January 30, 2009
Victims of an Internet-based Ponzi scheme have filed a lawsuit against Bank of America and the organizers of the scheme in the United States District Court for the District of Columbia.
Using elaborate misrepresentations, including numerous video postings on YouTube, organizers induced victims from around the country to purchase so-called "ad packages" from the following entities: AdSurfDaily, AdSurfDaily Cash Generator, Golden Panda Ad Builder, and La Fuente Dinero.
The scheme promised that participants could earn large rebates for viewing web advertisements and commissions for referring additional participants.
Hundreds of millions of dollars were collected from approximately 140,000 victims across the country, in amounts ranging from $500 to $250,000 at large rallies and through online deposits.
"We intend to hold all defendants accountable for this Ponzi scheme, including the Bank of America, and secure the return of all funds that were lost by innocent victims, said Steven N. Berk, a partner in the law firm of Chavez & Gertler LLP and a former federal prosecutor representing the plaintiffs in this case.
How does Bank of America figure into all of this?
The complaint alleges that a scheme of this magnitude could not have been possible without the involvement of a financial institution like Bank of America.
At least one other financial institution closed the accounts of the organizers for suspicious activity, according to a sworn government complaint. VISA also considered the enterprise suspicious and would not process charges directed to the scheme by would be victims. And the very popular PayPal payment system rejected efforts by participants to purchase "ad packages" using their system.
Nevertheless, the suit charges Bank of America, in the face of tell-tale signs of money laundering and other criminal conduct, provided both the imprimatur of legitimacy to the scheme and the banking infrastructure that facilitated many thousands of transactions for over two years.
Beginning in November of 2006, Bank of America allegedly allowed the scheme's main perpetrator carte blanche at the bank. The complaint claims the scammers opened and maintained at least 10 separate accounts for running an unlawful Ponzi scheme. These accounts were opened at a tiny Bank of America branch in Quincy, Florida under various "doing business as" designations.
The suit claims Bank of America looked the other way when these accounts amassed deposits in the tens of millions of dollars from thousands of individual transactions.
"We expect to establish that Federal banking regulations, including the Bank Secrecy Act, the USA Patriot Act and related anti-money laundering regulations, clearly required Bank of America to scrutinize the legitimacy of the tens, if not hundred of millions of dollars deposited into a branch in Quincy, Florida to fuel this scheme. Red flag after red flag was ignored by Bank of America. And with the assistance of Bank of America, this fraudulent scheme needlessly expanded" said Steven N. Berk, Counsel for the Plaintiffs.