In Inside Courts, retired judge Tom Hodson explains the complexities of the law and legal cases, helping you understand what’s at stake — and how it affects you.
The legal road for the City of Athens to recapture some of the nearly $722,000 that was stolen from the city through a cyber scam in November has become “curiouser and curiouser,” as Alice said in Alice’s Adventures in Wonderland.
Just last Friday, in a court filing, the bank in Louisville, Kentucky, where the city’s money was transferred, asked to join the case in the Athens County Common Pleas Court.
The bank, Republic Bank and Trust Company of Louisville also filed a draft of an “Interpleader Complaint” that it is asking permission to file.
Sound confusing? It can be but bear with me and I will explain it in terms that are far less confusing and easier to understand.
Background
On December 4, the City of Athens filed a civil lawsuit in the Athens Common Pleas Court against John and Jane Doe claiming that the City was scammed out of nearly three-quarters of a million dollars.
In the complaint, the city indicated that the stolen money had been sent to a designated account at the Republic Bank in Louisville. The City did not make the bank a defendant in the case but instead, asked the Court to freeze the account to keep anyone from withdrawing any funds that might be there.
It is designed for the city to get a return of all or some of the funds stolen. It does not interfere with any ongoing criminal investigations by federal, state, and local authorities to find the person (people) who stole the money. The criminal investigations are separate.
Recent court filing
On Friday, Jan. 10, the Republic Bank filed a motion in the city’s civil case, Athens County Common Pleas Court Judge George McCarthy to let the bank intervene in the case. That simply means the bank wants to join the current case for resolution.
Attached to the motion was a “memorandum of law” (written legal argument) setting out why the court should allow them to join the current litigation. As an attachment, the bank also filed a “Draft Interpleader Complaint” to show the court what the bank ultimately will be asking the court to do.
UPDATE: Judge McCarthy granted Republic’s motion on Jan. 29. On Feb. 20, the City of Athens asked for an additional 30 days to respond to the motion; the motion stated that Republic Bank had stipulated the request.
New disclosures in the case
New information was publicly disclosed in this motion, memorandum, and draft interpleader complaint.
It was disclosed that the cyber criminals perpetuated the same email phishing scheme on an entity called Regency Centers. Regency Centers, a real estate development company based in Jacksonville, Florida, lost almost $327,000 — which was deposited in the same bank account as the money from Athens.
The motion states that most of the money from the two thefts is gone, but over $349,500 remained in the account. The bank has put those funds in a “controlled account” until it is decided who is entitled to the money and in what proportions.
In short, the bank has grabbed the assets and put them in a special account that no one can touch without a court ruling.
The bank’s memorandum notes that the scammers worked through a company called NetSpend to set up a pre-paid debit account at the Republic Bank. Republic issued the debit cards and held the funds associated with the cards. The scammers opened such an account in August 2024, representing themselves as Gibson Electrical and General Contractors, a legitimate operation in New Jersey.
On Nov. 14, the thieves contacted the City of Athens through fraudulent emails purporting to be Pepper Construction, an entity the city is working with on construction jobs. The scammers asked the city to deposit nearly $722,000 into the fraudulent Republic Bank account. The city paid the designated account on Nov. 18.
The same scheme was worked against Regency Centers on Nov. 21. Regency sent its nearly $327,000 to the same account.
On being notified of the respective thefts, the bank grabbed the $349,522.10 left in the fraudulent account.
Both the city and Regency have made claims to the bank for the whole remaining amount.
The question now is: Who gets the money that was left in the account? Does Athens get all, any or none of it? Does Regency Centers get all, any, or none of it?
Republic Bank wants all claims to be consolidated in the Athens court and for Judge McCarthy to decide who gets the money. This would avoid multiple lawsuits from various parties in multiple jurisdictions.
What’s next
Unless Athens agrees to the intervention, the city will have an opportunity to oppose the bank’s motion and Judge McCarthy will ultimately decide whether to let the bank join the existing lawsuit.
These intervention motions are fairly routine, and I fully expect Judge McCarthy to allow the intervention and filing of the bank’s interpleader complaint.
That complaint would add Regency Centers as a party so they can make their legal claim to the remaining funds along with the city here in the Athens County Common Pleas Court.
However, Regency may try to get its case heard by a court in Florida — so a battle of which state and what court has authority to decide these matters may be on the horizon.
Meanwhile, Republic Bank is trying to consolidate all claims into this one lawsuit in Athens. That is the purpose of an “Interpleader Complaint.” It is to bring all parties (Regency Centers and Athens) with claims to funds held by a third party (Republic Bank) into one lawsuit for one court to decide.
The ultimate decision in the case will boil down to the city and Regency Centers making their claims with supporting evidence to the judge for his determination of who gets the remaining money or what portion of it should go to each party.
As of now, it is not clear that Athens will be able to get back nearly half of the money it lost. That is a possibility but far from a certainty at this point.
Legally, there could be a long road to travel before any determination is made of who gets the remaining funds.
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