Insurer Sued Over Colonial Bank Losses In $3B Fraud

Law360, New York (August 2, 2011, 4:41 PM EDT) -- Acting as Colonial Bank's receiver, the Federal Deposit Insurance Corp. on Friday hit a Chubb Group insurer with a $50.5 million lawsuit in Alabama federal court, seeking coverage of losses caused by ex-bank employees convicted in a $2.9 billion bank and securities fraud scheme.

Catherine Kissick, an ex-Colonial Bank senior vice president, and Teresa Kelly, a former operations supervisor in Colonial Bank’s mortgage warehouse lending division, pled guilty in March to participating in the fraud orchestrated by ex-Taylor Bean & Whitaker Mortgage Corp. Chairman Lee Bentley...
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