(Reuters) - Bank of America has asked a federal judge in Florida to dismiss a proposed class action accusing it of aiding a $102 million nationwide Ponzi scheme, saying the investors suing the bank failed to show that it even had knowledge of the scheme.
In a motion on Friday, the bank said the investors at most alleged that the bank overlooked red flags or suspicious transactions, but such conduct does not constitute actual knowledge of fraud, a key requirement for an aiding and abetting claim.
One of the alleged ringleaders once commissioned a song about himself for a party in Las Vegas with lyrics celebrating his $10,000 suits and his partner’s affinity for champagne, according to Monday’s complaint in federal court in Ocala, Florida.
The brother and sister who sued to recover losses from their late father’s investment claim the fraudsters “could not have perpetuated their scheme without the knowing assistance of their primary banking institution, Bank of America, which lent the scheme an air of legitimacy and provided critical support, including at times when the scheme would have otherwise collapsed," according to the complaint.
Bank of America spokesman Bill Halldin had no immediate comment on the suit.
The lender is accused of failing to spot suspicious activity, including deposits of hundreds of thousands of dollars into accounts with relatively small, negative or nonexistent balances, followed by transfers within the same week to other accounts or investors seeking to cash out.
The architects of the scheme promised they would put investor funds into profitable and perhaps dividend-paying companies, according to the SEC. But they spent $20 million from the investment pool to enrich themselves, made $38.5 million in "Ponzi-like payments" and transferred much of the rest away from the companies that were supposed to receive the money, the regulator said.
