Based in Portland
The Novato branch of Umpqua Bank is accused of having its employees assist in a Ponzi scheme that cost investors $4.2 million, according to a new lawsuit.
The first lawsuit was filed in 2020 by more than 1,000 investors, seeking more than $300 million in damages. The latest legal action to make similar claims was brought by 11 investors who bought the co-tenancy investment.
Eleven investors who lost more than $4 million to professional financial investors (PFIs) sued Umpqua Bank on June 2, accusing the bank of aiding, abetting and profiting from the scheme.Previous lawsuit says more than 1,200 investors succumbed to the scam This apparently produced regular returns on real estate investments, but allegedly used new investors’ funds to pay back previous investors and pay for PFI’s now-deceased founder, Ken Casey, and his chief executive, Lewis Wallach. Lifestyle funding.
Casey and Wallach have provided investors with safe and consistent returns for decades, the suit says. However, following Casey’s death in 2020, defendants realized that PFI was a scheme that “could cost investors hundreds of millions of dollars.”
Recent lawsuits allege that PFI raised money from investors by presenting itself as a real estate investment firm. It offers individuals the opportunity to finance the purchase of a commercial or multi-unit residential property and earn a return on rental income, the lawsuit says.
A month after Casey’s death, the SEC opened an investigation into PFI and suspended monthly payments to investors. Umpqua was the financial institution through which Casey and Wallach maintained each of the accounts, the suit alleges.
Umpqua employees at the Marin County branch allegedly set up accounts for PFI’s new investor funds instead of transferring them to accounts set up for that investor’s specific real estate projects, Transfer it to other accounts to make up for overdraft accounts or to repay shortfalls to investors. This new influx of cash was also transferred to Casey and Wallach’s personal accounts, the suit alleges.
The suit said the bank should have easily spotted “obvious” red flags. The plaintiffs allege that the bank’s culture of tying bonuses, commissions and incentives to total deposits resulted in Umpqua employees developing a rapport with PFI.
in Oregon Umpqua did not respond to a comment; however, the bank admitted the lawsuit against SF Chronicle. “Similar to other PFI-related lawsuits, we will continue to defend our firm against these allegations and look forward to responding in court,” the bank said.
Shortly after the SEC investigation, Wallach was indicted and pleaded guilty to wire fraud, admitting to transferring more than $26 million of investor funds into his own account. He admitted to using the money to help fund a land development project in Texas, an office space deal in California, oil and gas exploration and payments on his personal credit card. He was sentenced to 12 years in prison and is 67 years old and is currently serving his sentence at the Missouri Federal Penitentiary.
