Bank Disavows Unauthorized Guarantees

      MOBILE, Ala. (CN) - Wells Fargo Bank wants to void several "Sovereign Guarantees" for hundreds of thousands of dollars, supposedly to create jobs for the City of Selma, because the documents were allegedly signed without authorization.
     In its federal complaint, Wells Fargo says that its customer John Rogers - who is not a party to the complaint - told employees in two of its branches that he represented the City of Selma and needed them to witness his signature on "a series of documents in order to facilitate a project that would create jobs for the City of Selma, Alabama."
     Wells Fargo says Rogers claimed to be working with defendants Michael Jacobs and Ruby Handler Jacobs, Lawrence Lester and Decagon Company Ltd. He allegedly needed the employees to witness his signature on the sovereign guarantees and affix the official bank stamp.
     Decagon and its president Lawrence Lester are based in Seattle; Michael Jacobs and Ruby Handler Jacobs live in Albuquerque, N.M. Each of the seven Sovereign Guarantees was for more than $75,000, according to the complaint.
     Rogers and the individual defendants then had a Wells Fargo employee send the sovereign guarantees to several foreign banks, including banks in Dubai and Geneva, using Wells Fargo letterhead, according to the complaint.
     Wells Fargo says it found out about the transactions after receiving a SWIFT message from a private bank called Mirabaud in Dubai acknowledging receipt of a sovereign guarantee and asking for formal authentication. [SWIFT is an acronym for the Society for Worldwide Interbank Financial Telecommunication.]
     Wells Fargo says it told Mirabaud that its employees "were not authorized to sign the Sovereign Guarantees or the transmittal documents on behalf of Wells Fargo, and that the Sovereign Guarantees and transmittal documents were executed without Wells Fargo's authorization or consent and, therefore, are invalid and unenforceable as to Wells Fargo."
     After it investigated, Wells Fargo says, it contacted all the organizations that had been sent the Sovereign Guaranteed and told them the documents were sent without authorization.
     Wells Fargo says a New York attorney has threatened litigation on behalf of his client in Dubai if Wells Fargo does not confirm the existence of the "bonds" supposedly issued by the City of Selma.
     Wells Fargo claims that Selma told it that John Rogers did not have authority to act on its behalf, so the bank sent written notice to all of the defendants that the sovereign guarantees were "null and void."
     It says that Rogers has indicated he is no longer is pursuing transactions involving the guarantees.
     But the bank says that defendants Michael and Ruby Jacobs informed it that they are working on a "deal" and have threatened to sue the bank if its "unwarranted interference negatively impacts [their] endeavors."
     Wells Fargo that under the National Banking Act, a bank may act as a guarantor only if "the bank has a substantial interest in the performance of the transaction" or if "the transaction is for the benefit of a customer and the bank obtains from the customer a segregated deposit that is sufficient in amount to cover the bank's potential liability."
     Wells Fargo says that since it did not receive any benefit related to the sovereign guarantees, nor did the City of Selma or any of the defendants deposit any money that would cover the face value of one guarantee, let alone all seven that were issued, the court should declare the sovereign guarantees "void ab initio and unenforceable."
     Wells Fargo also wants the defendants enjoined from selling or transferring any of the sovereign guarantees that they may have in their possession.
     Wells Fargo is represented by Edward G. Bowron with Burr & Forman, of Mobile.
     
     EDITOR'S NOTE: On Aug. 26, a federal judge entered a final judgment that voids certain sovereign guarantees as requested by Wells Fargo. U.S. District Judge Callie Granade identified four documents purporting to guarantee payment to Sirius San-Xing Financial Services, and purportedly signed by the four Wells Fargo employees named in the original complaint but not as defendants. Granade dismissed the remaining claims and ordered each party to pay its own fees.