Plaintiffs Allege Umpqua Bank Aided and Abetted in PFI Ponzi Scheme
Gibbs Law Group and Silver Law Group have filed two lawsuits against Umpqua Bank, alleging that it aided and abetted Professional Financial Investors’ (PFI’s) Ponzi scheme. Plaintiffs allege that the bank knew PFI and its principals, Ken Casey and Lewis Wallach, were using new investor money to pay existing investors and to personally enrich Casey and Wallach, yet continued to provide banking services to PFI for many years.
The second lawsuit was filed on June 2, 2023 on behalf of a group of 11 investors who together lost over $4.2 million.
The first lawsuit, filed in 2020, is a class action on behalf of over a thousand investors who experienced over $300 million in damages. Umpqua tried to dismiss the case on multiple occasions, but the federal court denied all attempts, allowing the case to proceed. On December 16, 2022, the Court ruled that the investors would be certified as a class and that the lawsuit may proceed to a jury trial. The Court’s decision clears the way for the class of investors to pursue their legal claims against Umpqua Bank in a single trial.
Evidence shows Umpqua’s involvement in PFI’s Ponzi scheme
After Ken Casey died in May 2020, his Ponzi scheme was almost immediately uncovered. For more than a decade, Casey and his partner Lewis Wallach had convinced individuals (many from the Bay Area) to invest in PFI and PISF by promising them steady returns on their investments and ensuring them that their money would be used to purchase and maintain real estate in Marin County and Sonoma County. In reality, PFI and PISF were operating at a massive deficit and surviving only by continually raising new investor money to pay existing investors.
Casey and Wallach ran their scheme entirely through Umpqua Bank’s Novato branch. Investors therefore filed suit against Umpqua, alleging that Casey was only able to keep his Ponzi scheme going for so long because the bank was aiding and abetting the fraud. Plaintiffs allege that while other banks declined to accept PFI and PISF as customers because of Casey’s history of financial crime, Umpqua agreed to look the other way. Plaintiffs allege that Umpqua provided special treatment to PFI as one of the bank’s top customers, and that a banker at Umpqua was intimately familiar with PFI because she worked on the business’ accounts for over a decade. This banker allegedly knew investor money was placed in a particular account, and would transfer investor money from that account for Casey’s personal benefit (and for the benefit of existing investors).
It was not until Casey died, and an outsider had a view of PFI’s financials, that the Ponzi scheme was uncovered. At that point, Casey and Wallach had been running their Ponzi operation through Umpqua for at least 13 years—and Umpqua’s alleged cooperation had caused investors hundreds of millions of dollars in damages.
Have you invested in PFI and now have questions regarding Umpqua’s alleged role in the Ponzi scheme?