Credit Union to a bank account in HongKong.

The Universal City, Calif.-based credit union said someone whoidentified himself as Ryder called to request a change to atelephone number supposedly associated with the account atUCSCU.

After providing Ryder's date of birth, Social Security number,mother's maiden name and other account activity, the phone numberwas changed, the decision read.

A wire request for the transfer of funds from Ryder's home lineof credit to the Hong Kong account was received by the credit unionfive days after the initial phone number change.

Upon verification of the signature on the fax and information onRyder's file, UCSCU called the new phone number to confirm therequest with the person who identified himself as Ryder.

The credit union approved and completed the transfer after theperson was able to correctly answer a series of security questions,according to the ruling. Two weeks after the transfer, Ryderlearned about the transaction when his wife called the credit unionto inquire about a loan refinance.

Ryder confirmed and submitted a sworn statement that he nevercontacted the credit union about the phone number change and didnot authorize the wire transfer.

UCSCU said it was not able to recover the $243,000 and submitteda claim to CUMIS. The insurance firm said there was no coverage betweenthe bonding period of February 2007 to February 2008 because newsecurity measures in place during that time required wire transfersto be made through a secure phone number in place for at least 30days prior to a transfer request.

In its suit against CUMIS, the credit union cited breach ofcontract. However, Los Angeles Superior Court Judge Terry A. Greenruled for CUMIS saying that UCSCU failed to comply with securitymeasures during the bonding period.

In an appeal, Justice Robert Mallano upheld the ruling, sayingthe credit union received notification months before the bondingperiod went into effect in February 2007.

Tom Ott, the credit union's president/CEO, said, “We thought wehad coverage and the court thought not, CUNA Mutual thought not,”Ott said. “The only thing I can say about it is we want tocongratulate CUNA Mutual and its attorneys on a job well done.”

He added, “Credit unions have difficulty dealing with identifytheft. This is what the case was about.”