Umpqua Bank faces second lawsuit by Ponzi Scheme victims

A new lawsuit has been filed against Umpqua Bank, a regional bank based in Portland, Oregon, for allegedly aiding and abetting a massive, decades-long Ponzi scheme by Professional Financial Investors (PFI). While a previous class action lawsuit on behalf of over a thousand investors continues to approach trial, this new lawsuit was filed on Friday, June 2, 2023 on behalf of a separate group of 11 investors who together lost over $4.2 million.

The victims assert that Umpqua knew PFI and its principals, Ken Casey and Lewis Wallach, were using new investor money to pay existing investors and to line Casey’s and Wallach’s personal accounts, yet continued to provide banking services to PFI for nearly a decade. The massive Ponzi Scheme was uncovered in 2020, upon Casey’s death, when the executor of his estate discovered that rather than paying investors returns from real estate investments as represented, PFI was surviving only by continually raising new investor money to pay existing investors.

These 11 investors were lured into purchasing tenancy in common investments between 2018 and 2020, which were the last few years before Casey’s death.

The new complaint includes recently unsealed evidence, uncovered in the class action lawsuit, of Umpqua’s alleged aiding and abetting:

• On 179 occasions, private banker June Weaver or others at the bank’s Novato branch personally made transfers totaling $5.2 million to one of Casey’s or Wallach’s personal accounts from a PFI account where new investor money was regularly deposited.
• Umpqua’s protocols required Weaver and other branch employees to review recent PFI account activity and verify the source of the funds before executing requested transfers. This meant that Umpqua’s Novato branch must have known Casey and Wallach were fraudulently transferring newly deposited investor funds to their personal bank accounts.
• For example, when Novato branch manager A.J. Vazquez transferred $1.1 million from the PFI clearing account to Wallach’s personal account in June 2018, records show the clearing account’s balance consisted of at least $500,000 in new investor funds that had been deposited in just the past week. Yet Vazquez personally completed the transfer anyway, and when the suspicious transaction triggered an automated alert warning of potential fraud, Umpqua simply dismissed the alert.
• Between June 2018 and April 2020, Umpqua’s automated system for monitoring indications of fraud issued 146 separate alerts for PFI’s accounts—at least 61 of which specifically flagged the companies’ clearing accounts for further investigation.
• After PFI’s fraud was publicly exposed, Umpqua’s Operations Solutions Manager began an internal review of PFI’s accounts, but quickly abandoned it after realizing the Novato branch was regularly helping Casey transfer investor funds to his personal bank accounts. Upon reviewing the recent activity for one such account, she messaged the Novato branch manager, “Holy moly I see transfers were allowed ($40,000.00 transfer from the PFI [Transfer account] to [Casey’s personal account] on 5/12 and $21,000.00 on 4/12 and 25,000.00 on 3/31).” All written communication ceased at that point.

Oakland-based Gibbs Law Group, along with Silver Law Group, represents PFI investors in this lawsuit as well as the class action lawsuit filed in 2020.

PFI investors who would like to learn more about their legal rights in the Umpqua Bank PFI Ponzi Scheme Class Action Lawsuit may contact our team at (510) 350-9722.

About Gibbs Law Group

Gibbs Law Group is committed to protecting the rights of investors and consumers nationwide who have been harmed by corporate fraud and misconduct.  The firm has recovered over a billion dollars for its clients against some of the world’s largest corporations, and our attorneys have received numerous awards for their work, including “Class Action Practice Group of the Year,” “Top Boutique Law Firms in California,” “Best Lawyers in America,” “Titans of the Plaintiffs Bar,” “Top Plaintiff Lawyers in California,” “California Lawyer Attorney of the Year,” and “Top Class Action Attorneys Under 40.”

About Silver Law Group

Silver Law Group is a nationally recognized securities and investment fraud law firm representing investors worldwide to recover their investment losses. The law firm focuses on plaintiff-side class action litigation and securities arbitration claims representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others. Silver Law Group also routinely serves as counsel to receivers and trustees in matters relating to the recovery of investor losses in Ponzi schemes. Admitted to practice in New York and Florida, Silver Law Group attorneys have recovered millions of dollars for defrauded investors.

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