If a bank employee allows money to be fraudulently taken from a customer, who is responsible – the bank or the employee?
That’s the question asked by Cyrus Hekmat, an L.A. entrepreneur, who claims that a business development officer at Los Angeles-based 1st Century Bank, a division of MidFirst Bank, aided and abetted taking more than $1.8 million from him.

So far, the answer to Hekmat’s question has been that the bank is not responsible. At least, a trial court ruled that MidFirst Bank could not be held liable for the alleged misconduct of the employee, and that decision was affirmed by an appellate court. Hekmat is hoping to get the California Supreme Court to pick up his dispute.

“This is an important case in that it could set precedent in the state of California for allowing banks to say, ‘we’re not responsible through respondeat superior,’ meaning, ‘we’re not responsible through our employment relationship with our employees for any bad acts or negligence that they do,’” Hekmat said. “And that’s just shocking.”

MidFirst Bank’s attorneys did not respond to requests for comment, but in court filings they argued that under the law an employer cannot be held liable for an employee’s malicious conduct “if the employee substantially deviates from the employment duties for personal purposes.”

Lost money

Hekmat, the founder and chief executive of L.A.-based ExamPerformance.com, an online learning program that prepares and trains students for test taking, said the saga began in...

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