A group of investors in the Woodbridge Group Ponzi scheme are asking a California federal judge to certify them as a class in a suit against Comerica Bank, which they say aided Woodbridge's fraud by ignoring "hundreds" of red flags of criminal activity.
In a complaint filed Friday the investors accused Comerica of aiding and abetting the Woodbridge scheme by ignoring Woodbridge principal Robert Shapiro's history of fraud, notice of investigations by regulators and alerts thrown up by its own fraud detection system in order to hang on to the nearly $1.7 billion in business the scheme brought to the bank.
. . .
Woodbridge investors were led to believe their funds were secured by real estate assets, but in reality it paid the purported interest payments to investors from new investors' money. The fund ran out of money and the scheme unraveled in December 2017. Woodbridge entered Chapter 11, and Shapiro was sentenced to 25 years in prison in October 2019.
In their complaint the investors sought certification for a class that investor counsel Makenna Cox said constituted just under 8,000 people who invested in Woodbridge between 2012 and its collapse.
The motion claimed that Woodbridge moved about $1.66 billion though its Comerica accounts in nearly 11,000 transactions.
. . .
They said the bank also ignored a 2011 report they received saying investors had won judgments against Shapiro for diverting money from a real estate investment vehicle in the 1990s, subpoenas from the federal government and three different states concerning Woodbridge and a September 2017 email from the Securities Exchange Commission saying Woodbridge was failing to comply with subpoenas.
The investors are represented by Steven J. Toll and Christina D. Saler of Cohen Milstein Sellers & Toll PLLC, and attorneys from Girard Sharp LLP, Berger Montague PC, Kozyak Tropin & Throckmorton, Levine Kellogg Lehman Schneider & Grossman LLP, Sonn Law Group and Wolf Haldenstein Adler Freeman & Herz LLP.
The complete article can be viewed here.