Articles Posted in UNFAIR BUSINESS PRACTICES

May 10, 2010 – Victims of the Millennium Bank Ponzi scheme have survived a motion to dismiss filed by Defendant JPMorgan Chase Bank in their class action lawsuit. The complaint alleges that the bank aided and abettedThumbnail image for Thumbnail image for jpmorgan_logo.jpg the perpetrators of a $200 million Ponzi scheme which operated out of offices located in Napa, California. U.S. Magistrate Judge Edward Chen refused to dismiss four out of five of the counts, which will now proceed into a discovery phase requiring JPMorgan to produce documents and answer questions about its banking activities.

JPMorgan is the successor of failed Washington Mutual Bank (“WAMU”), which had branches in Napa, where Millennium’s mastermind, William Wise and his associates, carried out their banking activities. Wise lured over 250 investors by offering certificates wamu_logo.jpgof deposit (CDs) with unrealistically high interest rates. Millennium Investors were instructed to mail checks to Napa, which were presented for deposit at the WAMU branches. Millions were commingled and then either transferred offshore or used by Wise and his cohorts for personal expenses, including payments for a private jet, an extensive wine collection, and to support Wise and his family’s extravagant lifestyle.

The complaint alleges that WAMU continued to conduct business with Millennium even though it knew that investor monies were being siphoned away. Judge Chen determined that the allegations in the Complaint, if proved, would state a cause of action. Specifically, he permitted the claims of aiding and abetting fraud, aiding and abetting conversion, breach of fiduciary duty, and violation of California Business Code to proceed. However, he found no evidence to support the claim that there was a conspiracy to commit fraud.

The judge’s decision appears below:

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Thumbnail image for Thumbnail image for millennium-bank_1.jpgNovember 14, 2009 – The Boston Law Offices of Keith L. Miller and Washington D.C. based, Steven Berk (Berk Law), in conjunction with Cotchett, Pitre & McCarthy, has filed a class action against JPMorganChase as the successor in interest to Washington Mutual (“WAMU”) in the US District Court for the Northern District of California. The complaint alleges that WAMU’s banking services played an integral role in facilitating the $150 Million Ponzi scheme perpetrated by William Wise and Millennium Bank.

 

 

Thumbnail image for tv photo.jpgAccording to the complaint, Wise and Millennium Bank raised over $150 million from over 250 investors by promising returns as high as 9% on premium certificates of deposit, when the market was offering much lower rates. Millennium Bank was primarily operated out of Napa, California and claimed to be a subsidiary of United Trust of Switzerland, another Wise entity.  Millennium Bank’s sophisticated internet marketing allowed them to dupe hundreds of investors worldwide.

 

As described in the Complaint, Millennium Bank’s staff in Napa instructed purchasers of the high-yield CDs to wire funds to its WAMU accounts opened in Las Vegas, Nevada under fictitious names, or to send checks to Napa, which were subsequently deposited into these accounts. The money then moved offshore or was used to pay for Wise’s lavish lifestyle. There is no evidence that he made any investments with victims’ money. A copy of the Complaint appears below:

 

 

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Boston commercial and personal injury trial Lawyer, Keith L. Miller, takes a look at Caribbean based Millenium Bank, the latest banking Ponzi Scheme to have bilked U.S. and other investors seeking big returns on their investment monies.


On March 27, 2009, St. Vincent and the Grenadines (SVG), by its International Financial Service Authority (IFSA), appointed KPMG-International to assume control over the affairs of Millennium Bank (“Millennium”) in order “to preserve records and assets”. The IFSA was acting on information obtained from the U.S. Securities and Exchange Commission (SEC), after the SEC had issued a civil complaint against Millennium Bank, a number of affiliates and individual participants, including William J. Wise, Kristi Hoegel and Jackie Hoegel.


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This, however, was not the first time that the IFSA had taken action gainst Millennium. In fact, in 2004, the IFSA had legally moved to revoke Millennium’s license, a decision the SVG government later reversed, allegedly after the prime minister of SVA intervened on its behalf. Court documents indicate that William Wise, representing himself as a duly licensed Canadian legal counsel appealed the suspension, and ultimately prevailed.

This is when things ostensibly turned for the better for the once fledgling offshore bank. Undertaking an aggressive international marketing campaign led by Wise, deposits grew dramatically based on the promise of high interest CDs, rates which no U.S. bank could even come close to matching. It appears that the plan was successful as deposits grew in dramatic fashion.

Unfortunately for investors, who believed they were buying legitimate certificate of deposits in exchange for their cash, it appears that the bulk of the funds were being diverted to accounts held by Wise, principally at Washington Mutual Bank in Las Vegas, Nevada, and used for the personal needs and extravagances of these individuals.

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Boston commercial and personal injury trial Lawyer, Keith L. Miller, takes a look at Caribbean based Millenium Bank, the latest banking Ponzi Scheme to have bilked U.S. and other investors seeking big returns on their investment monies.

On March 25, 2009 the United States Securities Exchange Commission commenced a civil action in United States District Court in Northern Texas against the The Millennium Bank, and it principals, alleging violations of the securities laws of the U.S. According to most recent information from  the SEC, it appears that there are now over 1000 investors who placed at in excess of  $100 million dollars in the bank and its affiliates, hoping to secure high interest rate CDs, rates at two to three times that of the highest rates available in the U.S.

millenium-bank-cd-rates.gifInformation is now emerging that Millennium nurtured customers with an internet marketing plan targeted at individuals shopping for the best returns on term Certificates of Deposit. One was www.Bankrate.com, which is a website widely used by investors to determine the prevailing rates for investment and mortgage products in the U.S. Millennium regularly ran banner ads on this site. Victims also report that google “sponsored ads” regularly appeared when the Google seach engine was employed in searches for “high interest CDs”

bankrate.jpgAccording to the SEC complaint, Millennium Bank also ran advertisements of its high-yield no-risk CDs in print magazines and their Internet counterparts, including The Wealth Collection, Wealth Management Agenda and Haute Living. For instance, Millennium ran a promotional article in the March 2008 edition of The Wealth Collection, a bi-annual magazine that touts the latest in “luxury lifestyle trends, investment opportunities and wealth management”.

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Boston Accident Lawyer, Keith L. Miller, is investigating potential claims on behalf of individuals who were victims of the Bernard Madoff Ponzi scheme. Those who had direct investments in Bernard L. Madoff Securities, LLC are limited to the remedies offered in the bankruptcy proceeding now pending in New York. Claims for reimbursement of monies actually invested in the fund up to $500,000 can be recovered through the Securities Investment Protection Corporation (“SIPC”). However, there is an absolute filing deadline of July 2, 2009. 

ponzi.jpgFor those who did not invest directly with Madoff, there may be other potential remedies and sources of recovery available. Civil actions have been commenced against so called “feeder funds”, who filtered investment to Madoff in exchange for lucrative management fees. Such suits are now pending in state court in Connecticut, Florida, California and Arizona. The list of Defendants includes Tremont Capital Management, Inc., Fairfield Greenwich Group and Boston based Cohmad. Securities Corporation. The principals of these feeder funds have been sued as well and efforts are being made to tie up assets in the event of an eventual recovery.

 

images.jpgIn essence, the suits allege that these hedge funds failed to perform any meaningful investigation, due diligence or oversight of the Madoff fund, which reported consistent double digit gains year after year, notwithstanding questions about the trading strategies allegedly employed or the fact that Madoff enforced a veil of secrecy over his actual trading activity. In fact, it appears that there was no such strategy whatsoever.

 

The accounting firms who perform regular audits of these feeder funds have not been spared, having also been named as defendants in these civil actions. It appears that this is just the beginning and the dragnet will widen in an attempt to uncover insurance monies, which might be available to aid in the recovery of the millions in lost investments.

Several states have also joined in, filing administrative or other proceedings on behalf of defrauded citizens. In particular, the Massahusetts Secretary of State has filed administrative proceedings against Cohmad Securities and Fairfield Greenwich Group, its principals and affiliates. The attorney general of New York has also filed an action against J. Ezra Merkin and his Ascot Funds, alleging that he also clandestinely invested client funds with Madoff, while purporting to be trading on their behalf himself.

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Accidents often arise out of situtions where someone’s conduct causes injury to another, and it appears that the act causing injury was carried out intentionally. The most obvious type of situation is an assault and battery. Someone hits you in the face with their fist and causes injury, requiring medical treatment. You obtain treatment, seek the services of an attorney and bring a claim. The individual who caused the injury usually resides in a home and may have liability insurance coverage under the policy insuring the home, even if someone else owns the house. 

Most homeowners’ insurance policies provide insurance coverage for household members for their conduct both within and outside of the home. However, there are usually exclusionary provisions, which preclude coverage for intentional acts, and more specifically, for intentional illegal or criminal acts.

At first blush, one might assume that in all such situations, where an act appears to be intentional, there will be no coverage. However, Courts in Massachusetts and elsewhere have interpreted insurance policies to preclude coverage only where there was an intent to cause a specific injury, rather than simply if the act itself was intentional.


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Thus, for example, if a group of children were throwing snowballs at one another in the yard, obviously intending to hit one another, and a snowball happened to hit a child in the face, causing injury to an eye, for example, it is likely that there would be insurance coverage for the accident. The act was intentional, but there was no intent to cause the specific injury. In this situation, there would likely be coverage afforded.

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he Massachusetts Appeals Court has determined that a bank, acting as a fiduciary under a family trust, was liable for ignoring the provisions in a lease, which gave the lessee of a Cape Cod property used as a tree stump dump a right of first refusal with respect to purchase of the property.

The Plaintiff in this case operated a stump dump on property in Chatham owned by the Defendant, Fleet Bank, as Trustee of a family trust. It had a series of leases with the owner, which contained renewal options as well as a right of first refusal in the event of a bona fide offer of purchase from an outside party. The plaintiff brought suit after the subject property was transferred to the beneficiaries and then sold to a third-party purchaser. At the time of sale, the plaintiff’s leases on the property had not been renewed, but verbal extensions had been granted while negotiations were ongoing.

The plaintiff alleged in its complaints that both Fleet and the beneficiaries breached the implied covenant of good faith and fair dealing with regard to lease renewal option and the right of first refusal contained in the leases; and that both constituted unfair and deceptive acts or practices, in violation of G.L. c. 93A.
The Plaintiffs had been involved in extended negotiations for a lease renewal under the option granted in the expiring leases, and also made an offer to purchase the property, which was held up due to issues surrounding the title. During the negotiations, the oldest beneficiary under the trust died, which caused the trust assets to be distributed to the remaining beneficiaries.

During this extended period, the owners received another offer to purchase from a third party, and ultimately, title was transferred to the beneficiaries and then to the new offeror. The Plaintiffs were aware of the offer, and through counsel, sought to learn the terms so that they could exercise their right of first refusal. Their requests were ignored by Fleet and the beneficiaries.

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COMMONWEALTH vs. FREMONT INVESTMENT & LOAN CO.

SJC-10258, December 9, 2008.

The Massachusetts Supreme Judicial Court has upheld a preliminary injunction requested by the Massachusetts Attorney General and issued by a Superior Court judge preventing a subprime lender, Fremont Investment & Loan Co., from proceeding to foreclose on property subject to its mortgages, without first negotiating with the owners, and then if deemed necessary, obtaining specific court approval to proceed to foreclose.

Fremont is an industrial bank chartered by the State of California. Between 2004, and 2007, Fremont had originated almost 15,000 loans to Massachusetts residents secured by mortgages on owner-occupied homes, over fifty to sixty per cent of which were subprime.

When the Attorney General brought suit in 2007, a significant number of Fremont’s loans were in default. The Attorney General analyzed ninety-eight of those loans and found that all were ARM loans with a substantial increase in payments required after the first two or three years, and that ninety per cent of the ninety-eight had a one hundred per cent loan-to-value ratio.

The SJC agreed with the lower court judge who concluded that there was a likelihood of success on the merits of the claim because the lender had originated home mortgage loans with four specific characteristics, which made it almost certain that the borrower would not be able to make the necessary loan payments, leading to default and then foreclosure, which the court deemed was an unfair act or practice within the meaning of G.L. c. 93A, § 2.

The four features were as follows:(1) the loans were ARM loans with an introductory rate period of three years or less; (2) they featured an introductory rate for the initial period that was at least three per cent below the fully indexed rate; (3) they were made to borrowers for whom the debt-to-income ratio would have exceeded fifty per cent if the lender had measured the borrower’s debt by the monthly payments at the fully indexed rate rather than the introductory rate; and (4) the loan-to-value ratio was one hundred per cent, or the loan featured a substantial prepayment penalty or a prepayment penalty that extended beyond the introductory rate period.

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Following an accident resulting in personal injuries, the injured party inevitably will come into contact with representatives of one or more insurance companies, either their own or the company that insures the party responsible for the accident. There will be an adjuster or adjusters who want to ask you questions, and often want to record or memorialize your answers. No matter how friendly or helpful they appear, the insurance adjuster is not your friend. His/her job is not to minimize the exposure of their company, regardless of whom they represent.

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In certain instances, the misconduct of the insurer rises to a level of behavior, which is not only inappropriate, but may give rise to a separate and actionable claim. In Massachusetts and almost every other state, there are laws, which specify acts or practices of insurers, which are unlawful. These unlawful acts are often called unfair claims settlement practices or INSURANCE BAD FAITH.

Because insurers are required to deal fairly with claimants, when it is clear that someone is responsible for your injuries, the insurer must make reasonable offers of settlement. When the insurer refuses to offer to settle a case when liability is clear, the law permits claimants to sue the insurer directly.

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WEST LAKE ACADEMY v. THE TRAVELERS INDEMNITY COMPANY et al.
U.S. Court of Appeals, 1st Circuit, Nos. 07-2190, 07-2204

The U.S. Court of Appeals for the First Circuit has upheld a decision of the District Court that an general commercial insurance policy issued to a mental health care provider did not provide coverage for the sexual misconduct of one of its employees, who had sexual intercourse with a minor female patients, based on a sexual molestation exclusion in the policy.

The female minor patient had been involuntarily committed to West Lake Academy, a facility for mentally ill teenagers between 1993 and June 1995. In June 1995, a West Lake employee transported the patient alone between West Lake and a bus station on several occasions. More than once, the employee had sexual intercourse with the patient, who became pregnant and had his child.

The patient successfully sued the employee father and another West Lake employee, a supervisor, who she alleged had negligently failed to supervise the father of the child and recovered a large judgment against West Lake and the employees. National Union Fire Insurance Company provided a commercial general liability insurance policy to West Lake and their employees.

After the judgment, National Union refused to pay on the claim and in July, 2000, filed suit in the District Court in Massachusetts against its insureds, seeking a declaratory judgment limiting its exposure under the policy. The National Union policy included an exclusion, entitled “Abuse or Molestation Exclusion,” which limited coverage to $100,000 on claims based on abuse or molestation of anyone in the custody of the insureds.

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