(CN) – Huntington National Bank aided and abetted a $15 million Ponzi scheme run by a felon who had already pleaded guilty to bank fraud, according to a complaint in Cuyahoga County Court, Cleveland. Seventeen investors say the bank put a hold on James Carpenter III’s accounts after finding out he had just been released from prison for bank fraud, then inexplicably released the money to him.
Carpenter promised about 250 investors 10 percent annual returns on Serengeti Diamonds USA and Lomas de la Barra Development, according to the complaint.
The investors say Carpenter used his daughter, a teller, to open two bank accounts in 1998 that were “facially deficient.”
The only defendant in this complaint is the Huntington National Bank.
The plaintiffs say the bank refused Carpenter’s requests to send money from his accounts offshore, in January 1999, but relented and went ahead with it after Carpenter threatened it. The investors say the bank did it although it already knew Carpenter was a felon.
The plaintiffs also are members of a class in a companion case, in which Carpenter agreed to a consent judgment for $15 million, but “no funds have been located to satisfy the judgment,” according to the complaint.
Carpenter, formerly a lawyer, was disbarred in 1993 for misappropriating $240,000 from clients, according to the complaint. He pleaded guilty to felony bank fraud in 1991 and was sentenced to “not less than 1 year” in federal prison, the complaint states.
The 17 plaintiffs are represented by Robert Kehoe.