Class Action: Bank of America, Six Individuals Orchestrated ‘Classic Ponzi Scheme,’ Stole $102M

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Bank of America, N.A. and five individuals are staring down a proposed class action lawsuit in which the plaintiff alleges the parties orchestrated a Ponzi scheme. According to the 35-page lawsuit, the parties have duped consumers into investing in one or more of the individual defendants’ companies using “uniform fraudulent offering materials” under the guise that the companies would put investors’ funds into “financial services, insurance, real estate development, or medical laboratories.”

The suit outright pegs the defendants’ supposed investments as a sham. The parties, in “classic Ponzi scheme fashion,” the suit says, took newly acquired funds from investors to pay off previous investors, with the remainder used to fund a jet-setting lifestyle replete with “homes across the country, cars, expenses at a country club and Las Vegas resort and casino,” among other personal lavishments. One of the individual defendants even spent investors’ money on commissioning a song about himself, playing it at a party he threw in Las Vegas, the case claims:

“The lyrics describe him as ‘King Perry.’ Characterize his attire as ‘ten thousand dollar suits everywhere he rides,’ and refer to [the defendant] ‘pop[ping] champagne in L.A., New York to Florida; buy another bottle just to spray it all over ya.’”

Of the at least $102 million raised from investors, “most if not all” was either stolen by the individual defendants or used to pay back earlier investors, according to the suit.

As for Bank of America’s alleged role in the Ponzi scheme, the complaint claims the scam could not have gotten off the ground without “knowing assistance” from the individual defendants’ primary banking institution. Bank of America lent “an air of legitimacy” to the scheme, providing critical support to the individual defendants at times when the scam may very well have collapsed, the lawsuit says. 

The individual defendants allegedly used three issuer companies to raise most of the $102 million, with the rest raised through a variety of smaller entities. These smaller entities own at least 100 accounts with Bank of America, the lawsuit claims.

The complaint can be read below.