Wire Transfer Fraud – Who Bears the Loss in California

Thomas v. Corbyn Restaurant Development Corp. (2025) 111 Cal.App.5th 439

After the settlement of a personal injury lawsuit, an unknown third-party purporting to be plaintiff's counsel sent spoofed e-mails to defense counsel providing fraudulent wire instructions for the settlement proceeds and absconded with the funds. ​

Plaintiff filed an action to enforce the payment required by the settlement.  

In the absence of published California authority on the issue, the California Court of Appeal upheld the trial court’s application of the imposter rule in the Cal. Uniform Commercial Code that places the risk of loss on the person failing to exercise ordinary care, because persuasive federal decisions had applied the imposter rule from the Uniform Commercial Code in the wire fraud context.