The term ``fraud or dishonesty'' shall be deemed to encompass all
those risks of loss that might arise through dishonest or fraudulent
acts in handling of funds as delineated in Sec. 2580.412-6. As such, the
bond must provide recovery for loss occasioned by such acts even though
no personal gain accrues to the person committing the act and the act is
not subject to punishment as a crime or misdemeanor, provided that
within the law of the state in which the act is committed, a court would
afford recovery under a bond providing protection against fraud or
dishonesty. As usually applied under state laws, the term ``fraud or
dishonesty'' encompasses such matters as larceny, theft, embezzlement,
forgery, misappropriation, wrongful abstraction, wrongful conversion,
willful misapplication or any other fraudulent or dishonest acts. For
the purposes of section 13, other fraudulent or dishonest acts shall
also be deemed to include acts where losses result through any act or
arrangement prohibited by title 18, section 1954 of the U.S. Code.
