As we bid farewell to 2022, the year has witnessed a surge in large-scale Ponzi schemes, scams, and frauds. FTX has been a notable player in this realm, among others. In this blog post, we explore a compelling example that sheds light on how victims can potentially recover funds even when the primary perpetrator has depleted or squandered the ill-gotten gains. This case underscores the importance of investigating third-party liabilities, a strategy we’ve discussed on this channel multiple times.

The Case of Umpqua Bank

In a recent development, investors found a glimmer of hope in reclaiming their losses amounting to a staggering $300 million in a Ponzi scheme orchestrated by a customer of Umpqua Bank. Despite the bank being unaware of the fraudulent activities, a U.S. District Judge’s decision denied the bank’s exclusion from the case and certified it as a class action, allowing all affected investors to join forces.

Bank’s Alleged Complicity

The investors’ claim centers on the assertion that Umpqua Bank, albeit unknowingly, aided and embedded the Ponzi scheme by failing to conduct proper due diligence when opening the scammer’s account. While the bank did not actively participate in the fraudulent activities, the failure to implement sufficient safeguards allegedly facilitated the scam’s execution.

Uncovering Negligence through Investigation

The investigation into Umpqua Bank’s role revealed critical lapses in their processes. The bank’s own fraud detection software reportedly issued 146 alerts regarding specific suspicious activities related to the scam company. Moreover, records from the Nevada Branch outlined the flow of funds, unmistakably indicating fraudulent transactions. Despite these red flags, the bank allegedly failed to take decisive action.

Third-Party Liability: A Potential Lifeline for Victims

For victims of fraud or Ponzi schemes, especially when the perpetrator is elusive or lacks assets, exploring third-party liability can be a viable avenue for financial recovery. In many instances, third parties such as banks, accountants, attorneys, sales companies, or advertising entities may bear some responsibility. In the case of Umpqua Bank, the failure to scrutinize the customer’s account thoroughly has potentially exposed them to liability.

Seeking Legal Counsel and Third-Party Redress

If you find yourself a victim of fraud or a Ponzi scheme, where the primary scammer is challenging to locate or lacks sufficient assets, exploring third-party liability becomes crucial. Seeking legal advice is paramount, as experienced investigators have often found third-party liabilities to be the saving grace for investors.

It’s important to note that third-party liability can also extend to insurance companies. In cases where insurance policies have liability limits, they may cover claims from defrauded investors.

While the complexities of financial fraud cases are numerous, the pursuit of third-party liabilities can offer a glimmer of hope for investors seeking to recoup their losses. As we navigate the evolving landscape of financial malfeasance, staying informed and seeking professional advice remains key to achieving justice and financial redress.