An Indiana bank is suing its insurer after falling victim to a loan fraud involving someone pretending to be an NFL player. The case raises important questions about insurance coverage in the digital age.
First Farmers Bank & Trust Co. filed a lawsuit against Berkley Insurance Company in federal court, following the denial of a $2.4 million claim. The fraud involved a fake version of David Njoku, the Cleveland Browns tight end, and the FBI has identified it as an identity theft scheme.
The incident happened in June 2024 when First Farmers approved a $5.265 million loan to an individual claiming to be Njoku. The loan closing was done remotely via Zoom. A certified notary public was physically present to verify the borrower’s ID and witness the signatures. Bank staff and a representative from SureSports, a company that works with athlete financing, joined the meeting online.
The notary checked what looked like a valid driver’s license and watched the borrower sign several documents, including promissory notes, security agreements, and a pledge of Njoku’s NFL contract. An affidavit was also signed, affirming the borrower’s status as a professional athlete. These documents were uploaded immediately to a shared digital drive accessible to the bank.
After reviewing the documents, First Farmers wired the loan money the next day. The borrower made some early payments but eventually stopped paying. Seven months later, the FBI notified the bank that the signatures were forged, and the borrower’s ID was fake.
Berkley Insurance denied the claim, saying that the bank never had physical possession of the original documents as the insurance policy requires. They pointed to a specific policy clause stating that coverage depends on having the actual original documents in hand.
First Farmers argues that the notary acted on its behalf, meeting the physical possession requirement by witnessing the signing and handling the upload of documents. The bank also says it acted in good faith, relying on trusted representatives who confirmed the borrower’s identity and observed the signing live during the virtual closing.
The lawsuit spotlights a bigger issue in commercial insurance: how to apply policy terms written long ago to today’s digital business practices. As more transactions happen online with electronic workflows, many insurance policies still require paper documents and in-person verifications.
Financial institution bonds like the one involved in this case are designed to protect banks against fraud, forgery, and employee dishonesty. Insurers argue that strict rules about document handling are essential for preventing fraud, while banks say physical document possession is becoming outdated when secure digital methods can do the job.
First Farmers is seeking a court ruling that Berkley must pay the claim, with interest dating from when the claim was submitted. The bank is also asking for reimbursement of legal costs. The total loss after factoring in initial payments and recovered funds from a related savings account is about $2.42 million.
No decision has been made yet. The outcome could influence how courts handle insurance policies in an era where business deals increasingly happen remotely. Both banks and insurers are watching closely to see if older coverage language can evolve with modern technology or if it will continue to demand strict literal compliance.