Pub. 7 2012-2013 Issue 5

January | February 2013 19 Extraordinary Service for Extraordinary Members. before them when the person was not present, is a dishonest or fraudulent act. The bank should never decide to ignore any dishonest or fraudulent act by an employee. Pleading guilty to a dishonest or fraudulent act is conclusive evidence that the person committed the dishon- est or fraudulent act. No explanation later given for pleading guilty (to reduce legal expenses or to receive a lesser penalty, for example) can rebut the conclusive evidence that the employee pled guilty to committing a dishonest or fraudulent act. There is no distinction in the bond language between misdemeanor con- victions and felony convictions for dishonest or fraudulent acts. The au- tomatic termination of bonding for that employee applies whether the dishonest or fraudulent act is a misdemeanor or a felony. Banks, or directors or officers, often learn of a dishonest or fraudulent act that an employee committed even though no criminal charges have been brought. Learning of the dishonest or fraudulent act still results in termina- tion of the bonding for that employee, even if no criminal charges are ever brought. Generally, a bank has no alternative but to terminate the employment of any person upon learning that such person committed a dishonest or fraudulent act of any kind. A bank may discover a dishonest or fraudulent act that an employee committed which might be consid- ered minor and which occurred many years ago. In such cases, the bond still automatically terminates as to that employee. However, the bank could send a written request to the insurance company asking that the particular inci- dent be waived, and the company could agree in writing to bond the employee even though the employee committed a specific dishonest and fraudulent act. Normally, the bonding company will require a written statement from the employee explaining what act was committed and also providing any ex- tenuating circumstances. Waiving the provision of the bond for a particular incident is possible, but rare. Bonding companies are unwilling to do so in most cases because agreeing to bond a person who is known to have commit- ted a dishonest or fraudulent act can substantially increase risk. Even if the bonding company agrees to bond the individual, the bank is still in an awkward position if later it changes bonding companies. The bank must remember it needs to request and receive from the new insurance com- pany a waiver of the provision for that particular incident or the employee will again not be bonded. Z The EFT You can TRUST NetWorks is the Electronic Funds Transfer (EFT) service provider that Nebraskans have used and learned to trust like family for over 30 years. Our highly experienced staff is extremely knowledgeable and resourceful when it comes to assisting your institution. Give us a call to learn more about our services, you’ll have the opportunity to talk to someone who truly cares about and understands your EFT service needs. www.netseft.com Toll Free 800-735-6833 Local 402-434-8202 For more information, contact Kansas Bankers Surety Co. at (785) 228-0000.