On August 26, 2020, Cohen Milstein and co-counsel filed an amended consolidated class action complaint against Comerica Bank for violating California statutory law and breaching its fiduciary duties by aiding and abetting an elaborate multi-billion-dollar Ponzi-scheme fraud committed by Robert H. Shapiro and the Woodbridge Group of Companies, a real estate investment company, which transacted the scheme through Comerica bank accounts. Plaintiffs in the case are investors who were harmed by the Ponzi-scheme. On April 16, 2021, Plaintiffs moved for class certification.
Cohen Milstein is a part of the executive leadership team in this case.
Comerica served as the exclusive banker for the Woodbridge Group of Companies, which raised $1.2 billion in real estate investments while running a Ponzi scheme. Woodbridge principal Robert H. Shapiro used new investor funds to pay returns to earlier investors and to cover sales commissions and overhead and diverted the balance to his personal benefit. The money that Plaintiffs and members of the proposed class invested in Woodbridge was uniformly deposited in Woodbridge’s Comerica accounts, and investors received returns out of these same Comerica accounts until Woodbridge went bankrupt in December 2017. Shapiro was eventually charged with various federal offenses, including conspiracy to commit money laundering, and pleaded guilty in August 2019 to conspiracy to commit wire and mail fraud and tax evasion.
Plaintiffs’ claim, among other things, that Comerica processed over 10,000 internal transfers totaling $1.6 billion among related Woodbridge accounts and hundreds of millions of dollars in transfers to vaguely denominated attorney trust accounts. Comerica went to great lengths to retain Shapiro’s business even after Comerica received subpoenas from January 2015 to January 2018 from the SEC, IRS and other federal and state regulators for its records associated with the Woodbridge accounts, and even after learning that Woodbridge had been ordered by the state regulators of several states to cease and desist its fraudulent investment business. Plaintiffs further claim that though Woodbridge’s banking activity made no sense on any level, Comerica had identified Shapiro as a “High End Client” and believed it was free to provide its services to Woodbridge until confronted with “enough evidence to confirm that our customer is involved in a criminal enterprise.”
Finally, Plaintiffs, who suffered several hundred million dollars in losses, contend that no investor would have invested had they been told the true nature of the Woodbridge investment and that Comerica is liable to them – and seek damages through this class action—by consequence of Comerica’s actual knowledge of and substantial assistance to the Woodbridge Ponzi scheme.
Case name: In re Woodbridge Investments Litigation, Case No. 2:18-cv-00103-DMG (MRWx), United States District Court for the Central District of California