Anyone in favor of federal preemption of state immigration laws, especially Arizona’s SB 1070, was disappointed with the way the oral arguments before the Supreme Court justices on April 25, 2012 turned out in Arizona v. US. It appears that the core provision of SB 1070, Section 2(B), which mandates police officers to determine the immigration status of anyone they stop if they have a “reasonable suspicion” that the person in “unlawfully present in the United States” may be upheld even if other provisions are preempted. And while it is obvious that this provision would lead to racial profiling, the case that the United States brought against Arizona is more about whether federal immigration law preempts 2(B) and other provisions. Both conservative and liberal justices did not think so since 2(B) was not creating a new state immigration law. All it does is to allow police officers to determine if someone was unlawfully present by inquiring about that person’s status with the federal Department of Homeland Security. Whether this would lead to the incarceration of both citizens and lawfully present non-citizens did not seem to concern the justices as the inquiry regarding immigration status would be made in conjunction with another state offense, such as speeding or driving without a license. Moreover, even without SB 1070, the justices noted that the federal government has allowed state enforcement personnel to do much the same thing, especially through its Secure Communities program or through cooperation in the “investigation, apprehension or detention of aliens in the United States” under INA § 287(g).
CHIEF JUSTICE ROBERTS: Right. So, apart from Section 3 and Section 5, take those off the table, you have no objection to Section 2?
GENERAL VERRILLI: We do, Your Honor. But, before I take 3 and 5 off the table, if I could make one more point about 3 and 5, please? The -- I think -because I think it's important to understand the dilemma that this puts the Federal government in.
CHIEF JUSTICE ROBERTS: Exactly. You -- the Federal government has to decide where it's going to use its resources. And what the state is saying, here are people who are here in violation of Federal law, you make the decision. And if your decision is you don't want to prosecute those people, fine, that's entirely up to you. That's why I don't see the problem with Section 2(B).
We hope we are proved wrong and the Supreme Court will find SB 1070 unconstitutional in its entirety, but even if we are not wrong, do not lose heart. Good things can also come out of it. Take a look at Peter Spiro's intriguing essay in the New York Times, where he argues that even if SB 1070 stands, it will ultimately wither as Arizona, and other copycat states, will continue to hurt economically. Thus, such laws that Arizona and some states will enforce with vigor will ultimately die their own natural death. Of course, this still does not excuse the fact that 2(B), while in existence, is likely to result in mass incarcerations, while the state police inquire about each detainee;s status. One saving grace it that someone who is actually affected, such as an individual who is lawfully present, can mount another challenge based on due process and equal protection violations, rather than preemption, and this may have more of a chance to succeed. In the mean time, Spiro states, One of federalism;s core virtues is the possibility of competition among states. Competition in this context is likely to vindicate pro-immigrant policies. Thus, most other states that welcome immigrants, legal and undocumented, and recognize their contributions, will deliberately not pass similar laws like Arizona's. By not enacting similar laws, they will be competing with those states by enticing their corporations, as well as jobs, to move over.
While there are very good arguments in support of preemption, if part of SB 1070 is upheld, states that want immigrants can go even further than do nothing. For instance, a state can pass a law that encourages immigrants who reside within to apply for a personal endorsement from the state’s governor in support of a national interest waiver request, which waives the job offer and labor certification requirement, when applying for permanent residency. The state can set criteria for whom it wants to encourage, such as entrepreneurs or robotics specialists, and its governor can write a personal letter in support of their petitions for permanent residency through the federal national interest waiver pursuant to INA § 203(b)(2)(B)(i). As in Arizona’s Section 2(B), the state is not creating a new immigration category, but simply assisting the federal government to make a determination under federal law. Unlike Arizona’s SB 1070, which is premised on driving away immigrants from the state through attrition, the purpose of a state law in our hypothetical example is to encourage the immigrant to remain in that state and contribute to its economy, which in turn will benefit the national interest of the US. Indeed, we commend noted attorney Rami Fakhoury of Troy, Michigan, who is proposing such standards for Governor Snyder of Michigan to implement in order to support a national interest waiver request from a Michigan resident.
In the same vein, a state can designate certain occupations as shortage occupations, which may assist the Department of Labor in more easily certifying a labor certification pursuant to INA § 212(a)(5) of an employer filed on behalf of a non-citizen resident in the state. A state can be a more effective judge of shortage occupations than the federal government, and if a labor certification is filed on behalf of a non-citizen in that particular state designated shortage occupation, the DOL may be more influenced in making a favorable determination on the labor certification. Similarly, even with regards to an undocumented immigrant, a state may be able to enact criteria for recommending that such a person, who has otherwise not been convicted of serious crimes and is say an essential farm worker, is deserving of prosecutorial discretion by the federal government under its new prosecutorial discretion policy and thus be permitted to remain in the state and prevent its farm produce from otherwise rotting away. There may already be such authority under INA § 287(g), which authorizes the federal government to enter into a written agreement with a state to perform the function of a qualified immigration officer in relation to the “investigation, apprehension and detention” of non-citizens. In the era where the government has implemented a broad prosecutorial discretion policy, a state can assist the federal government in the “investigation, ” rather than the apprehension or detention, of an individual who may merit such discretion from the federal government.
While Utah has also passed an enforcement oriented immigration law similar to Arizona’s, it contains one unique provision quite unlike any other state’s law. The Utah provision offers work permits to undocumented immigrants who pass background checks, have paid fines and can demonstrate a work history. The measure does not offer legal status or citizenship, but would allow unauthorized workers who meet its criteria to continue working in Utah. This provision also requires a federal waiver. If the Utah provision, which is currently enjoinedis allowed to go forward, in the event that the Supreme Court gives a green signal to states in Arizona v. US, we estimate that there will be more states that will enact laws similar to the Utah guest worker provision than Arizona’s SB 1070.
Since the New Deal, the operating assumption in American politics has been that reform must come from Washington DC to be imposed upon the states. The growth of the imperial presidency has flowed directly and inevitably from this core conviction. This is certainly the case with immigration reform given the plenary federal power over this issue as an extension of foreign policy. The inability or unwillingness of Congress to deal effectively with undocumented migration to this country on an unprecedented level has created the impetus for state action to fill up the vacuum. We advocate that Congress must deal with this situation by creating more pathways to legal status over an enforcement only approach, which is what states like Arizona have done. Until now, such state action has been deprived of constitutional legitimacy; the Supreme Court may be ready to change that. Indeed, the first signs of this came with Chamber of Commerce v. Whiting, 131 S. Ct. 1968, 179 L.Ed.2d 1031 (2011) when a 5-3 ruling upheld the 2007 Legal Arizona Workers Act thus transforming the power of state regulators to grant or withhold business and professional licenses into tools of immigration enforcement. Should the High Court sustain SB 1070, for the first time since the 1870’s, the states will be able to take advantage of a constitutional regime that not only tolerates but welcomes their presence and invites their participation. Of course, Congress can also deal with states legislating on immigration by expressly preempting such action, but one will need to wait for that day to happen.
Those who think immigration is good for America will then have to find a way to review and revise their most basic assumptions on the nature of American reform. There is a way to make lemonade out of lemons. Even now, not all state and local action has been negative. Utah is but one such example. Look and you will find others. Congress may not have passed a federal Dream Act but California and Illinois have done precisely that on the state level. Maryland too adopted its own Dream Act in 2011 and the Maryland Supreme Court will soon decide if this measure must go to a voter referendum this fall. In his most recent state-of-the-city address, New York City Mayor Michael Bloomberg vigorously supported a Dream Act for New York State, though Governor Cuomo has yet to declare his position.12 states now grant in-state tuition rates to undocumented students. Texas, California and New Mexico provide financial aid to undocumented students. If we look north to our neighbor, Canada, its provinces have considerable influence in Canada’s immigration policy. An intending immigrant to Canada will get a preference if he or she meets certain requirements of Quebec province, for example.
Our position on SB 1070 has not changed. We do not believe it is constitutional. We do not write to endorse a patchwork immigration system of 50 different approaches without unity or definition. The dangers of this are apparent to all and we devoutly wish that our ideas will be made irrelevant when the Supreme Court finds SB 1070 to be constitutionally impermissible. Yet, candor requires us to admit that the result may not be as we would like. Now is the time to prepare for what may come and think the unthinkable. We owe it to our clients and our country to turn a problem into an opportunity. Until now, both supporters and critics of SB 1070 have assumed that if the Supreme Court were to uphold the law, it will unleash a tsunami of copycat legislation. This may happen and it may hurt. Yet, the future often has a way of surprising us. More may emerge; the outcome could well be different than what most hope or fear.This blog points a way forward. What happens next is up to you.
Gary Endelman is a Senior Counsel at Foster Quan, Houston, TX. His practice includes I-9 compliance and audits, E-Verify compliance, immigration issues related to mergers and acquisitions, employment-based nonimmigrant visas, B-1 OCS, permanent residence petitions for ability, outstanding researchers, PERM labor certification; naturalization, derivation and transmission of U.S. citizenship. Mr. Endelman graduated with a B.A. in History from the University of Virginia, a Ph.D. in United States History from the University of Delaware, and a J.D. from the University of Houston. From 1985 to 1995, he worked at one of the largest immigration firms in the country. From 1995 to 2011, he worked as the in-house immigration counsel for BP America Inc., a multinational energy company ranked as one of the top 5 largest companies in the world. Mr. Endelman is board certified in Immigration and Nationality Law by the State Bar of Texas, Board of Legal Specialization. He is a frequent national speaker and writer on immigration related topics including several columns and blogs on immigration law. He served as a senior editor of the national conference handbook published by AILA for ten years. In July 2005, Mr. Endelman testified before the United States Senate Judiciary Committee on comprehensive immigration reform. Please contact Gary Endelman at gendelman@fosterquan.com. The views expressed by Mr. Endelman in this article are his own and not of his firm, Foster Quan, LLP.
Cyrus D.Mehta, a graduate of Cambridge University and Columbia Law School, is the Managing Member of Cyrus D. Mehta & Associates, PLLC in New York City, www.cyrusmehta.com, and a member of the Alliance of Business Immigration Lawyers (ABIL). He is listed as a most highly regarded individual by International Who's Who of Corporate Immigration Lawyers 2011 and is ranked by Chambers USA 2011. Mr. Mehta is the Vice Chair of the American Immigration Lawyers Association?s (AILA) Ethics Committee and past Chair of AILA's Pro Bono Committee. He is a former Chair of the Board of Trustees of the American Immigration Council (2004-06). He was also Secretary (2003-07) and Chair of the Committee on Immigration and Nationality Law (2000-03) of the New York City Bar. He is a frequent speaker and writer on various immigration-related issues, and is also an adjunct associate professor of Law at Brooklyn Law School, where he teaches a course entitled "Immigration and Work." He received the AILA 2011 Michael Maggio Memorial Award for his outstanding efforts in providing pro bono representation in the immigration field.


text:
On May 31, 2017, the Eighth Circuit Court of Appeals released its decision in 3M Company v. National Union Fire Insurance Company of Pittsburgh, PA. The Court affirmed the decision of the U.S. District Court for the District of Minnesota (see our October 13, 2015 post), which had applied a crime policy’s ownership condition in ruling that the insured did not have coverage for the loss of investment earnings incurred when an investment entity in which it had a limited partnership interest collapsed due to the entity’s principals’ Ponzi scheme. The Eighth Circuit’s decision provides a good illustration of the interaction between the ownership condition and statutory and common law concepts of “ownership” as they relate to partnerships.
The inventory exclusion precludes an insured from proving an employee theft loss solely by reliance on inventory calculations, independent of other proof of actual employee theft. A recent decision of the Court of Appeals of Kentucky, Khazai Rug Gallery, LLC v. State Auto Property & Casualty Insurance Company, provides a good example of the application of the inventory exclusion, and makes important findings with respect to whether it is appropriate to infer a connection between a demonstrated instance of employee theft and another similar instance for which there is insufficient independent evidence.
Several recent decisions, such as Telamon Corporation v. Charter Oak Fire Insurance Company (see our March 13, 2017 post), have highlighted the importance of assessing the precise legal status of an alleged defaulter’s work relationship vis-à-vis the insured as part of a proper coverage analysis. The decision of the U.S. District Court for the Central District of California in Commercial Ventures, Inc. v. Scottsdale Insurance Company provides another example of the courts considering this challenging issue. In Commercial Ventures, the Court dealt with an alleged defaulter who was both a minority owner and the President of the insured, and specifically addressed whether contingent ownership distributions constituted “salary, wages or commissions” within the crime coverage’s definition of “Employee”.
Commercial Ventures had two affiliated companies, Noblita, LLC (“Noblita”), which operated an apparel business, and Daylight Investors, LLC (“Daylight”), which owned 49 per cent of Noblita. Rik Guido personally owned another 49 per cent of Noblita, and was also its President. As an owner of Noblita, Guido was entitled to receive $27,500 per month, but only under certain conditions.
Mr. Guido will not be paid for such services [as President], but so long as (1) he is President of the Company and rendering his full time services to the Company (and in compliance with the terms of this Agreement) and (2) the company has adequate monies, Mr. Guido will receive a Distribution of twenty–seven thousand five hundred dollars ($27,500) per month.
In November 2013, Daylight sued Guido in state court, alleging that Guido participated in a fraudulent scheme whereby he transferred money and inventory from Noblita to a Florida-based company in which he had an ownership interest.
Commercial Ventures maintained a Business Management Indemnity Policy with Scottsdale, under which both Noblita and Daylight were additional insureds. The policy’s crime coverage included coverage for employee theft. Daylight notified Scottsdale of a potential employee theft loss arising from Guido’s alleged actions.
Scottsdale inquired as to the nature of Guido’s role with Noblita. Noblita’s controller advised that Guido was not entitled to take any distribution from Noblita unless the company had adequate monies or was profitable. The controller added that, during the majority of the months in which Guido worked for Noblita, it had negative operations and Guido was therefore not entitled to any distribution.
In Scottsdale’s view, Guido was a non-salaried member of Noblita, and was therefore not an “Employee” within the meaning of the crime coverage.
ii. has the right to direct and control such person while performing services for the Insured.
Consequently, Guido was not an “Employee” and no indemnity was available.
Although the decision is based on the interpretation of the specific contract between Noblita and Guido, Commercial Ventures provides general guidance as to the proper interpretation of the definition of “Employee” found in many crime coverages, as well as the meaning of the specific terms “salary, wages or commissions”. The Court rejected the insured’s contention that these terms were ambiguous, and found that ownership distributions did not fall within their ambit. The interpretive approach adopted in Commercial Ventures will be of assistance to fidelity claims professionals in assessing whether individuals who maintain both ownership and other roles within an insured come within the definition of “Employee”.
In the recent decision of Taylor & Lieberman v. Federal Insurance Company, the Ninth Circuit Court of Appeals affirmed a decision of the U.S. District Court for the Central District of California holding that a business management firm did not have coverage in respect of client funds which it was fraudulently induced to wire overseas.
While the District Court had held that the insured had failed to establish that it had sustained any “direct” loss at all (see our July 14, 2015 post), the Ninth Circuit affirmed the result on other grounds, holding that the insured had also failed to establish that the loss came within the substantive requirements of any of the Forgery, Computer Fraud or Funds Transfer Fraud insuring agreements.
Taylor & Lieberman (“T&L”) was an accounting firm which also performed business management and account oversight services for various clients, including the client in issue. Clients’ funds were held in separate bank accounts maintained with City National Bank. Clients granted Powers of Attorney over their accounts to a designated individual at T&L, permitting transactions to be made in the accounts.
The first email directed the employee to wire $94,280 to an account in Malaysia. The employee did so, and then sent a confirming email to the client’s email account.
The next day, the employee received another email from the client’s account directing her to wire $98,485 to an account in Singapore. The employee again complied, and again sent a confirming email to the client’s email account.
The employee then received a third email, purportedly from the client, but sent from a different email address. The employee contacted the client by phone, and discovered that all three emails were fraudulent. T&L was able to recover some of the funds, but had to reimburse its client and incurred a net loss of nearly $100,000.
T&L submitted a claim under each of its Forgery Coverage, its Computer Fraud Coverage and its Funds Transfer Fraud Coverage. The District Court held that each of these coverages required “direct loss sustained by an Insured” and that, as a matter of law, no direct loss had been sustained.
On appeal, the Ninth Circuit did not disturb the finding with respect to direct loss, but affirmed the result on the basis that T&L had failed to establish that the loss came within the scope of any of the insuring agreements.
The Ninth Circuit quickly dismissed T&L’s contention that this insuring agreement’s requirement of a “Forgery or alteration of a financial instrument” did not require proof of a “Forgery” of a financial instrument, because the insuring agreement required only proof of an alteration of a financial instrument or a free-standing “Forgery” of any document, of any type. The Court held that the insuring agreement plainly required either a “Forgery” or an alteration of a financial instrument.
Here, the emails instructing T&L to wire money were not financial instruments, like checks, drafts, or the like. See Vons Cos., Inc. v. Fed. Ins. Co. … (C.D. Cal. 1998) (holding that wire instructions, invoices, and purchase orders were not “documents of the same type and effect as checks and drafts.”). And even if the emails were considered equivalent to checks or drafts, they were not “made, drawn by, or drawn upon” T&L, the insured. Rather, they simply directed T&L to wire money from T&L’s client’s account. In sum, there is no forgery coverage.
The emails instructed T&L to effectuate certain wire transfers. However, under a common sense reading of the policy, these are not the type of instructions that the policy was designed to cover, like the introduction of malicious computer code. … Additionally, the instructions did not, as in the case of a virus, propagate themselves throughout T&L’s computer system; rather, they were simply part of the text of three emails.
fraudulent written, electronic, telegraphic, cable, teletype or telephone instructions issued to a financial institution directing such institution to transfer, pay or deliver Money or Securities from any account maintained by an Insured Organization at such Institution, without an Insured Organization’s knowledge or consent.
This coverage is inapplicable because T&L requested and knew about the wire transfers. After receiving the fraudulent emails, T&L directed its client’s bank to wire the funds. T&L then sent emails confirming the transfers to its client’s email address. Although T&L did not know that the emailed instructions were fraudulent, it did know about the wire transfers.
Moreover, T&L’s receipt of the emails from its client’s account does not trigger coverage because T&L is not a financial institution.
As a result, there was no coverage available under the Federal policy.
Following the Fifth Circuit’s decision in Apache (see our October 24, 2016 post), the Ninth Circuit’s decision in Taylor & Lieberman provides another example of a clear trend on the part of the courts to refuse to find coverage for social engineering fraud losses under the “traditional” crime policy coverages (typically, computer fraud and funds transfer fraud coverages, but occasionally, as here, other coverages as well). The proliferation of social engineering frauds has created a new exposure for insureds, and fidelity insurers have responded by creating discrete social engineering fraud coverages. Like Apache, Taylor & Lieberman serves as a cautionary tale to businesses (and to their brokers) of how a business may be exposed to an uninsured loss in the event that it does not maintain such coverage.
On March 16, 2017, the U.S. District Court for the Northern District of Georgia released its decision in InComm Holdings, Inc. v. Great American Insurance Company. The Court held that Great American’s computer fraud coverage did not respond where holders of prepaid debit cards used multiple simultaneous telephone calls to exploit a coding error in the insured’s computer system, thereby fraudulently increasing the balances on the cards. The Court also applied the recent appellate decisions in Apache (see our October 24, 2016 post) and Pestmaster (see our August 4, 2016 post) in holding that the loss scenario did not meet the direct loss requirement in the computer fraud insuring agreement.
InComm was a debit card processor. Individuals could purchase prepaid debit cards issued by banks and then utilize InComm’s system to load funds onto those cards. InComm’s processing system consisted of an Interactive Voice Response (IVR) system and an Application Processing System (APS). The IVR system permitted cardholders, using telephone voice commands or touchtone codes, to load credit onto their cards. The APS provided transaction processing in respect of transaction instructions received through the IVR system. After the APS carried out the requested instruction, it would communicate the result to the IVR system, which would then report the result to the cardholder.
To add value to a card, a cardholder could purchase a chit from a retailer, which would then relay the funds to InComm by transferring them to an account maintained by InComm with Wells Fargo. To redeem the chit, the cardholder would call the IVR system and provide the unique PIN printed on the chit. The IVR system would then relay the information to the APS, which would verify the data and then add the value of the chit to the card.
After a chit is redeemed, InComm transfers the equivalent amount of funds to the bank that issued the card. The funds are then maintained by the issuing bank for the benefit of the cardholder until the cardholder makes a purchase, at which point the issuing bank remits funds to the vendor. InComm is not involved in payments by banks to vendors.
InComm contracted with Bancorp to serve as program manager for cards issued by Bancorp. When a Bancorp cardholder redeemed a chit, InComm would transfer the equivalent dollar amount from its Wells Fargo account to a special settlement account held at Bancorp in Bancorp’s name. The InComm-Bancorp contract provided that “[Bancorp] shall hold all Cardholder Balances in a fiduciary or custodial manner on behalf of [InComm] as holder[ ] of the Cardholder Balances for the benefit of Cardholders” and that “all Cardholder Balances shall be held in trust for the benefit of the Cardholders”.
For a period of several months in 2013 and 2014, there was a coding error in the IVR system which permitted a chit to be redeemed multiple times. Cardholders could exploit the coding error by making multiple simultaneous telephone calls to the IVR system, redeeming their chit multiple times, and obtaining multiples of the value of the chits, which were then used by the cardholders to make purchases. As a result of the misuse of the IVR system, InComm wired $10,769,039 to Bancorp in connection with these fraudulent transactions. Bancorp transmitted most of these funds to vendors, but currently retains $1,880,769 of the wrongfully-redeemed funds in its trust account.
Great American reasoned that the cardholders had not engaged in computer fraud within the meaning of the policy, as they had utilized telephones, not computers, to make the calls. Great American also took the view that any loss to InComm was not a loss “resulting directly” from computer fraud. The Court accepted Great American’s position on both issues.
The Court also held that InComm had not established that it had sustained a loss “resulting directly” from the cardholders’ conduct. The Court observed that, under the terms of InComm’s contract with Bancorp, InComm retained an interest, as trustee, in the funds so long as they continued to be held by Bancorp. Consequently, a transfer from InComm’s Wells Fargo account to Bancorp was not itself a loss. The earliest that a loss could occur was when funds were paid out by Bancorp to vendors to settle the cardholders’ expenditure of the fraudulently-redeemed chits.
The Court also observed that, even if the loss had occurred earlier in the process (i.e., when the funds left Wells Fargo), the loss still did not result directly from the chit redemptions. Great American pointed out that those fraudulent redemptions did not automatically transfer funds to issuers like Bancorp. A redemption did not reduce the available assets in InComm’s hands; instead, a redemption only triggered InComm’s contractual obligation to an issuer to fund the redemption.
… InComm’s loss resulted directly — that is, immediately — from InComm’s decision to wire the funds to Bancorp, not from the cardholders’ redemptions. Apache, and the cases it discusses, warn that to find coverage based on the use of a computer, without a specific and immediate connection to a transfer, would effectively convert a computer fraud provision into a general fraud provision. … To accept InComm’s argument that the cardholders’ fraudulent redemptions resulted directly in the transfer of funds from InComm to Bancorp — where InComm itself chose to make the transfer — would violate the admonition in Apache and the other cases addressing computer fraud coverage.
Doubtless, had the confirmation call been properly directed, or had Apache performed a more thorough investigation, it would never have changed the vendor-payment account information. Moreover, Apache changed the account information, and the transfers of money to the fraudulent account were initiated by Apache to pay legitimate invoices … Arguably, Apache invited the computer-use at issue, through which it now seeks shelter under its policy, even though the computer-use was but one step in Apache’s multi-step, but flawed, process that ended in its making required and authorized, very large invoice-payments, but to a fraudulent bank account.
InComm chose to wire funds to Bancorp because it was contractually required to do so and because, despite any reconciliation or verification process it had in place, it believed the redemptions were legitimate.
As in Apache, “the authorized transfer was made to the [Bancorp] account only because, after receiving [notice of the duplicate chit redemptions], [InComm] failed to investigate accurately new, but fraudulent, information provided to it.” [emphasis added].
Not only did the Apache and InComm courts refuse to find an “immediate” relationship between the alleged conduct and the claimed losses, they each observed that investigatory lapses on the part of the insureds could be considered intervening and superseding causes of their losses.
Although it arises from a rather complicated set of facts and legal relationships, InComm provides helpful general guidance on both the “use of a computer” and the “direct loss” requirements found in computer fraud insuring agreements.
The courts in Apache and Pestmaster recognized that computers are involved in virtually every business transaction, and that interpreting computer fraud coverage to cover every loss that involves both a computer and fraud at some point in the transaction would turn such coverage into a “general fraud policy”. The Court in InComm built on this insight by interpreting “the use of any computer to fraudulently cause a transfer” to require the fraudster’s use of a computer, not the use of a telephone to interact with the insured’s computer.
Further, the Court implicitly applied a “direct means direct” causation approach in finding that the loss was not one resulting directly from the cardholders’ conduct. This is underscored by the Court’s requiring a “specific and immediate connection” between the conduct and the loss, which could not be established, given the intervening steps which occurred here.
On March 9, 2017, the Seventh Circuit Court of Appeals released its decision in Telamon Corporation v. Charter Oak Fire Insurance Company. The decision affirms the ruling of the U.S. District Court for the Southern District of Indiana, which had held that the insured’s Vice-President of Major Accounts was not an “employee” within the meaning of a crime policy, as her services were provided to the insured by an outside entity pursuant to a series of consulting services agreements (see our April 25, 2016 post for more detail).
Juanita Berry worked for Telamon from 2005 to 2011. Her work was governed by a series of Consulting Services Agreements (the “Agreements”) between Telamon and J. Starr Communications, Berry’s one-woman company through which she provided her services. The terms of the Agreements remained largely unchanged during Berry’s six-year association with Telamon. Her role did not. Berry’s responsibilities expanded well beyond those described in the Agreements, and she eventually became Telamon’s Vice-President of Major Accounts, making her the company’s senior manager in the New York and New Jersey region.
In that capacity, Berry oversaw Telamon’s AT&T Asset Recovery Program, which was supposed to remove old telecommunications equipment from AT&T sites and sell it to salvagers. Berry removed the equipment and sold it, but she pocketed the profits. By the time that Telamon discovered this conduct in 2011, it had incurred $5.2 million in losses. Telamon fired Berry and she was later convicted of wire fraud and tax evasion.
any … independent contractor or representative or other person of the same general character not specified in paragraphs 1. through 5., above.
Travelers reasoned that the Agreements made it clear that Berry worked as an independent contractor, and that J. Starr could not reasonably be considered to be a labour leasing firm. Telamon disputed Travelers’ position, contending that J. Starr was a labour leasing firm because it had provided Berry’s consulting services to Telamon in exchange for payments; as Berry was a “leased employee”, the exception for independent contractors could not apply. The District Court accepted Travelers’ position and granted summary judgment dismissing the claim. Telamon appealed.
Before the Seventh Circuit, Telamon asserted that the plain meaning of a “labor leasing firm” is a company “in the business of placing its employees at client companies for varying lengths of time in exchange for a fee”; in Telamon’s view, all that it needed to demonstrate was that J. Starr was a business concern that sold another person’s work for a specified time and for a specified fee.
We will accept that definition for purposes of this opinion. Yet even so, we cannot conclude that J. Starr meets it. It is true that the Agreements were contracts between Telamon and J. Starr under which the former obtained the right to Berry’s labor. But J. Starr was not a firm in the business of leasing labor; it was just Berry’s vehicle for providing her own services. To classify her corporate alter ego as a “labor leasing firm” would be to elevate form over substance.
Consequently, no coverage was available under the Travelers policy.
Telamon provides useful appellate guidance on the employee-independent contractor distinction found in most crime policies. The Seventh Circuit’s decision reinforces the importance of assessing whether an alleged defaulter comes within the definition of “Employee” in a theft claim. In this case, Berry was held out by Telamon as a Vice-President and exercised considerable power over Telamon’s operations and personnel, but performed these duties as an independent contractor. With more work relationships moving away from the traditional employee-employer model, fidelity claims professionals must ensure that the precise legal status of the alleged defaulter’s work relationship vis-à-vis the insured is established as part of the coverage analysis.
Telamon also provides specific guidance with respect to the meaning of “labor leasing firm” and, arguably, similar terms used in other fidelity coverages. Although J. Starr did, in the narrowest and most technical sense, supply its (only) worker to another company for payment, the Court rejected Telamon’s attempts to characterize J. Starr as a labour leasing firm, even accepting Telamon’s proposed definition of the term for the purposes of the analysis. This finding is of assistance to fidelity claims professionals who must address creative arguments which attempt to bring similarly-situated workers within the definition of “Employee”.
On November 16, 2016, the U.S. District Court for the Eastern District of Wisconsin released its decision in Citizens Bank Holding Inc. v. Atlantic Specialty Insurance Co. The Court held that forged business loan guarantees purportedly issued by the U.S. Department of Agriculture (USDA) did not qualify for indemnity under Insuring Agreements D or E of a Financial Institution Bond. The decision is notable in that it reaffirms the interpretive principle that the Bond is not to be interpreted contra proferentem, as it is a product of negotiation between the banking and fidelity insurance industries.
Citizens Bank maintained an investment advisory agreement with Pennant Management, Inc. (“Pennant”), a company engaged in acquiring USDA-guaranteed loans on behalf of community banks. Pursuant to this agreement, Citizens Bank began purchasing shares in loan pools administered by Pennant.
In 2013, Pennant entered into a master repurchase agreement with First Farmers Financial LLC (“First Farmers”), a company approved by the USDA as an eligible lender for certain USDA loans. Under the terms of the master repurchase agreement, Pennant, on behalf of its clients, agreed to purchase from First Farmers guaranteed portions of USDA loans and supporting agreements, documents, and instruments, including USDA-issued Assignment Guarantee Agreements (AGAs).
Beginning in 2013, Pennant purchased, on behalf of Citizens Bank, 25 USDA-guaranteed loans purportedly originated by First Farmers. Citizens Bank’s investment in the loan pool totaled $15 million. For each loan, Citizens Bank’s custodian received an original USDA AGA that contained an original ink signature purporting to be that of a USDA state director.
In 2014, Pennant discovered that the First Farmers loans were fictitious and that the signatures on the AGAs were forged. The identified borrowers and collateral were fictitious and the CPA who allegedly audited First Farmers did not exist. First Farmers refused Pennant’s request to repurchase the loans it purportedly originated, and the USDA refused Pennant’s demand to honor the AGAs, reasoning that it had not guaranteed any valid loans. As a result, Citizens Bank lost its investment.
which … bears a handwritten signature of any … guarantor … that is a Forgery.
Citizens Bank asserted that the forged AGAs qualified as certificated securities, or as corporate or personal guarantees. Atlantic took the view that the AGAs did not fall within either category of documents.
(c) either one of a class or series or by its terms divisible into a class or series of shares.
Citizens Bank contended that an AGA “is a ‘class’ of obligation ‘issued by the USDA’ in ‘registered’ form and ‘commonly recognized’ as a ‘medium of investment’ in the secondary market for USDA guaranteed loans.” Atlantic responded that the Bond defined guarantees and certificated securities separately, and that the documents in issue were self-identified as guarantees. Further, an AGA was not a share, nor was it divisible into shares.
The Court held that a reasonable insured would not expect the AGAs to qualify as certificated securities under the Bond, observing that, while one could try to classify an AGA as a certificated security by separating each of the terms used in defining the document, “such terms must be viewed in context of the Bond as a whole and not in isolation.” As the AGAs were labeled as guarantees, and fit within the definition of “guarantee” used in the Bond, it was not reasonable to accept that the parties intended such documents to also qualify as certificated securities.
The Court then considered whether the AGAs were “corporate, partnership or personal” guarantees. Citizens Bank contended that they represented (i) corporate guarantees, because the USDA acts in a corporate capacity in providing loan guarantees; and (ii) personal guarantees, because the USDA, as a political body, is an artificial “person” akin to a corporation or partnership. The Court rejected these arguments, holding that the USDA is a government agency and not a corporation. As the types of guarantees in Insuring Agreement E(1)(g) expressly included only corporate, partnership or personal guarantees, accepting Citizens Bank’s definition would be “unreasonable as it would render those expressly included terms superfluous.” As a result, the AGAs did not fall within Insuring Agreement E(1).
an engagement in writing by a bank or other person made at the request of a customer that the bank or other person will honor drafts or other demands for payment upon compliance with the conditions specified in the Letter of Credit.
Citizens Bank contended that the USDA acted as a “bank” by facilitating the transmission of funds to lenders and borrowers, and also argued that the USDA was an “other person”, on the basis that that term encompassed human beings, corporations and partnerships.
The Court finds that a reasonable insured in Citizens Bank’s position would not expect the [AGAs] to qualify as letters of credit under the terms of the Bond. For one, the [AGAs] are labeled as guarantees and clearly fit within the definition of a guarantee as used in the Bond and for which coverage is provided under Insuring Agreement E. That other instruments, for example certificates of deposit, may qualify for coverage under multiple insuring agreements does not mean that a document expressly labeled as a guarantee — a term defined in the Bond — should be treated as an instrument with an entirely different definition.
Citizens Bank is notable for three reasons. First, the holdings by the Court regarding Insuring Agreements D and E(1) will undoubtedly be of interest to fidelity professionals dealing with claims involving government-issued guarantees. Second, the Court expressly reaffirmed the principle that Financial Institution Bonds are not to be interpreted contra proferentem, as they are effectively products of joint authorship.
This failure of the contracting parties to consider government guarantees explains why Citizens Bank has pressed a highly creative interpretative stratagem, urging a microscopic focus on the dictionary or statutory definitions of individual words. … Such an approach, however, runs contrary to the general rule that interpretation must take into account the whole of the contract.
Citizens Bank militates against an interpretive approach which seeks to generate coverage by “stitching together” definitions of individual words and phrases to try to fit the circumstances of a loss within coverage, and in favour of an approach whereby courts give effect to the wording of the Bond, read as a whole. The latter approach is consistent with the interpretive methodology used by U.S. courts generally, and is expressly mandated by the Supreme Court of Canada as the “primary interpretative approach” to be taken in our country.
On November 9, 2016, the Sixth Circuit Court of Appeals released its decision in Hantz Financial Services, Inc. v. American International Specialty Lines Insurance Co., affirming the U.S. District Court for the Eastern District of Michigan’s grant of summary judgment in favour of National Union in a claim advanced on a Financial Institution Bond.
As we discussed in our September 29, 2015 post, the District Court held that no coverage was available to the insured, Hantz Financial Services, Inc. (“Hantz”), for losses resulting from its employee’s perpetrating a fraud on its clients, as such losses were indirect. The District Court also suggested that the employee could not, in defrauding the clients, have had the manifest intent to cause a loss to Hantz.
The Sixth Circuit’s decision affirmed the result, but did so on the basis of the expiration of the suit limitation provision contained in General Agreement F of the Bond. The Sixth Circuit’s decision provides a useful reminder of the enforceability of suit limitation provisions in fidelity and crime policies, even where the insurer undertakes significant investigatory steps in the course of assessing the first-party claim.
Hantz is a licensed securities broker-dealer that offers clients investment advice. Hantz does not provide its own investment products to clients; instead, it introduces clients to investment products offered by other financial services companies.
Hantz employee Michael Laursen stole more than $2.6 million that Hantz’s clients had provided to him to invest, or to purchase insurance, on their behalves. Initially, Laursen deposited cheques written by clients directly into his personal bank account. Some cheques were written to Laursen directly, while others were made payable to “Hantz Financial Services”, “HFS”, “Hantz” or “Hantz Consulting”. At one point during the course of the fraud, Laursen opened a bank account in the name of “Henary Firearms Service” and directed his clients to write cheques payable to “HFS”, which he then deposited into that account. The fraud came to light in March 2008.
Bolton Claimants: the Bolton claimants initiated a Financial Industry Regulatory Authority (FINRA) arbitration action against Hantz, which was settled for $600,000 on July 24, 2009.
Monroe Claimants: the Monroe claimants initiated a FINRA arbitration action against Hantz and recovered $587,063. A Michigan state court entered judgment confirming the FINRA arbitration award on December 17, 2010; this judgment was affirmed by the Michigan Court of Appeals on January 24, 2012.
Hantz commenced its coverage action against National Union on March 18, 2013.
the Insured may not bring legal proceedings for the recovery of such loss after the expiration of 24 months from the date of such final judgment or settlement.
It will be noted that the trigger for the suit limitation period in General Agreement F of the Bond, drafted specifically to apply to losses resulting from legal proceedings against the insured, is “the date of … final judgment or settlement” in such litigation. Almost invariably, fidelity coverages contain a “general” suit limitation period, which is triggered by the insured’s discovery of the loss. For example, in the 1999 decision of the Supreme Court of Canada in Guarantee Co. of North America v. Gordon Capital Corp., the Court enforced a 24-month suit limitation period which was triggered by the insured’s discovery of “facts which would cause a reasonable person to assume that a loss of a type covered by this bond has been or will be incurred”.
Accordingly, as a legal term of art, “final judgment” virtually always designates the judgment by a court that determines all the rights and obligations of the parties in a case so that it can be appealed—not a judgment that has been resolved after appeal. Mindful that we must not read ambiguity into contracts where none exists, we do not find Hantz’s proposed construction of the term to be a reasonable alternative interpretation. And no other language that could support its reading of “final judgment” — i.e., words like “appeal,” “exhaust,” “affirm,” or “deny” — appears anywhere in this section of the Bond.
The March 18, 2013 action was initiated subsequent to the expiration of the 24-month suit limitation period following the December 17, 2010 judgment. Accordingly, no coverage was available to Hantz in respect of the Monroe claim.
As a result, the 24-month suit limitation period was enforceable in respect of the Bolton claim, and had expired prior to the commencement of Hantz’s action.
Hantz Financial Services is notable insofar as it affirms the enforceability of a suit limitation provision on its plain terms. Although the Sixth Circuit was considering General Agreement F of the Financial Institution Bond, there is no reason why the same interpretive approach should not apply to discovery-triggered suit limitation periods; indeed, this was the result in the Supreme Court of Canada’s decision in Gordon Capital.
Hantz Financial Services is also significant in its rejection of the insured’s contention that National Union’s investigative actions gave rise to equitable estoppel precluding reliance on the suit limitation provision. While prudence suggests that an insurer may wish to expressly advert to a suit limitation period in the course of investigating a first-party loss, the Sixth Circuit has rejected the contention that the mere fact of investigating and gathering information, without specifically broaching the suit limitation period, necessarily gives rise to equitable estoppel.
On October 18, 2016, the U.S. Court of Appeals for the Fifth Circuit released its opinion in Apache Corporation v. Great American Insurance Company. This is one of the first appellate decisions to consider coverage for a social engineering fraud loss under “traditional” commercial crime policy wording since the widespread introduction of social engineering fraud endorsements. In holding that the loss did not trigger indemnity under the Computer Fraud coverage, the Fifth Circuit adopted the interpretive approach to Computer Fraud coverage taken by the Ninth Circuit in Pestmaster Services v. Travelers (which we discussed in our August 4, 2016 post) and applied it in the context of social engineering fraud.
Apache is an oil production company which is headquartered in Texas and which operates internationally. In March 2013, an Apache employee in Scotland received a call from a person claiming to be a representative of Petrofac, a legitimate vendor of Apache. The caller instructed the employee to change the bank account information which Apache had on record for Petrofac. The Apache employee advised that such a change request would not be processed without a formal request on Petrofac letterhead.
An Apache employee called the telephone number on the letterhead and confirmed the authenticity of the change request. Next, a different Apache employee approved and implemented the change. A week later, Apache was transferring funds for payment of Petrofac’s invoices to the new bank account.
Within a month, Petrofac advised Apache that it had not received payment of approximately $7 million which Apache had transferred to the new account. Apache recovered some of the funds, but still incurred a net loss of approximately $2.4 million.
b) to a place outside those premises.
In Great American’s view, no indemnity was available because the @petrofacltd.com email did not cause the transfers in issue, and because the coverage was limited to losses resulting from hacking and other incidents of unauthorized computer use.
The Fifth Circuit accepted Great American’s position. Noting that there was no Texas law directly on point, the Court embarked on what it described as a “detailed — but numbing — analysis” of the authorities interpreting the Computer Fraud coverage. Chief among these was the Ninth Circuit’s recent decision in Pestmaster, in which that Court interpreted the coverage to require an unauthorized transfer of funds, rather than simply any transfer which involved both a computer and a fraud at some point.
Here, the “computer use” was an email with instructions to change a vendor’s payment information and make “all future payments” to it; the email, with the letter on Petrofac letterhead as an attachment, followed the initial telephone call from the criminals and was sent in response to Apache’s directive to send the request on the vendor’s letterhead. Once the email was received, an Apache employee called the telephone number provided on the fraudulent letterhead in the attachment to the email, instead of, for example, calling an independently-provided telephone contact for the vendor, such as the pre-existing contact information Apache would have used in past communications. Doubtless, had the confirmation call been properly directed, or had Apache performed a more thorough investigation, it would never have changed the vendor-payment account information. Moreover, Apache changed the account information, and the transfers of money to the fraudulent account were initiated by Apache to pay legitimate invoices.
The Court observed that the authorities generally refuse to extend the scope of the Computer Fraud coverage to situations where the fraudulent transfer is not a direct result of computer use, but rather results from other events.
The Fifth Circuit’s decision in Apache is broadly significant to the fidelity insurance industry not only because, like Pestmaster, it reaffirms the intended scope of the Computer Fraud coverage, but also because it reinforces the purpose behind insurers’ introduction of discrete social engineering fraud coverage in the last few years, i.e., the lack of coverage for social engineering frauds under traditional computer and funds transfer coverages.
The proliferation of social engineering fraud has undoubtedly exposed insureds to greater risk. However, insurers have responded by underwriting discrete social engineering fraud coverages. There is no need for courts to depart from the traditional interpretation of computer fraud and funds transfer fraud coverages in order to address this perceived problem, because a solution is already available.
As a practical matter, Apache confirms that insureds need Social Engineering Fraud coverage for these types of losses. The decision provides greater certainty on the part of insureds, insurers and brokers as to the intended scope of each coverage, and makes it easier for all industry participants to ensure that insureds obtain the coverages they require for the types of potential losses that they face.

matches: v. v. v. v. v. v. v. v. v. v. v. v. v.


44-712. Employment security fund; loans from pooled money investment board, when. (a) Establishment and control. There is hereby established as a special fund in the state treasury, separate and apart from all public moneys or funds of this state, an employment security fund, which shall be administered by the secretary as provided in this act. This fund shall consist of: (1) All contributions collected under this act; (2) interest earned upon any moneys in the fund; (3) all moneys credited to this state's account in the federal unemployment trust fund, pursuant to section 903 of the social security act, 42 U.S.C.A. § 1103, as amended; (4) any property or securities acquired through the use of moneys belonging to the fund, and all other moneys received for the fund from any other source; (5) all earnings of such property or securities. All moneys in this fund shall be mingled and undivided.
(b) Accounts and deposits. The state treasurer shall be ex officio custodian of the fund. Payments from the fund, and for the purposes of this act deposits with the secretary of the treasury of the United States shall not be deemed to be payments from the fund, shall be made by any commercially-accepted means approved by the secretary. There shall be maintained within the fund three separate accounts: (1) A clearing account; (2) an unemployment trust fund account, and (3) a benefit account. All money payable to the fund upon receipt thereof by the secretary, shall be remitted to the state treasurer in accordance with the provisions of K.S.A. 75-4215, and amendments thereto. Upon receipt of each such remittance, the state treasurer shall deposit the entire amount in the state treasury to the credit of the clearing account of the fund. Refunds payable pursuant to K.S.A. 44-717, and amendments thereto, may be paid from the clearing account of the fund by any commercially-accepted means approved by the secretary. After clearance thereof, all other moneys in the clearing account of the fund shall be immediately deposited with the secretary of the treasury of the United States of America to the credit of the account of this state in the federal unemployment trust fund established and maintained pursuant to section 904 of the social security act, 42 U.S.C.A. § 1104, as amended, any provisions of law in this state relating to the deposit, administration, release, or disbursement of moneys in the possession or custody of this state to the contrary notwithstanding. The benefit account of the fund shall consist of all moneys requisitioned from this state's account in the federal unemployment trust fund. Except as herein otherwise provided, moneys in the clearing and benefit accounts of the fund may be deposited by the state treasurer in any bank or public depository as is now provided by law for the deposit of general funds of the state, but no public deposit insurance charge or premium shall be paid out of the fund. Moneys in the clearing and benefit accounts of the fund shall not be commingled with other state funds and shall be maintained in separate bank accounts.
(c) Withdrawals. Moneys shall be requisitioned from this state's account in the federal unemployment trust fund solely for the payment of benefits and in accordance with the provisions of this act and the rules and regulations adopted by the secretary, except that moneys credited to this state's account pursuant to section 903 of the social security act, 42 U.S.C.A. § 1103, as amended, shall be used exclusively as provided in subsection (d) of this section. The secretary shall from time to time requisition from the federal unemployment trust fund such amounts, not exceeding the amounts standing to its account therein, as deemed necessary for the payment of benefits for a reasonable future period. Upon receipt thereof the state treasurer shall deposit such moneys in the benefit account of the fund and payments of benefits shall be charged solely against such benefit account of the fund. Expenditures of such moneys in the benefit account and refunds from the clearing account of the fund shall not be subject to any provisions of law requiring specific appropriations. Any balance of moneys requisitioned from the federal unemployment trust fund which remains unclaimed or unpaid in the benefit account of the fund after the expiration of the period for which such sums were requisitioned shall either be deducted from estimates for, and may be utilized for the payment of benefits during succeeding periods, or, in the discretion of the secretary shall be directed to be redeposited with the secretary of the treasury of the United States of America, to the credit of this state's account in the federal unemployment trust fund, as provided in subsection (b) of this section. All balances accrued from unpaid or canceled warrants issued pursuant to this section, notwithstanding the provisions of K.S.A. 10-812, and amendments thereto, shall remain in the benefit account of the fund, and be disbursed in accordance with the provisions of this act relating to such account.
(d) Administrative use. (1) Money credited to the account of this state in the federal unemployment trust fund by the secretary of the treasury of the United States of America, pursuant to section 903 of the social security act, 42 U.S.C.A. § 1103, as amended, may be requisitioned and used for the payment of expenses incurred in the administration of this act pursuant to a specific appropriation by the legislature, if expenses are incurred and the money is requisitioned after the enactment of an appropriation law which: (A) Specifies the purposes for which such money is appropriated and the amounts appropriated therefor, (B) limits the period within which such money may be obligated to a period ending not more than two years after the date of the enactment of the appropriation law, and (C) limits the amount which may be obligated during a twelve-month period beginning on July 1 and ending on the next June 30 to an amount which does not exceed the amount by which (i) the aggregate of the amounts credited to the account of this state pursuant to section 903 of the social security act, 42 U.S.C.A. § 1103, as amended, (ii) the aggregate of the amounts obligated pursuant to this subsection and amounts paid out for benefits and charged against the amounts credited to the account of this state. For the purposes of this subsection, amounts obligated during any such twelve-month period shall be charged against equivalent amounts which were first credited and which are not already so charged.
(2) Money credited to the account of this state pursuant to section 903 of the social security act, 42 U.S.C.A. § 1103, as amended, may not be withdrawn or obligated except for the payment of benefits and for the payment of expenses for the administration of this act and of public employment offices pursuant to this subsection (d).
(3) Money appropriated as provided by this subsection (d) for the payment of expenses of administration shall be requisitioned as needed for the payment of obligations incurred under such appropriation and, upon requisition shall be deposited in the state treasury to the credit of the employment security administration fund from which such payments shall be made. Money so deposited and credited shall, until expended, remain a part of the federal unemployment trust fund, and, if it will not be expended, shall be returned promptly to the account of this state in the federal unemployment trust fund.
(4) Notwithstanding paragraph (1), money credited with respect to federal fiscal years 1999, 2000 and 2001, shall be used solely for the administration of the UC program, and such money shall not otherwise be subject to the requirements of paragraph (1) when appropriated by the legislature.
(e) Management of funds upon discontinuance of federal unemployment trust fund. The provisions of subsections (a), (b), (c) and (d) of this section, to the extent that they relate to the federal unemployment trust fund, shall be operative only so long as such unemployment trust fund continues to exist and so long as the secretary of the treasury of the United States of America continues to maintain for this state a separate book account of all funds deposited therein by this state for benefit purposes, together with this state's proportionate share of the earnings of such unemployment trust fund, from which no other state is permitted to make withdrawals. If and when such unemployment trust fund ceases to exist, or such separate book account is no longer maintained, all moneys, properties or securities therein, belonging to the employment security fund of this state, shall be transferred to the state treasurer, to be administered by the secretary as a trust fund for the purpose of paying benefits under this act, and the director of investments upon the direction of the secretary shall have authority to hold, invest, transfer, sell, deposit, and release such moneys, and any properties, securities, or earnings acquired as an incident to such administration.
(f) Loans from the pooled money investment board, when authorized. (1) Pursuant to K.S.A. 2012 Supp. 75-4209(d), and amendments thereto, the pooled money investment board is hereby authorized and directed to make loans as requested by the secretary of labor to fund debt obligations to the federal government as may have been, or continue to be, incurred by the employment security fund.
(B) shall remain in effect for a period of three years from the date of the first loan requested. The pooled money investment board may reauthorize this line of credit following the initial three year period if deemed mutually beneficial by the board and the secretary of labor.
(2) The secretary of labor is hereby authorized to request and receive loans from the pooled money investment fund for the purposes described herein.
(3) The outstanding balances of such loans in the aggregate shall not exceed the limit imposed by K.S.A. 2012 Supp. 75-4209(d), and amendments thereto.
(4) Any such loan shall not be deemed to be an indebtedness or debt of the state of Kansas within the meaning of section 6 of article 11 of the constitution of the state of Kansas.
(5) The pooled money investment board, secretary of labor, and state treasurer shall coordinate as needed to make the appropriate transfers and payment of moneys anticipated hereunder.
History: L. 1937, ch. 255, § 12; L. 1939, ch. 214, § 4; L. 1941, ch. 264, § 9; L. 1945, ch. 220, § 9; L. 1947, ch. 291, § 5; L. 1949, ch. 288, § 8; L. 1957, ch. 296, § 2; L. 1965, ch. 321, § 1; L. 1969, ch. 247, § 1; L. 1974, ch. 206, § 1; L. 1976, ch. 370, § 66; L. 1983, ch. 170, § 1; L. 1987, ch. 191, § 7; L. 1992, ch. 74, § 3; L. 1996, ch. 254, § 10; L. 1998, ch. 124, § 3; L. 2001, ch. 5, § 141; L. 2007, ch. 132, § 2; L. 2011, ch. 85, § 8; May 19.


text:
The Master of Fine Arts program in Art provides a dynamic interdisciplinary environment within which students are encouraged to develop their creative practice as professional artists. The School of Art has facilities for printmaking, painting and drawing, sculpture, photography, textiles, digital media, and emerging technology, and ceramics. MFA students have access to all of the School of Art facilitates as well as individual and communal MFA studio workspaces. Our faculty are distinguished and professionally active artists and art historians. Students work closely with a graduate advisor/mentor to chart their individual path through the program, including studio seminars, critiques, and individually supervised tutorials. Coursework and seminars in art history and other academic fields complement studio courses, and students are encouraged to develop rigorous research and writing skills to enrich and complement their art practice. All students are provided with individual studio spaces, and there are opportunities for teaching, either as a teaching assistant or instructor of record. Our vibrant visiting artist program introduces students to artists in the Bay Area and beyond, connecting students to the local art community. The M.F.A. degree culminates with a written thesis report and a thesis exhibition in which students exhibit an original body of work. The program may be completed in 2 or 3 years, depending on how many classes are taken each semester. Students should decide before the beginning of their first semester whether they intend to complete the program in 2 or 3 years and meet early on with the graduate coordinator to plan accordingly.
Applications for the master of fine arts in art program are accepted October 1 through February 1 for admission the following fall semester. Late applications will not be accepted.
The graduate admission application to SF State consists of a two-part review. Part One: The Division of Graduate Studies reviews your application for general university admission requirements and requires you to upload copies of transcripts from every college or university attended, including study abroad coursework, community college coursework even if transfer credit appears on your degree transcript. Upload all transcripts to the Program Materials “documents” section of this application. Make sure you resolve any financial obligations at previously attended institutions so they will release your transcripts. You must submit clear, legible copies of transcripts that document your complete academic history. Part Two: The School of Art will review your application for program and discipline-specific criteria. Applicants must complete the Cal State Apply application by the February 1st deadline to be considered for admission.
Apply online through Cal State Apply for a Graduate Program. You will be required to create a personal login to manage your application. Select "San Francisco" for campus, and "Art" for the degree program.
Pay the $55 USD application fee online by credit card at the moment you submit your application.
Upload copies of transcripts from every college or university attended, including study abroad coursework, community college coursework even if transfer credit appears on your degree transcript. Upload all transcripts to the Program Materials “documents” section of this application. If selected for admission, you will be required to submit official transcripts. If an International Applicant, TOEFL Scores of 550 or better or Internet-Based Test TOEFL Scores of 80 or better are required, taken within two (2) years of the semester you wish to attend. The TOEFL is a requirement by the CSU and cannot be waived.
An undergraduate art degree or equivalent preparatory degree, with three units of contemporary art history taken within the last five years. If the applicant does not complete this upon admission to the program, enrollment in a contemporary art history class during the first semester is required.
A 3.0 grade point average in the last 60 units completed in an undergraduate degree.
M.F.A. admissions application (details below).
Categories should include Education, Exhibitions, Publications, Special Activities and Awards, and Related Employment.
List information with the most recent activity first.
The submitted portfolio is one of the most critical components of the application.
The Graduate Selection Committee, composed of the entire full-time art faculty, screens documentation of work in search of candidates with strong artistic direction and promise of continuing in a sustained, independent and exploratory manner.
Portfolios not meeting the following requirements will not be reviewed. The organization of your materials is an element that will be considered in evaluating your application.
The Selection Committee will review a maximum of 20 images from each candidate.
Images should be labeled with the work’s title, date, media, size, and other significant information.
Where appropriate, other documentary material is admissible in place of images. This may include films, audio and/or video, or web-based work. If applicable, please include a link in the PDF of the URL for video and/or digital based work.
Due to time constraints, time-based digital media and films should be cued and cannot exceed three minutes. Short segments should be excerpted from longer pieces. Full-length versions of time-based media can be included as a supplement but should be labeled as such. These versions will not be considered during the first round of the review process.
Please submit a 500 – 1,000 word artist statement that addresses the following: Describe the significance of your work and the concepts, research, and/or processes that drive your studio practice within the context of contemporary artistic practice. Why do you think you are prepared for a master of fine arts program in studio art and what do you hope to get out of graduate-level study?
Three letters of recommendation. Letters of recommendation should be from individuals qualified to testify to the applicant's capabilities and readiness to enter graduate study in art.
Provide transcripts from all institutions of higher learning attended.
All transfer of credit must be approved on a course-by-course basis by a graduate advisor, the graduate coordinator and the Office of Graduate Studies. This transfer should be arranged before the first semester of graduate studies begins.
A maximum of 12 units total may be transferred towards credit for the master of fine arts in art degree.
A student previously enrolled in any accredited master of fine arts in art program may transfer up to 12 units from that program.
A student who has taken graduate courses in an unclassified post-baccalaureate status may transfer no more than six units in studio, and six units of other, credible, coursework, for a total of 12 units.
A student who has accrued credits both as an enrolled candidate in an accredited master of fine arts in art program and taken courses in an unclassified post-baccalaureate status may transfer no more than 12 units total.
All students in graduate programs at SF State must demonstrate Level One (entry) and Level Two (exit) writing proficiency in accordance with university, departmental, and or programmatic guidelines.
Level One is satisfied by the successful completion of ARTH 700.
Level Two is satisfied by the successful completion of ART 706.
To complete the M.F.A., students must satisfy all University and Department requirements. Department requirements are described in detail in the M.F.A. General Information Brochure. In addition to satisfactory completion of the course of study, other requirements include satisfactory performance on yearly departmental reviews, a creative work exhibition and review, and creative work documentation (generally in the form of a written thesis report). The department accepts transfer units on a course-by-course basis, only upon advisement, and in accordance with the limits established in the section entitled Transfer of Credit for Previous Graduate Work of the M.F.A. General Information Brochure. If the creative work project is not complete in the final semester of the program, students must enroll in ART 899 in the semester they intend to graduate. Students are required to be enrolled during the semester in which they graduate.
Nine units by advisement. Suggested courses: ART 704, ART 709, ART 882, ART 780, and undergraduate studio art courses.
12 units by advisement may be taken in any department and may include additional academic art courses/seminars in theory, criticism, history, and directed experience. Suggested courses in the School of Art: ARTH 306, ARTH 602, ARTH 701, ART 706, ART 750, ART 850, ART 899, and M S 800. See MFA Handbook for list of suggested courses in other departments in the University.

matches:
ART 706
ART 899
ART 704
ART 709
ART 882
ART 780
ART 706
ART 750
ART 850
ART 899


text:
Should international views be given greater consideration in the interpretation of the evolving standards of the Eighth Amendment?
The United States has been pressured by the international community for its stance on capital punishment. This pressure has recently been reignited with the state of Arkansas announcing the execution of eight death row inmates in the span of ten days at the end of the month. Although historically many nations exercised capital punishment, the majority of modern day states have either curbed or completely outlawed capital punishment. In the case of S v. Kaywanyane and Another, South Africa’s highest court ruled that, “[e]veryone, including the most abominable of human beings, has a right to life, and capital punishment is therefore unconstitutional.” Canada, after a five year moratorium, passed the C-84 bill, which abolished the death penalty. As one of the prime leaders in the world for human rights movements, the international community has been puzzled by the United States’ archaic stance on capital punishment. Despite attempts to kick outside influence from our courts, we have seen such international influence creeping in starting as early as Paquete Habana. Even the heated topic of capital punishment has not been immune to international influence.
In Thompson v. Oklahoma, the Supreme Court found that the execution of an individual under the age of 16 would be a cruel and unusual punishment under the 8th Amendment’s contemporary standards of decency. The plurality talked about the “evolving standards of decency,” which was stated in Trop v. Dulles as an indicator of a “maturing society.” To reach this evolving standard of decency, the court stated that it “is also consistent with the views expressed by… other nations that share the Anglo-American heritage” and additionally, “by the leading members of the Western European Community.” The court even referred to three human rights treaties that prohibit juvenile capital punishment in the footnotes, specifically: Art. 6(5) of the International Covenant on Civil and Political Rights, Art. 4(5) of the American Convention on Human Rights, and Art. 68 of the Geneva Convention Relative to the Protection of Civilian Persons in Time of War.
To determine what constitutes cruel and unusual under the Eighth Amendment, our courts placed an emphasis on the “evolving standards” in our nation. Although there has been a lot of opposition on the use of international views to determine our constitutional rights, it is not a novel practice to have our courts cite international laws or sources, as shown throughout history. Through transnational seminars and conferences, legal dialogues between our judges and judges from around the world are increasingly common. From the cases observed here, the international views our courts referenced were not contrary to our values. In fact, our courts aligned with foreign views which brings up the idea that there is an international consensus against certain penal practices. Foreign law and international law, are still very persuasive laws.
It is time for the United States to re-examine our capital punishment policies with the international community’s views as a persuasive source. Even though our nation has shifted in the same direction as these abolitionist countries, the United States is in the minority where capital punishment is acceptable. Our nation joins a small group of countries who are regularly seen as one of the biggest human right violators, such as North Korea, Saudi Arabia, Iraq, China, Iran, and Egypt. Our capital punishment policy has been nothing but a failed project on criminal deterrence and its continued use is an international embarrassment. When our officials criticize other nations that have terrible human rights records, those countries deflect our criticisms and point out our archaic retentionist policies. As a result, it would be in our nation’s best interest to re-examine the death penalty, with the international view as a persuasive source, and to persuade the Arkansas governor to halt the execution of these eight individuals, in light of the evolving standards of decency.
 Thompson v. Oklahoma, 487 U.S. 815, 830 (1988).
Categories: death penalty, international human rights, Uncategorized, United States | Tags: death penalty, international human rights, international human rights law, United States | Permalink.
Before trying to fix a problem, make sure you first have one.

matches:
v.
v.
v.
Art. 6
Art. 4
Art. 68
v.


text:
LSU v. Alabama National Chamionship Rematch?
LSU v. Oklahoma State? LSU v. Stanford? LSU v. Oregon? LSU v. Alabama? Oklahoma State v. Oregon? Stanford v. Oklahoma? The BCS Championship picture is far from being clear right now with at least eight teams still with a very plausible shot to play for the title. Doug Christison and Mikey Gatrell join me to breakdown all of the BCS Championship scenarios as well as their picks for this upcoming Saturday.
This entry was posted in College Football, Podcasts and tagged Alabama, Alabama football, BCS Championship, college football, college football playoff, ESPN, Fiesta Bowl, Les Miles, LSU, LSU football, Nick Saban, Oklahoma State, Oregon, Oregon football, rematch, Rose Bowl, Stanford, Stanford football, Sugar Bowl by graham. Bookmark the permalink.

matches: v. v. v. v. v. v. v.