Wells Fargo is facing a class-action lawsuit claiming the bank facilitated a Ponzi scheme that preyed upon potentially thousands of unsophisticated investors — mostly of Haitian descent living in South Florida — spearheaded by Sanjay Singh, now a convicted felon.
Singh offered investments through his investment entity, Royal Bengal Logistics. Singh, 45, was sentenced to 23 years in prison in early June for borrowing "hundreds of millions from the mostly working-class investors with promises of paying them double-digit returns and ownership of the trucks in his company," the Miami Herald reported.
About 2,000 investors lost $54 million in the scheme, according to the Herald.
In the class-action lawsuit, filed Tuesday in the U.S. District Court for the Southern District of Florida, investors seek redress from Wells Fargo and claim the bank "facilitated the misconduct by knowingly aiding and abetting the flow and misappropriation of stolen investor money through its accounts."
The bank "observed and facilitated the flow of millions of ill-gotten dollars (and thousands of personal checks and wire transfers) through [its] coffers, playing a principal role in the continuation of the Ponzi scheme that destroyed the lives of each investor," the suit states.
The Securities and Exchange Commission brought civil charges against Singh in June 2023, saying he fraudulently raised about $112 million from 1,500 investors.
Ponzi Scheme
The Ponzi scheme began as early as August 2019 when Singh began offering investments through Royal Bengal Logistics.
"RBL promised between 12.5% to 325% 'guaranteed' returns as part of RBL’s trucking and logistics company, which was headquartered in Coral Springs, Florida," the suit states.
"Initially, RBL did not operate as a Ponzi scheme — however, as RBL began to operate at a loss on or about August 2019, RBL began aggressively soliciting over $70 million of investments from new investors in order to pay its debts and fund the lavish lifestyle" of Singh, the suit continues.
RBL misappropriated nearly $20 million of investors’ contributions into Singh’s brokerage accounts, which focused on highly speculative equities trading on margin, according to the suit.
'Massive Inflows and Outflows'
From approximately August 2019 through February 2023, "RBL operated numerous bank accounts in which RBL had investors’ wire transfers and checks deposited in order to facilitate the Ponzi scheme, including Wells Fargo bank accounts ending in '5094' and '5065,'" which both belonged to RBL, Singh or a combination of the two, the suit states.
"Both were critical facilitation tools for the Ponzi scheme," according to the suit.
"Wells Fargo oversaw the extraction of millions of dollars from Plaintiffs through these accounts for more than four years — facilitating massive inflows and outflows of money, at times more than $18 million dollars in a single month," the suit continues.
Pursuant to the Bank Secrecy Act and Anti-Money Laundering Act, "Wells Fargo was required to and had thousands of opportunities to adequately review the 5094 Account, the 5065 Account, and the legitimacy of RBL and its investment offerings," the suit maintains.
"Amongst other things, Wells Fargo knew a massive number of high-value wires consisting of investor funds were pouring into the 5094 Account and observed and facilitated the misappropriation of those funds to Singh’s and RBL’s accounts, amongst other destinations, acquiring knowledge of the misappropriation and misuse of investor funds as part of the Ponzi scheme," according to the suit.
Wells Fargo didn't respond to a request for comment.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.