Wells Fargo Stumbles in Ponzi Scheme Litigation

WEST PALM BEACH, Fla. (CN) - Accused of aiding and abetting a $60 million Ponzi scheme in South Florida's Haitian community, Wells Fargo failed to charm a federal judge with its affirmative defenses.

"Although defendant may not have had a duty to investigate, disclose or prevent misconduct, defendant did have a duty not to aid and abet it," U.S. District Judge Daniel Hurley wrote Wednesday.

In a Ponzi scheme that reportedly began around November 2007, George Theodule promised investors 100 percent return within 90 days at no risk, spending a portion of the trading profits on projects to benefit the Haitian community.

Contrary to his promises, Theodule lost money in his trade accounts and never generated any net profit for his Creative Capital Consortium entities because the funds were used to pay earlier investors or for Theodule's personal benefit.

The court-appointed receiver claims that Wells Fargo aided and abetted the scheme while also maintaining Theodule's personal proceeds. Perlman moved the court to strike 40 of the bank's 42 affirmative defenses.

Judge Hurley deemed some of Wells Fargo's defenses as insufficient, defective or redundant. He also clarified that the receivership entities, not the investors themselves, made claims against the bank.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit