August 24, 2015 – The U.S. Court of Appeals for the First Circuit has affirmed the decision of a Magistrate Judge in a Massachusetts federal court case, arising from a $150 million Ponzi scheme known as Millennium Bank. Several investors brought a class action lawsuit against JPMorgan Chase Bank, N.A. (“JPMorgan”), where Millennium related entities held deposit accounts, alleging that the bank aided and abetted the fraud.
After the lawsuit was commenced, the plaintiffs obtained documents from an investigation of the Millennium accounts conducted by JPMorgan. The plaintiffs subsequently filed the documents with the Court, under seal, for a determination of whether the investigative file was privileged under the Bank Secrecy Act, 31 U.S.C. § 5318(g) (“BSA”), which prohibits disclosure of suspicious activity reports (“SARs”).
After extensive litigation, a Magistrate Judge presiding over the case issued a decision, holding that, with the exception of several pages from the investigative file, the documents were not privileged under the BSA. JPMorgan then filed a Petition for a Writ of Mandamus with the First Circuit Court of Appeals, arguing that the judge had erred.
After oral argument, the First Circuit denied JPMorgan’s Petition, finding that the bank failed to satisfy the mandamus standard. The Court conducted an in camera review of the subject documents and determined that they were not protected under the BSA, because none of the documents constituted a SAR or revealed the existence of a SAR. Thus, there was no basis for interlocutory review of the Magistrate’s decision. Boston, Massachusetts attorney, the attorney, will continue to represent the plaintiffs in the pending U.S. District Court action.
Decision: In re: JPMorgan Chase Bank, N.A.