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Primis Bank is headquartered in Henrico County. (BizSense file photo)
Primis Bank can't quite shake loose from the fallout of a long-running employee theft.
The Henrico-based bank is now in a legal battle over insurance coverage to recoup losses it suffered at the hands of former loan officer James Stevens, who for 15 years orchestrated what prosecutors described as a "Ponzi loan scheme" to steal millions from Primis and its predecessors.
Primis earlier this month filed suit against Great American Alliance Insurance Co., claiming the Ohio-based insurer is refusing to honor a fidelity bond that would cover its more than $2 million in losses from the Stevens saga.
Stevens, 48, is currently serving a 51-month federal prison sentence after pleading guilty to the scheme, which ran from 2008 through June 2023. It involved issuing numerous fraudulent loans in the names of both witting and unwitting Primis customers.
While the loans over the years totaled $5.63 million, the loss to Primis was $2.4 million, due to Stevens using newer fraudulent loans to pay down the balance on the previous loans.
The scam came to an end when Stevens was hospitalized and unable to maintain payments on the fraudulently obtained loans.
Primis discovered the crime and reported it to federal authorities, before disclosing it publicly with the expectation of recovering the money through insurance coverage.
FCI Cumberland in Maryland, where James Stevens is currently serving his prison sentence. (Courtesy Bureau of Prisons)
But nearly two years later, Primis claims that Great American has breached its contract for not providing a coverage determination. That's despite receiving proof of loss from the bank and Primis claiming it has met all the necessary conditions necessary according to the terms of the policy.
"Great American has engaged in bad faith by, among other things, its pattern of delays, excessive requests, lack of communication, failure to provide timely updates, and bad faith failure to provide coverage for the claim," the May 5 lawsuit alleges.
Primis is asking for damages of $2.48 million, equal to the amount it hoped to recoup from the insurance policy plus related expenses and interest.
The bank also is asking the court to issue a declaratory judgement to definitively state that Great American must cover the losses from the Stevens scheme.
Primis claims Great American has continuously dragged its feet in making a decision, asking for additional information and documentation in a 22-month back-and-forth since the bank first filed its claim.
In March of this year, Primis claims Great American was operating based on an "opportunistic and patently absurd interpretation of the facts," the lawsuit alleges.
Great American has yet to file a formal response in the case.
An email to Primis CEO Dennis Zember was not returned by press time.
Primis is represented in the lawsuit by attorney Robert Friedman and M. Scott Fisher of local law firm Friedman Fisher Verity.
Great American did not respond to a request for comment. Court records do not yet list Great American's attorneys.
Stevens is a lifelong Northern Neck resident who worked as a commercial lender and branch manager at Primis and its previous incarnations Sonabank, EVB and Southside Bank from 2000 to 2023.
He's currently serving his sentence at FCI Cumberland, a medium-security facility in Cumberland, Maryland with an adjacent minimum-security camp. White-collar criminals typically serve their time in such camps.
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