F&M Says Federal Owes $7M Coverage For Loan Scam

Law360, New York (July 15, 2011, 6:54 PM EDT) -- F&M Financial Corp. on Thursday filed suit in Tennessee federal court against Federal Insurance Co., alleging the insurer breached a financial institution bond by refusing to cover $7 million in losses it incurred issuing a loan to convicted fraudster Osama El-Atari.

F&M claims that the terms and conditions of the bond, purchased from Federal in 2007, required that the insurer pay for losses incurred as a result of fraud and forgery of the type for which El-Atari was convicted.

Formerly a Virginia business owner, El-Atari defrauded...
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