McGuireWoods’ Ponzi Litigation team launched its Ponzi Perspectives blog in early 2021. Since that time, we’ve posted detailed case alerts of Ponzi-related complaints filed throughout the country and posted key decisions that have the potential to influence controlling law on Ponzi-related issues involving financial institutions. This 2022 year-end round up summarizes the cases and opinions analyzed
Jarrod D. Shaw
Jarrod is co-chair of the Ponzi Litigation team and is a member of McGuireWoods’ Financial Services Litigation group representing clients in complex litigation and class actions. Jarrod focuses his practice on banking and consumer financial services industries while also serving a broader array of clients in complex litigation.
Pennsylvania Supreme Court Recognizes a New Cause of Action Against Those Who Aid and Abet Fraud
With a new decision settling the issue, businesses run the risk of being held liable for the conduct of their customers with the potential for increased Ponzi scheme related litigation following the Pennsylvania Supreme Court’s approval of a cause of action for aiding and abetting fraud. …
Continue Reading Pennsylvania Supreme Court Recognizes a New Cause of Action Against Those Who Aid and Abet Fraud
Ponzi Perspectives: 2022 Midyear Roundup
McGuireWoods’ Ponzi Litigation team launched its Ponzi Perspectives blog in early 2021. Since that time, our focus is to track key cases and decisions that have the potential to influence controlling law on Ponzi-related issues. The blog also offers analysis on practical considerations when defending Ponzi litigation. This 2022 mid-year round up summarizes the new…
Ponzi Schemes: A Growing Hazard in Film Financing
Ponzi schemes focused on fake investment opportunities are nothing new. Bernie Madoff, Allen Stanford and Tom Petters are now household names. But there has been a particular rise of Ponzi schemes specifically in the film and video content industry that has intensified in the last few years.
As streaming services vie for dominance in the frenzied content wars in an effort to draw in more and more viewers, this trend is likely to accelerate. These streaming services will spend tens of billions of dollars this year alone creating and acquiring video content.
These conditions create a perfect breeding ground for Ponzi schemes, given the amount of money changing hands and the lax due diligence standards investors sometimes accept in exchange for the chance to tap into this hot market.
In the last year alone, the largest film financing Ponzi scheme in U.S. history collapsed, and these schemes spread to overseas markets, like China.…
Continue Reading Ponzi Schemes: A Growing Hazard in Film Financing
Personal Jurisdiction – An Effective Defense As Illustrated by the Southern District of New York in Dismissing Ponzi Litigation
In a recent decision in Anderjaska v. Bank of America, N.A., et al., the Southern District of New York decided that three national banks were not subject to general jurisdiction in New York for allegedly aiding and abetting a Ponzi scheme.
Anderjaska highlights the utility of procedural mechanisms when defending against Ponzi-related allegations in a forum where a bank neither has its principal place of business nor its place of incorporation. Such procedural tools should not be overlooked as a means to defend litigation.…
Continue Reading Personal Jurisdiction – An Effective Defense As Illustrated by the Southern District of New York in Dismissing Ponzi Litigation
Fifth Circuit Holds that Receiver Has Standing to Bring Derivative Claims on Behalf of Investors Harmed by Ponzi Scheme
February 3, 2021 – Rotstain v. Mendez, 2021 WL 359989 (5th Cir.)
On February 3, 2021, the United States Court of Appeals for the Fifth Circuit issued an opinion in Rotstain v. Mendez, holding in part that a receiver had standing to bring claims on behalf of investors in connection with a Ponzi scheme.
In the context of denying a motion to intervene, Rotstain clarified that receivers and their assignees have standing to bring claims on behalf of investors when the investors’ claims are against alleged conspirators for conduct in furtherance of that scheme and are derivative of and dependent on the claims of the receivership estate.…
Continue Reading Fifth Circuit Holds that Receiver Has Standing to Bring Derivative Claims on Behalf of Investors Harmed by Ponzi Scheme
Second Circuit Rejects Ponzi Scheme-Related Facilitation Claims against Bank
November 13. 2020 – Heinert v. Bank of America, N.A., 2020 WL 6689287 (2d Cir.)
On November 13, 2020, the United States Court of Appeals for the Second Circuit issued an opinion in Heinert v. Bank of America, N.A. imposing a heavy pleading burden upon plaintiffs seeking to sue banks for the facilitation of a Ponzi scheme.
As the recession deepens, Ponzi schemes that benefitted from a thriving pre-pandemic economy are likely to collapse. While investors may pursue claims against the fraudsters themselves, these suits are unlikely to yield meaningful recovery as Ponzi schemes are frequently operated by judgment-proof shell entities. As a result, investors may look to deep-pocketed financial institutions to recoup their losses. Indeed, banks are a frequent target of Ponzi-scheme related aiding and abetting claims. These claims can present significant exposure risks to banks if they survive a motion to dismiss. Heinert shields banks from some of those risks by setting a high bar for pleading a key element of an aiding and abetting claim—actual knowledge of the underlying scheme.…
Continue Reading Second Circuit Rejects Ponzi Scheme-Related Facilitation Claims against Bank