A new lawsuit accuses Wells Fargo of monitoring “both sides” of an alleged $300 million Ponzi scheme and doing nothing to stop it.
Plaintiffs for the lawsuit accuse the US bank of unjust enrichment, negligence, aiding and abetting fraud and breaching fiduciary duties, reports the Sun Sentinel.
In July of 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 that were supposedly backed by life insurance policies.
But the OFR says Seeman Holtz used the funds from new investors to pay off older investors to create the illusion of profitability. At the time, Seeman Holtz set up accounts at Wells Fargo that held funds from new and old investors.
According to the Sun Sentinel, the lawsuit alleges Wells Fargo opened 31 bank accounts on behalf of Seeman Holtz companies, stating “Wells Fargo knew, or should have known, of the Ponzi scheme and extensive fraud” because the bank presided over “both sides of the scheme.”
“The bank also knew, or should have known, that three sets of companies ‘comingled and transferred investor money between the Wells Fargo bank accounts without any legitimate purpose or financial arrangement,’ the suit states.”
The Ponzi scheme fleeced over 1,000 victims, including seniors and investors who lost their entire nest egg after being promised annual returns of as much as 18%, according to the lawsuit.
The suit is asking Wells Fargo to return all income and fees received from the accounts involved in the scheme on top of interest and other costs.
Wells Fargo has not yet responded to the lawsuit and says it has no comment.
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