Eleventh Circuit Court Of Appeals Reinstates Receiver’s Claims that Bank Aided Ponzi Scheme

FOR IMMEDIATE RELEASE
For Information Contact: Laise Lowachee
305-913-6678

ELEVENTH CIRCUIT COURT OF APPEALS REINSTATES RECEIVER’S CLAIMS THAT BANK AIDED PONZI SCHEME

MIAMI, FL – May 9, 2014 - The Eleventh Circuit Court of Appeals has reinstated an equity Receiver’s claims that Wells Fargo Bank aided the principals of Creative Capital Consortium in carrying out a $68 Million Ponzi scheme that defrauded mostly members of South Florida’s Haitian community. In the case of Jonathan E. Perlman v. Wells Fargo Bank, N.A., decided on May 6, an Eleventh Circuit panel held that allegations in the Receiver’s “Amended Complaint, supported by the testimony of Wells Fargo’s own representatives … support a plausible inference of actual knowledge by Wells Fargo of the Ponzi scheme which it then aided and abetted by permitting the fraud to continue through the use of its accounts after it had actual knowledge of the scheme.”

The Eleventh Circuit reversed an order dismissing the Receiver’s claims entered last year by the United States District Court for the Southern District of Florida. This is the second claim brought against a major bank by the Creative Capital Receiver that has been reinstated by the court of appeals. Another Eleventh Circuit panel reinstated fraudulent transfer claims against Bank of America in a decision issued on March 28, 2014 in the case of Jonathan E. Perlman v Bank of America, N.A. The Receiver was represented on both appeals by W. Barry Blum, a partner at Genovese Joblove & Battista, P.A. in Miami. The Receiver, Jonathan E. Perlman, is a shareholder of the firm.

“We are pleased with the Court’s second ruling that banks cannot turn a blind eye to suspicious or unlawful activity,” Blum said. “This decision further supports our position that a bank that has knowledge of improper activity being conducted in its accounts cannot enable the wrongdoing by continuing to serve as a platform for the ongoing fraud.” Blum added that “Ponzi schemes and financial fraud require access to the financial system. It is only sensible that the law provides recourse when banks facilitate transactions that they know, or any reasonable person would know, are improper.”

George Theodule, a mastermind of the Creative Capital Consortium Ponzi scheme pleaded guilty to federal charges related to bilking his victims. In February 2014, Theodule was sentenced to 12-1/2 years in federal prison.