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 allegedly backed by a life settlement policy.
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 lawsuit, Wells Fargo allowed Seeman Holtz to divert funds from new investor accounts into accounts designed to hold old investor funds.
Plaintiffs say that “Wells Fargo knew, or should have known, of the Ponzi scheme and the extensive fraud” because the banking giant was monitoring “both sides of the scheme.”
According to the lawsuit, the Ponzi scheme claimed more than 1,000 victims, including seniors and investors who lost their entire life savings after being promised annual returns of as much as 18%.
“Most investors in the notes have lost their entire investment, which in some cases was their life savings. Many of the investors have no other income, live almost exclusively on social security benefits and are now desperately struggling to find the means to support themselves.”
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.
Don’t miss a beat – Subscribe to receive email alerts straight to your inbox
Check price action
follow us on XFacebook and Telegram
Surf to the Daily Hodl mix
Generated image: Midjourney