No Recovery, No Fee

424-835-5733 | 310-525-3516

You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Investment fraud lawsuit targets Los Angeles bank

It was supposed to work the following way. Foreign investors desiring permanent residency status in the U.S. would deposit $500,000 in an American bank.

That money would stay parked in an escrow account until U.S. customs officials were satisfied that the depositors were qualified as EB-5 investors. Following approval, the money could be released and would thereafter be invested in projects that helped create jobs for American workers. As a happy byproduct of that result, the investors would receive their visas.

Instead, those investors allege that it worked this way. They duly deposited the funds, but their attorney adviser thereafter dipped into the accounts and used the money for various personal reasons and schemes. Reportedly, nearly 100 investors lost close to $50 million.

The attorney is presently behind bars in South Korea. As reported by the Los Angeles Times, the investors have now sued the bank -- the Koreatown Wilshire Bank in Los Angeles -- for its alleged complicity in the fraud that took their savings. They argue that the funds and their intended purpose, along with their placement in an escrow account, should have been reasonably apparent to the bank and that it is severally liable for their losses.

"At best, they [the bank officials] were negligent," says a legal representative for the plaintiffs.

"At worst," he adds, "they were really in bed with this guy."

The case is noteworthy for testing bank liability under such a scenario. As the Times article notes, Wilshire Bank will likely argue that it merely had a duty to hold the money and release it as ordered to the investors' representative.

That defense might be infirm, states one commentator, who says that, "At some point, you can't ignore what appears to be fraud and hide behind contractual limitations of liability."

The plaintiffs are demanding the return of their invested funds, along with interest and punitive damages. The Times notes that, if things turn out badly for the bank in litigation, it "could be on the hook for tens of millions of dollars."

No Comments

Leave a comment
Comment Information

Our Office Location

The Law Offices of Marc I. Zussman
433 N. Camden Drive
Suite 730 
Beverly Hills, CA 90210       
Map & Directions

Local: 424-835-5733
Local: 310-525-3516
Toll Free: 866-451-2517
Fax: 310-525-3528