If you saw our recent article*, warning of the possible adverse consequences of failing to learn that a major bank client was operating a massive Ponzi Scheme, read this. Investors, who lost millions of dollars in the bogus investment scheme perpetrated by Fort Lauderdale attorney/Ponzi Schemer Scott Rothstein**, have brought a civil action against a bank where he was an important client, Gibraltar Private Bank & Trust***. The Complaint reportedly alleges that the bank actually facilitated the fraud, and that senior management flat out ignored the objections of their own compliance officers, and Chief Operating Officer, who then resigned. Was this a corporate culture where the importance of a major client trumped effective compliance policies and procedures ?
Therefore, if a valued client's accounts exhibit the indicia (red flags) of Ponzi Scheme activity****, it is in your bank's best interests to terminate the relationship forthwith, and consult with bank counsel, to determine whether reporting to regulators and/or law enforcement is in order.
