Category: Ponzi Scheme

Investors Claim Scheme Lasted 15 Years

A putative class action was filed in New York Federal court recently against a Royal Bank of Canada subsidiary and a senior executive, accusing them of aiding a 15-year ATM Ponzi scheme. The scheme allegedly defrauded investors out of $45 million.

The suit alleges that Patrick Brian Fitzwilliam, Senior Vice President of City National Bank NA,  who managed the bank’s Woodland Hills, California, branch, aided now-imprisoned fraudsters Joel Gillis, 77, and Edward Wishner, 78 by moving stolen investor funds to and from fraudulent accounts held with the bank under the name Nationwide Automatic Systems Inc. (NASI).

The suit says that Fitzwilliam personally oversaw the NASI account and that CNB’s involvement in and knowledge of the Ponzi scheme occurred through Fitzwilliam’s servicing of the account. Fitzwilliam and the bank allegedly vouched for the integrity of the ATM Ponzi scheme to investors, who in turn funneled millions into the company, and helped Gillis and Wishner cover negative bank balances.

NASI Operates Ponzi Scheme through ATMs

According to the suit, Gillis and Wishner told investors they would receive 50 cents per transaction on the ATMs, yielding a guaranteed 20 percent annual return. The ATMs were purchased by investors at the cost of either $12,000 or $19,800 per machine and payments per transaction, were made with money taken in from newer investors.

For eight years, from 2006 through 2014, approximately $400 million dollars of investors’ money flowed into and out of NASI’s accounts at the bank, generating substantial service fees and profits for City National Bank.

Fitzwilliam and Wife Were Complicit in NASI Ponzi Scheme

During that time, the suit claims that activity from NASI’s accounts generated substantial compensation for Fitzwilliam. Though he knew that the company had legitimate ATM transaction revenue from only 250 real ATMs and not the thousands of ATMs that the fraudsters touted to investors, he allegedly sent potential investors promotional letters, actively misrepresenting the status of the investment scheme.

In 2006, Fitzwilliam and his wife, Betty Saleh Fitzwilliam, invested thousands of dollars into NASI, but cashed out most of their investment when they saw the scheme was on the verge of collapse. The couple took more than $250,000 in ill-gotten gains plus another $60,000 from NASI less than a month before the bank terminated the company as a client in 2014. Betty Fitzwilliam is not named as a defendant in the suit.

SEC Takes Action Against NASI in 2014

The U.S. Securities and Exchange Commission sued NASI in 2014 and placed it in receivership. Shortly after, Wishner and Gillis pled guilty to conspiracy, mail fraud, and wire fraud charges for running the scheme, resulting in 9 and 10-year federal prison sentences, respectively.

At the same time, the receiver sued Fitzwilliam, his wife, and the bank in June 2016, asserting similar claims of enabling the 15-year Ponzi scheme.

Since the SEC suit against NASI in 2014, two putative class actions have been filed against the bank and Fitzwilliam in California state court. In September 2016, a group of approximately 40 individual California-based investors also sued the bank and Fitzwilliam over their losses. Three of the four suits filed – the individual investors’ suit, one of the two putative class actions and the receiver’s action – are currently pending in California state courts.

The other putative class action was tossed by a state judge under the anti-SLAPP statute. The plaintiffs in that action have since appealed the judge’s ruling.

Plaintiffs Seek to Certify Class

The plaintiffs seek to certify a class of approximately 500-600 investors from 36 states outside of California who invested in the company between 2009 and 2014. Those investors do not believe the pending California class actions adequately protect out-of-state victims.

Did You Lose Money to a Ponzi Scheme?

If you believe you have been the victim of a Ponzi scheme or other investment scheme, you may have certain legal rights that require your immediate attention.

Call an Investment Fraud Attorney Today

If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions, including financial institutions that assisted Ponzi schemers.

With offices in Los Angeles, New York, West Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.