Bank Of America Hit With Proposed Ponzi Scheme Class Suit

By Mike Curley

 Investors have slapped Bank of America with a proposed class action accusing the banking giant of knowingly helping five investment advisers perpetuate a $102 million Ponzi scheme by allowing them to transfer the funds through the bank.

Following on the heels of a government enforcement action, Mary Beth Heinert and Richard R. Schultz Jr. filed the suit in Florida federal court on behalf of 637 investors from whom Perry Santillo, Christopher Parris, Paul Anthony LaRocco, John Piccarreto and Thomas Brenner allegedly stole millions starting in 2011.

The investors claim the five used their status as members of their communities to persuade people to invest in their companies, which purported to do business in real estate, stock investments and medical research, only to funnel the money into Bank of America accounts and use them to either pay out to previous investors or for personal purposes.

“Bank of America had actual knowledge that the individual defendants were using Bank of America accounts to engage in illicit activity, and willingly assisted the fraud anyway,” the complaint states.

The funds went toward paying for homes and cars, country club memberships and trips to Las Vegas, according to the complaint. Santillo used some of the money to commission a song describing himself as a high-rolling “King Perry” in “ten thousand dollar suits,” then played the song at a party in Las Vegas, according to the complaint.

The scheme was brought down when the Securities and Exchange Commission launched a civil enforcement suit against the five men in June.

In the new complaint, the investors hold Bank of America responsible for keeping the scheme afloat, saying the bank knew the scam was using accounts opened in its branches and did nothing to stop it.

As part of the scheme, the five conspirators opened as many as 100 Bank of America accounts, which they used to manage and transfer the millions they took from their marks, the complaint alleges.

The proposed class claims Bank of America knew what the five conspirators were doing and had a duty to act on the signs of a Ponzi scheme, such as frequent transactions in a business account unrelated to the business’s function and multiple transfers to one person from several different accounts, according to the complaint.

Had the bank taken action to close or freeze the accounts involved, the scheme would have fallen apart much sooner, the suit says, adding that the bank had the power to close the accounts at any time and had no reason to keep them open.

“The individual defendants could not have run this scheme undetected for so many years without Bank of America’s knowing and substantial assistance,” Heinert and Schultz claim.

“We look forward to working to get relief for the class,” Harley S. Tropin of KozyakTropin& Throckmorton PA, attorney for the class, told Law360 in an email.

Counsel for the defendants could not immediately be reached for comment.

Heinert and Schultz are represented by George Franjola of Gilligan Gooding &Franjola PA and Harley S. Tropin, Tal J. Lifshitz and Robert J. Neary of KozyakTropin& Throckmorton PA.

Counsel information for the defendants was not available.

The case is Heinert et al v. Bank of America, N.A. et al, case number 5:18-CV-00324 in U.S. District Court for the Middle District of Florida.

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Bank of America Sued for Allowing $102 Million Ponzi Scheme

By Jonathan Levin

Bank of America Corp. was accused in a lawsuit of providing more than 100 accounts used to perpetrate what the U.S. regulators called a $102 million Ponzi scheme.

The class-action suit filed behalf of people who lost money follows a complaint last week by the Securities and Exchange Commission alleging that five men and three companies defrauded more than 600 investors.

One of the alleged ringleaders once commissioned a song about himself for a party in Las Vegas with lyrics celebrating his $10,000 suits and his partner’s affinity for champagne, according to Monday’s complaint in federal court in Ocala, Florida.

The brother and sister who sued to recover losses from their late father’s investment claim the fraudsters “could not have perpetuated their scheme without the knowing assistance of their primary banking institution, Bank of America, which lent the scheme an air of legitimacy and provided critical support, including at times when the scheme would have otherwise collapsed,” according to the complaint.

Bank of America spokesman Bill Halldin had no immediate comment on the suit.

The lender is accused of failing to spot suspicious activity, including deposits of hundreds of thousands of dollars into accounts with relatively small, negative or nonexistent balances, followed by transfers within the same week to other accounts or investors seeking to cash out.

The architects of the scheme promised they would put investor funds into profitable and perhaps dividend-paying companies, according to the SEC. But they spent $20 million from the investment pool to enrich themselves, made $38.5 million in “Ponzi-like payments” and transferred much of the rest away from the companies that were supposed to receive the money, the regulator said.

The case is Heinert v. Bank of America, N.A., 5:18-cv-00324, U.S. District Court, Middle District of Florida (Ocala).

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Plaintiffs’ Practice: Vetting and Preparing Putative Class Representatives for Challenges to Their Adequacy

By Robert Neary

A prerequisite for bringing a class action under Federal Rule of Civil Procedure 23(a)(4) is that the class representative “will fairly and adequately protect the interests of the class.” Defendants often raise challenges to the adequacy of a putative class representative in an effort to defeat certification. Plaintiffs’ counsel should be aware of these possible challenges and take steps to head them off, starting from the initiation of the case through class certification. Being prepared to respond to any attacks on the putative class representative’s adequacy begins with the proper vetting of a potential representative and should continue through discovery and ultimately certification.

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What Class Action Litigators (and Objectors) Need to Know About Amendments to Rule 23

By Tal J. Lifshitz and Rachel Sullivan

Amendments to the Federal Rules of Civil Procedure will take effect on Dec. 1, 2018, subject to Supreme Court approval and arguably no substantive area of law will be more impacted than federal class action litigation, in particular, the procedures for addressing objections to class settlements.

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KozyakTropin and Throckmorton’s Cori Lopez-Castro Inducted into the International Academy of Trial Lawyers

Cori Lopez-Castro was selected to join the International Academy of Trial Lawyers based on her proven skill and ability in jury trials, trials before bankruptcy courts, and appellate practice.

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KozyakTropin and Throckmorton Adds Maria Garcia to Complex Litigation, Class Action and Health Care Practices

Maria Garcia, of counsel, focuses her practice on health care law and commercial litigation. She also chairs multiple boards and committees for the City of Coral Gables.

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KozyakTropin and Throckmorton Adds John Criste to Complex Litigation, Class Action and Health Care Practices

John Criste, associate, focuses his practice on complex litigation. Prior to joining the firm, Criste was an associate at a leading Miami law firm, where he focused on construction litigation.

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KozyakTropin and Throckmorton Adds Daniel Maland to Complex Litigation, Class Action and Health Care Practices

Daniel Maland, associate, focuses his practice on complex litigation. He has served as a litigator at Wall Street’s longest standing law firm and served as a judicial law clerk to the U.S. Magistrate Judge for the District of New Jersey.

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KozyakTropin and Throckmorton Adds Benjamin Widlanski to Complex Litigation, Class Action and Health Care Practices

Benjamin Widlanski, of counsel, focuses his practice on complex commercial litigation and class actions. He has extensive courtroom and trial experience, prosecuting and investigating hundreds of federal crimes.

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Kozyak Tropin & Throckmorton’s Cori Lopez-Castro Inducted into the International Academy of Trial Lawyers


MIAMI – April 23, 2018 – Kozyak Tropin Throckmorton today announced the induction of Cori Lopez-Castro into the International Academy of Trial Lawyers at the academy’s annual meeting in March.

Lopez-Castro was selected to join the national group of 500 fellows based on her proven skill and ability in jury trials, trials before bankruptcy courts, and appellate practice. She was selected through a comprehensive screening process that identifies the most distinguished members of the trial bar by means of peer and judicial review. She was nominated by fellows Michael DeMarco, partner of K&L Gates in Boston, and Robert Josefsberg, partner of Podhurst Orseck in Miami. Her induction is considered particularly notable because of her representation of clients in bankruptcy courts around the country and as a Hispanic woman in trial litigation.

“I’m honored to be a member of the academy. I believe my induction is a testament to the quality of litigation by practitioners in bankruptcy courts,” said Lopez-Castro, who concentrates her legal practice on bankruptcy, receiverships, and commercial litigation matters. She recently led the legal team representing the City of Coral Gables in its litigation against Florida Power & Light, which will proceed to trial. “The academy’s authentic commitment to inclusivity and representation of practitioners who litigate in all courts is evidenced by the induction of several outstanding women in litigation this year. I’m very proud to enter the academy with them and continue to bring our unique perspective and influence upon the legal profession.”

Lopez-Castro, a partner of the firm since 1998, is currently serving a one-year term as its managing partner. Her community and professional contributions include serving from 2006-2007 as the second woman president of the Cuban-American Bar Association, a non-profit organization with which she has been actively involved for over 20 years.

Lopez-Castro credits her success in great measure to firm President Harley Tropin, who has served as her mentor and adviser: “I began my career at the firm where I’m now serving my second term as managing partner. Harley has long instilled a culture of cultivating talent and bringing people up, and my induction into the academy further evidences that philosophy.”

Chartered in 1954, the academy’s general purpose includes cultivating the science of jurisprudence, promoting reforms in the law, facilitating the administration of Justice, and elevating the standards of integrity, honor and courtesy in the legal profession.

 About Kozyak Tropin & Throckmorton

Kozyak Tropin & Throckmorton is a complex commercial and health care litigation firm founded in 1982 that focuses its practice on bet-the-company commercial cases, bankruptcy matters and class actions. For more information, visit