OSD held a Financial Institution Bond for Insurance Companies from Hartford. Two riders were at issue: one covering computer systems fraud, the other covering fraud initiated through email. According to the complaint, outside hackers ran what the court described as “a spear phishing scheme” to gain access to the email account of OSD’s chief financial officer. Posing as the CFO, the hackers emailed other OSD employees with instructions to wire funds into what appeared to be new investments, and altered settings within the account so they could respond to follow-up questions without raising suspicion. Staff wired the money as instructed. Over several weeks, OSD’s complaint alleges a gross loss of nearly $7 million, of which about $3 million was later recovered — a net loss of nearly $4 million.
Seventh Circuit backs Hartford in $4 million fraud dispute
