The 8th U.S. Circuit Court of Appeals has ruled that an insurance company must cover significant losses Wayzata-based Cargill suffered as a result of employee theft. In National Union v. Cargill, decided March 7, the court found that a commercial crime insurance policy issued will cover losses beyond money pocketed due to embezzlement.
National Union Fire Insurance Co. of Pittsburgh issued a commercial crime insurance policy to Cargill. Cargill’s insurance policy covered employee theft, which was defined as “the unlawful taking of property to the deprivation of the Insured.” That loss had to have resulted “directly from” employee theft for it to be covered under the policy.
Diane Backis worked at Cargill for several decades at a grain facility in Albany, New York, as a Merchant/Admin Leader. In that capacity, Backis negotiated sales contracts with Albany grain customers, entered sales in the accounting system, and handled the invoices for those transactions. Backis understood Cargill’s financial systems and controlled the Albany facility’s financial records.
In 2008, Backis began a fraudulent scheme to embezzle money from Cargill. She did this by misrepresenting the price she could sell the grain for Cargill in the Albany market. Backis entered false sales contracts into the accounting system, manipulating the receivable balances and customer payments to reflect the sale. Cargill shipped additional grain to the Albany facility, which stored grain purchased from the...
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