Primis Financial, the parent company of Primis Bank, recently reported a significant employee loan fraud that has led to approximately $2.5 million in losses. This fraud scheme, lasting over a decade, involved the combination of fraudulent documentation and the cooperation of external parties to make or renew loans.
The discovery of this fraudulent activity took place at the end of the second quarter. While the lender implicated in the scheme ceased originating new loans or renewing existing loans three years ago due to changes in reporting lines and tightened credit controls, they have continued to service loans using funds from previous extensions.
Fortunately, Primis management believes that the losses incurred can be recovered through their insurance policies. Currently, the company is diligently working through the claims process to ensure a successful resolution.
“While the fraud has impacted our capital instead of earnings this quarter, it is an unfortunate and frustrating situation. However, it is important to note that this incident is isolated and can be covered by insurance,” said Chief Executive Dennis Zember. “Since the fraud was detected late in the quarter, we are currently conducting a thorough forensic investigation to support our insurance claim. We anticipate future recoveries through the successful resolution of this claim.”
In conclusion, Primis Financial is committed to addressing this incident and minimizing its impact on their operations. They are taking all necessary steps to ensure that such fraudulent activities are prevented in the future.
