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Signature Bank Faces Lawsuit Over Ponzi Scheme

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Signature Bank is being sued over a connection to a Ponzi scheme that cost investors $66 million.

The bank, which holds $33 billion in assets, allegedly helped money manager William Landberg and his investment firm advance the scheme by forcing him to transfer funds around the dozens of accounts he kept at the bank in order to cover long-term overdrafts.

Landberg plead guilty to one count of securities fraud in 2011 and was sent to federal prison for three and a half years. He has since completed his sentence.

From the New York Times:

In the complaint, the investors’ lawyer, Wes Christian, said that “Signature knew Landberg was operating a house of cards and knew returning checks on overdrawn accounts would make it collapse, so Signature used that threat to force Landberg to transfer funds.” The complaint adds, “Signature should have stopped the crime but instead perpetrated it.”

A spokeswoman for Signature said the bank “vigorously denies” any accusations of wrongdoing, saying it was also a victim in the fraud and did not benefit from Mr. Landberg’s actions.

“Signature Bank itself lost several millions of dollars as a result of Landberg’s fraud,” the spokeswoman, Susan Lewis, said in a statement. “We understand that plaintiffs’ attorneys are looking for any deep pockets and that these types of suits have become all too common.”

In a statement, Signature Bank said, “We look forward to these allegations being determined as false, and the claims denied,” the Times reported.

 

Photo by Keith Cooper via Flickr CC License

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