LOS ANGELES (CN) – Hundreds of working-class Latino families say Bank of America aided and abetted a $30 million Ponzi scam that cost many victims their homes and their life savings.
In a class action in Superior Court, 10 named plaintiffs sued the bank and Pablo Araque, the owner and sole employee of PEA Enterprises, a tax preparation and bookkeeping business in Downey.
Neither BofA nor Araque are accused of running the scam. The plaintiffs say the Ponzi scam was run by Juan Rangel, through his company, Financial Plus Investments. Rangel advertised on Spanish-language TV and in newspapers, guaranteeing annual returns as high as 60 percent, allegedly from buying and selling property and high-interest loans to distressed homeowners.
The plaintiffs say Rangel used the money he got from his victims to buy himself a Lamborghini, a $2.5 million mansion and a limousine, among other things.
Rangel also allegedly targeted distressed homeowners with a fraudulent refinancing program that left many without their homes.
The duped investors say Rangel received “substantial assistance” from Bank of America branch manager Dony Gonzalez, who took bribes from Rangel in exchange for laundering $1 million to bank accounts in Pachuca, Mexico.
Gonzalez is not a defendant in this complaint.
The plaintiffs say that knowledge of the transactions was “not limited to Gonzalez,” and that several Bank of America employees should have detected the fraud.
“Suspicious transactions were brought to the attention of Bank of America managers and officials through reports that documented the transactions, but none of them endeavored to investigate Rangel and Financial Plus,” the complaint states.
“An investigation would have led to the discovery of the Ponzi scheme,” the complaint adds. “Instead Bank of America preferred to enjoy the banking relationship with Rangel and the other companies involved in this scheme.”
FBI agents arrested Rangel in August 2008. He was sentenced this year to 22 years in prison, with a concurrent 7 year and 3 month sentence for money laundering and bribery.
George Trevor, whose firm Pearson, Simon, Warshaw & Penny represents the victims, told Courthouse News that Rangel’s scheme was “financially devastating,” and that many of his clients lost their life savings.
“When you look at someone like Bernie Madoff, his victims were millionaires,” Trevor said. “These people are hard-working Spanish people victimized by Rangel and Financial Plus.”