According to a Bloomberg Law report, Wells Fargo Bank NA is facing a proposed class action lawsuit alleging its involvement in aiding and abetting a $300 million Ponzi scheme that defrauded over 1,000 investors, predominantly elderly individuals who lost substantial portions of their life savings. The complaint asserts that Wells Fargo failed to prevent the scheme operators from misappropriating funds intended for the investors.
Allegations Against National Senior Insurance Inc. and Related Entities
According to the lawsuit, the bank’s motivation was to “maximize assets held and to generate account—and transfer-related revenue and compensation.”
The complaint alleges that National Senior Insurance Inc., operating under the name Seeman Holtz, along with its agents, solicited and sold promissory notes offered by Para Longevity Investments LLC and related companies. These notes were purportedly secured by collateral in the form of life insurance policies issued to third parties, known as “Stranger-Originated Life Insurance” (STOLI).
Fanny Millstein, the lead plaintiff, claims that these companies utilized Wells Fargo as their primary banking institution. The scheme operators allegedly assured investors that the proceeds from the death benefits of the STOLI policies would be used to make interest payments and eventually return the principal investment.
Misuse of Investor Funds
However, the complaint states that instead of using new investor money to fund premiums for new STOLI policies, the scheme operators diverted a substantial portion of the newly invested funds to pay existing investors. Additionally, they allegedly looted significant sums through improper, exorbitant, or fictitious fees and expenses.
Millstein further alleges that Wells Fargo was aware that many of the STOLI policies intended as collateral for the notes were “fraudulently pledged as security or transferred to other lenders” via the Centurion Insurance Group LLC and related entities.
Wells Fargo’s Role and Knowledge
According to the complaint, Wells Fargo provided substantial assistance and services in furtherance of the scheme through its roles as Trustee, Securities Intermediary, and Depository Bank. The bank monitored the activities of the Para Longevity entities and allegedly knew that they “were being used to perpetrate the scheme.”
Despite this knowledge, Wells Fargo allegedly chose not to report or take any action to halt the ongoing fraud, opting instead to assist and profit from it.
Legal Claims and Remedies Sought
The complaint includes claims of aiding and abetting breach of fiduciary duty, aiding and abetting fraud, and unjust enrichment. In addition to seeking class certification, Millstein is pursuing damages, civil penalties, pre-and post-judgment interest, and the return of income and fees retained by Wells Fargo.
The legal representation for Millstein and the proposed class includes Buckner + Miles, Silver Law Group, and Sallah Astarita & Cox LLC.
The case is filed as Millstein v. Wells Fargo Bank NA, S.D. Fla., No. 24-cv-22142, with the complaint filed on June 4, 2024.
