Programmer of Software Sues Security Pacific
A computer software programmer has filed a $60-million lawsuit against Security Pacific Corp., accusing the banking giant of copyright infringement, fraud and theft of trade secrets involving a computer program that he developed to help protect banks against losses from credit card fraud.
Gerald Schwartz, a San Clemente programmer, claims in a suit filed Friday in U.S. District Court that Security Pacific never compensated him for the software program he developed while working as a consultant to the bank.
Deborah Lewis, a senior vice president at Security Pacific’s headquarters in Los Angeles, said the suit was “without merit” and that the bank will “defend ourselves against it vigorously and successfully.”
Schwartz said in an interview that the software, which he named Credit Card Block, would immediately prevent any credit card or automated-teller machine charges on an account after a credit card was reported lost or stolen.
Previously, Schwartz said, the Los Angeles-based banking company took three to five days to terminate authorizations on such cards.
Although federal law protects consumers from liability for fraudulent charges after they report a card lost or stolen, a bank is liable for losses until it terminates an account. With Security Pacific’s program, bank personnel could use a Touch-Tone telephone to access a bank’s computer and instantaneously block new card charges.
Schwartz claims that he created the program while working as a consultant for the bank from March to August of 1989. He alleges that the bank never paid him for his work, for which he was supposed to receive $3,000 per software copy.
At the time he wrote the program, Schwartz was an employee of Voice Integrated Products, a consulting company whose principal investor was Gus Owen, president of the Lincoln Group of Orange County.
After Voice Integrated shut down, the rights to the software were given to Schwartz, who had been the company’s chief technologist, Owen said.
Schwartz said he discovered in June, 1991, that the bank was using a slightly modified version of the software he developed at 600 branch offices. He claims that the program, which the bank named Arbis, saved each of the branches about $50,000 a month by reducing credit card losses.
Schwartz said he learned about the bank’s Arbis program when he was asked to testify in a separate lawsuit filed by J. David Bristow, a former security manager who is suing Security Pacific for wrongful termination.
Bristow’s suit, filed in Los Angeles Superior Court in January, 1991, alleges that he was fired after he refused to alter Schwartz’s software program to enable the bank to use it at its branch operations. Bristow’s suit is awaiting trial.
