Legal papers filed in a case in which investors seek to recover damages from a bank for a Ponzi scheme include a deposition from a bank official about fund transfers between business and personal accounts by the operators of the two Novato firms that orchestrated the fraud.
“Holy moly, I see transfers were allowed,” an Umpqua Novato employee messaged the branch manager, according to court documents.
With a U.S. District Court hearing date slated for Aug. 25 in San Francisco, the discovery phase that produced this deposition has ended, as Professional Financial Investors and Professional Investors Securities Fund investors pursue a class action suit against Umpqua and its Novato branch. This is where the firms’ Novato founder, the late Ken Casey, and convicted CEO Lewis Wallach of Encino conducted banking activity in what authorities refer to as a “classic” $330 million Ponzi scheme.
Casey died of a heart attack in May 2020, prompting an audit called by his widow that led to investigations by both the U.S. Securities and Exchange Commission and law enforcement. It also triggered a Marin County property selloff of PFI and PISF properties valued at $436 million, as well bankruptcy filings by the two companies and a 12-year prison sentence for Wallach.
While accused of living lavish lifestyles that include the purchase of Judy Garland’s Malibu mansion at the expense of others, the men once representing PFI and PISF, were alleged to have bilked more than…
