Portland-based Umpqua Bank may be the subject of a class-action lawsuit from jilted investors in a Ponzi-esque investment scheme masterminded by a now deceased Marin County real estate mogul.
Following the May 2020 death of Ken Casey at age 73, SFist reported on the unfolding situation in which Casey's ex-wife was left holding the bag as she came to discover the mess she had inherited. Charlene Albanese, the ex-wife, inherited Casey's business interests and property following his fatal heart attack, and her subsequent financial investigation to understand what she'd inherited revealed what federal prosecutors said was a "Ponzi-like" scheme.
The scheme, per Bay Area News Group, was one in which investors were lured into a fund created by Casey and he used "investor-sourced funds to purchase and operate commercial real estate in Marin and Sonoma countries with the goal of selling them after they had appreciated."
Casey's firm, Professional Financial Investors (PFI), used around $450 million of investor funds to acquire 71 properties, which were estimated to be worth $550 million when PFI filed for bankruptcy.
As Albanese discovered after Casey's death, he died over $400 million in debt and owing investors $250 million. Proceeds from the sale of the properties is only expected to yield $100 million to $120 million, and multiple investors in the Bay Area are out hundreds of thousands of dollars.
Thus, they now have an interest in holding Umpqua Bank responsible, and a federal judge has ruled that a lawsuit can move forward.
As Bay Area News Group reports, Casey had previous convictions for financial crimes going back to the 90s, which meant that most banks wouldn't do business with him. But one private banker in particular, according to the lawsuit, June Weaver, took Casey on as a client when the Novato bank was known as Circle Bank, and it was then acquired by Umpqua in 2012. Weaver allegedly worked with Casey for years after that as an Umpqua employee, and a judge in the case ruled this week that there is evidence to suggest the bank has some liability. Specifically, U.S. District Chief Judge Richard Seeborg said there was evidence that Weaver at least participated in "some of the mechanics of the scheme."
Bank employees also allegedly transferred funds out of PFI's account, which took in investor funds, to Casey's personal accounts.
Umpqua Bank put out a statement saying they were disappointed in the ruling, and said, "It’s also important to note the court’s decision does not find in favor of either party or resolve the dispute, only that a jury will consider the evidence.”
Image: Steve D. via Yelp