o Casualty's argument is that First State Bank did not, in fact, suffer a loss because it received a valid and enforceable instrument — namely, Stilwell's check drawn on his (empty) account at Tuscola National Bank — in exchange for its money order. If First State Bank incurred any loss, Ohio Casualty argues that it would have occurred later when First State Bank was unable to collect on Stilwell's check. That, Ohio Casualty asserts, would not have been a covered loss because that event would neither have taken place on First State Bank's premises nor "resulted directly from" any false pretenses. Under Illinois law, and in most jurisdictions, a loss is an "actual depletion of bank funds"; bookkeeping or theoretical losses are not covered by the financial-institution bond. RBC Mortgage Co., 285 Ill.Dec. 908, 812 N.E.2d at 733; see also Reserve Ins. Co. v. Gen. Ins. Co. of Am., 77 Ill.App.3d 272, 32 Ill.Dec. 552, 395 N.E.2d 933, 939 (1979); Private Bank, 409 F.3d at 817 (Illinois law); Cincinnati Ins. Co. v. Star Fin. Bank, 35 F.3d 1186, 1191 (7th Cir. 1994) (Indiana law) (requiring an actual loss instead of merely a bookkeeping or theoretical loss); FDIC v. United Pac. Ins. Co., 20 F.3d 1070, 1080 (10th Cir. 1994) (federal law) (the bond does not cover "[b]ookkeeping or theoretical losses, not accompanied by actual withdrawals of cash or other such pecuniary loss"); William T. Bogaert Andrew F. Caplan, Loss and Causation Under the Financial Institution Bond, in FINANCIAL INSTITUTION BONDS, supra, at 385-87. First State Bank's loss was such an "actual loss."

"We review de novo a district court's grant of summary judgment, viewing the record and all reasonable inferences drawn from it in the light most favorable to the party opposing the motion." Cincinnati Ins. Co. v. Star Fin. Bank, 35 F.3d 1186, 1189 (7th Cir. 1994). III.

NU contends that an "actual withdrawal of cash" or "an actual pecuniary loss" is required to establish a direct loss. Fletcher Jones Co. v. United Pacific Ins. Co., 181 Cal. App. 2d 202, 206 (1960); Cincinnati Ins. Co. v. Star Fin. Bank, 35 F.3d 1186, 1191 (7th Cir. 1994). NU argues that a theoretical loss of equity does not qualify.

" In re Amatex Corp., 97 B.R. 220, 222-23 (Bankr. E.D. Pa. 1989); accord First State Bank of Monticello v. Ohio Cas. Ins. Co., 555 F.3d 564, 569 (7th Cir. 2009) ("[A] loss is an actual depletion of bank funds[.]"); Cincinnati Ins. Co. v. Star Fin. Bank, 35 F.3d 1186, 1191 (7th Cir. 1994) (stating an insured could not recover under a bankers' blanket bond without showing "actual withdrawals of cash or other such pecuniary loss"). In short, suffering a "loss" typically means that if the property lost through employee dishonesty is not owned by the insured, the insured must expend its own funds before coverage attaches.

See Attachment to Claim in the Estate of James E. Fox, Deceased, Doc. No. 81, Exs. J and K. Defendant indicates that a "bookkeeping or theoretical loss" is not sufficient in order for a fidelity bond to provide coverage. Cincinnati Ins. Co. v. Star Financial Bank, 35 F.3d 1186, 1191 (7th Cir. 1994). Instead, there must be a direct loss or the actual depletion of the insured's funds caused by the employee's dishonest acts.Federal Deposit Ins. Corp. v. United Pacific Ins. Co., 20 F.3d 1070, 1080 (10th Cir. 1994).

In addition to the Illinois Appellate Court, other courts, including the Seventh Circuit, have cited with approval or relied on the interpretation of "losses directly resulting from . . ." set out in United Pacific, 20 F.3d at 1080: "[A] direct loss or the actual depletion of bank funds caused by the employee's dishonest acts. . . . Bookkeeping or theoretical losses, not accompanied by actual withdrawals of cash or other such pecuniary loss [are] not recoverable." See, e.g., Cincinnati Ins. Co. v. Star Fin. Bank, 35 F.3d 1186, 1191 (7th Cir. 1994). A loss cannot be direct if it is not "ascertainable."

Watters argues prejudgment interest may be included in some cases. Cincinnati Ins. Co. v. Star Fin. Co., 35 F.3d 1186, 1188 (7th Cir. 1994); Sarnoff v. Am. Home Prod, 798 F.2d 1075, 1078 (7th Cir. 1986). This is correct.

We adopt the logic of the Horowitz court and hold that no reasonable interpretation of the term “loss” in the context of the bond allows for coverage of fictitious Madoff gains. We further note that Horowitz is not alone in finding that “bookkeeping or theoretical loss[es], not accompanied by actual withdrawals of cash or other such pecuniary loss,” are not covered by fidelity bonds ( Cincinnati Ins. Co. v. Star Fin. Bank, 35 F.3d 1186, 1191 [7th Cir.1994] [internal quotation marks omitted] [endorsing position of insurance carrier for bank that bank did not stand to suffer a “loss” were it forced to reimburse payor bank for funds that insured bank received by accepting a forged check]; see also In re New Times Sec. Servs., Inc., 371 F.3d 68, 88 [2d Cir.2004] [internal quotation marks omitted] [holding that Securities Investment Protection Act (SIPA) did not have to compensate Ponzi scheme victims beyond their cash investments because “basing customer recoveries on fictitious amounts in the firm's books and records would allow customers to recover arbitrary amounts that necessarily have no relation to reality”] [internal quotation marks omitted] ). JFI attempts to distinguish Horowitz by noting that the court there only considered whether the plaintiffs had parted with “something of value” within the meaning of that policy.