Richland restaurant sues KeyBank and payroll company after $432K stolen in a scam

Greek Islands Cuisine in Richland is suing a bank and two business services companies after the restaurant and caterer lost about $432,000 through identity theft.

Greek Islands says that in May 2022 criminals stole the restaurant’s information and used it to create an account in the company’s name with Zenefits.

Zenefits, legally known as YourPeople, is a foreign company providing human resources, payroll and benefits services in the United States, according to the lawsuit filed in U.S. District Court.

KeyBank, where Nikos Danakos, the president of Greek Islands, had an account in Kennewick, also is named in the lawsuit.

On Monday, Newcourse Communications, which provides mailing services to banks was added to the lawsuit.

The suit claims the company, which provides mailing services to banks, had a data breach in April or May 2022 that allowed information about Danakos, his wife and their personal account at HomeStreet Bank to be stolen.

Zenefits and KeyBank declined to talk with the Tri-City Herald about the pending litigation. Newcourse did not immediately respond to a request for comment.

Nicos Danakos and his father, Art Danakos, started the popular restaurant Greek Islands at 600 Gage Blvd. in Richland to sell traditional Greek food made with high quality ingredients.

Nikos Danakos had recently made a large deposit at KeyBank from a new loan he’d received and then learned on June 7, 2022, that $432,500 had been withdrawn from the account without his knowledge, according to a court document.

The lawsuit says there were multiple red flags that Zenefits should have noticed.

The company reviewed a fake Washington state drivers license created by the criminals and accepted it as evidence that Nikos Danakos had personally enrolled Greek Islands as a customer.

The drivers license had an incorrect middle name, a different person’s photo and signature, an incorrect address and the wrong license number, among other discrepancies, according to the lawsuit.

Zenefits submitted a payroll file to KeyBank identifying phony restaurant employees with duplicate Social Security numbers, according to the lawsuit.

A few days later, $232,500 and $200,000 in payroll claims were issued from Greek Islands’ KeyBank account to prepaid debit cards, which the lawsuit said are virtually untraceable and an obvious sign of fraud.

“Zenefits’ sloppy security procedures and inadequate attention to obvious ‘red flags’ showing fraud caused plaintiff’s losses of hundreds of thousands of dollars, if not more,” the lawsuit claims.

It also called KeyBank’s security procedures sloppy and its followup to a six-figure fraud shoddy.

The $432,500 in transactions on June 3, 2022, was about 10 times the value of Greek Islands’ typical monthly expenditure, the lawsuit said.

KeyBank recorded conversations with a “Nigerian or South African accent” claiming to be Nikos Danakos, who is a lifelong resident of the United States.

KeyBank also allowed a fraudulent transfer of $900,000 from Greek Islands’ business savings account to its checking account.

Four days after the $432,500 was withdrawn, KeyBank called Nikos Danakos about some different fraudulent checks written against his account in Colorado, and officials assured him the checks had been stopped and he would have no liability, according to the lawsuit.

But there was no mention of the $432,500.

Nikos Danakos was concerned and checked Greek Islands’ KeyBank account later in the day, seeing the $432,500 missing.

The bank was closed by then but he immediately sent an email alerting the bank that the money had been stolen.

A bank employee replied that it would investigate and everything would be fine, according to the lawsuit. It said it would freeze the account.

However, on June 22, 2022, Zenefits made another charge of $1,668 against a new KeyBank account for the restaurant.

“Since 2022, plaintiff (Greek Islands) and Mr. Danakos have wasted hundreds of hours attempting to communicate with KeyBank and Zenefits to obtain any relief after defendants gave nearly half a million dollars of plaintiff’s business assets to criminals on prepaid debit cards with no prior notice to and without the authorization of Greek Islands Cuisine,” according to the lawsuit.

“Defendants gave Mr. Danakos and his company the run around, continually attempting to evade plaintiff’s messages and deflecting blame onto third parties for their wrongdoing,” it said.

Because of the fraud Nikos Danakos missed out on buying some real estate that he had spent years preparing to acquire, the lawsuit said.

The updated filing in the lawsuit this week said that the Danakos have had repeated attempts at fraud against their bank accounts and they expect attempts to continue.

Personally identifiable information can be used to open new financial accounts and take out loans in their names and to clone ATM, debit and credit cards, the lawsuit said.

The lawsuit says Newcourse’s approach to maintaining the privacy and security of the Danakos’ personal information was “lackadaisical, cavalier, reckless, or at the very least, negligent.”

The lawsuit is asking for triple the damages sustained, plus interest and attorney fees.

This story was originally published May 17, 2024 at 5:00 AM.