Chartis Concocted Reason To Nix $18M Payout, Merrick Says

By William Gorta (November 28, 2016, 9:47 PM EST) -- Merrick Bank Corp. told a New York federal jury Monday that Chartis Specialty Insurance Co. "concocted" an after-the-fact equivalency between an escrow account and a merchant reserve account to avoid paying $18 million in uncollected chargebacks when charter airline Direct Air went bankrupt in 2012.

In his opening argument, Daniel G. Gurfein of Satterlee Stephens Burke & Burke LLP told the jury that funds to guarantee the chargebacks in cases of refunds on future airfares were held in escrow as required by the U.S. Department of Transportation. He said that former executives at Direct Air fraudulently raided the escrow account and...

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