A court ruling has cleared the way for investors — many from Marin — who lost money in a $300 million Ponzi scheme to proceed with a class action lawsuit against Umpqua Bank.
The suit alleges that the bank aided and abetted the scheme by helping Novato-based Professional Financial Investors (PFI) and its principals, Ken Casey and Lewis Wallach, use new investor money to benefit existing investors.
Casey’s death in May 2020 led to the unraveling of the scheme. Wallach pleaded guilty to defrauding investors and embezzling over $26 million in investor money and is currently serving a 12-year prison sentence.
Chief Judge Richard Seeborg of the U.S. District Court for the Northern District of California ruled that the lawsuit would be certified as a class action on Dec. 16. Seeborg rejected a motion by Umpqua Bank for a summary judgment to dismiss the suit without a trial.
“The denial of the summary judgment means the judge thinks there is enough evidence here that a jury could find Umpqua to be liable,” said Linda Lam, the plaintiff’s attorney at Gibbs Law in Oakland.
PFI’s business model was to use investor-sourced funds to purchase and operate commercial real estate in Marin and Sonoma countries with the goal of selling them after they had appreciated. PFI had acquired 71 properties estimated to be worth $550 million when it eventually filed for bankruptcy.
The lawsuit asserts that 1,267 investors invested $454 million in PFI and only $100 million to $120…
