Investors Say Bank Abetted Ponzi Scam

PORTLAND, Ore. (CN) – Former clients and creditors of bankrupt Summit Accommodators say Umpqua Bank loaned Summit millions of dollars to help it continue a $30 million Ponzi scheme – and that Umpqua knew about the scam.

     The bankruptcy trustee overseeing the defunct firm filed a similar lawsuit in June.
     Lead plaintiff Danae Miller says Summit Accommodators owners Mark Neuman and Brian Stevens spent 13 years funneling millions from Summit’s bank accounts to affiliate Inland Capital before the company went bankrupt in 2008.
     Lane Lyons and Tim Larkin joined Summit as quarter-owners in 2006, according to the complaint. The owners allegedly embezzled from Inland and spent the money on themselves, causing liquidity problems that left Summit unable to pay its bills.
     That’s when the owners started their Ponzi scheme, bringing in new investors to pay off the old ones, according to the complaint.
     In 2007, the owners “described in great detail all relevant aspects of their Ponzi scheme and embezzlement” to Umpqua’s CEO Ray Davis and then-President Dave Edson during a pitch to get a loan or equity investment from the bank, the lawsuit states.
     Umpqua granted Summit substantial loans despite its knowledge of Summit’s Ponzi scheme, according to the complaint. It allegedly encouraged Summit to shift all of its business to Umpqua, facilitating the exchange of millions because of the large fees it earned on Summit’s deposit base.
     The creditors and clients want $30 million.
     Michael Simon with Perkins Coie represents the plaintiffs in Multnomah County Court.

%d bloggers like this: