A new lawsuit accuses Wells Fargo of monitoring “both sides” of an alleged $300 million Ponzi scheme and doing nothing to stop it.
Plaintiffs in the lawsuit accuse the U.S. bank of unjust enrichment, negligence, aiding and abetting fraud and breaching fiduciary duties, the Sun Sentinel reports.
In July 2021, the Florida Office of Financial Regulation (OFR) filed a complaint against insurance company Seeman Holtz for multiple violations of securities laws. The complaint alleges that Seeman Holtz engaged in the sale of unregistered securities after issuing $300 million in promissory notes purportedly backed by life insurance policies.
But the OFR says Seeman Holtz used new investors’ money to pay off older investors, creating the illusion of profitability. At the time, Seeman Holtz set up accounts at Wells Fargo that held money from new and old investors.
According to the Sun Sentinel, the lawsuit alleges that Wells Fargo opened 31 bank accounts on behalf of Seeman Holtz companies, stating that “Wells Fargo knew, or should have known, of the Ponzi scheme and the elaborate fraud” because the bank was in charge of “both sides of the issue”. the schedule.”
“The bank also knew, or should have known, that three groups of companies ‘came together and transferred investor funds between Wells Fargo’s bank accounts without any legitimate purpose or financial arrangement,’ the complaint said.
The Ponzi scheme claimed more than a thousand victims, including seniors and investors who lost their entire savings after being promised annual returns of as much as 18%, according to the lawsuit.
The lawsuit asks Wells Fargo to return all income and fees received from the accounts involved in the scheme, in addition to interest and other charges.
Wells Fargo has not yet responded to the lawsuit and says it has no comment.
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