Releases

Banks and other financial institutions are facing increased litigation over business dealings with questionable investments that might be considered Ponzi schemes. From 2007 through the first half of 2009, these allegations comprised 3.5 percent of all federal class-action filings, up from 0.2 percent the previous two years. "Increasingly common are class actions based on what a bank should have known, even if the institution acted as a passive custodian of the funds," says Kenneth Johnston of Dallas's Kane Russell Coleman & Logan. "Banks may face costly claims for failing to identify that, for example, one of its customers was in fact a Ponzi scheme." Johnston also notes that SEC receivers and bankruptcy trustees are aggressively pursuing fraudulent transfer claims against both banks and investors who merely held or received Ponzi scheme distributions. To interview Mr. Johnston, contact Barry Pound at 800-559-4534 or barry@androvett.com.