Northbrook Bank & Trust has been named as a defendant in a class action involving an alleged $9 million Ponzi scheme.
John Praither, of Virginia, and Marcello Caliva, of North Carolina, filed a complaint Oct. 17 in Cook County Circuit Court against the bank and Tamer Moumen, of Virginia, who in May 2017 pleaded guilty to a federal wire fraud violation, which yielded a 10-year prison sentence and an order to pay $7.5 million in restitution.
According to the complaint, Moumen duped investors into thinking he managed hedge funds using three accounts at Northbrook Bank: Crescent Ridge Volatility Fund, Crescent Ridge Energy Fund and Crescent Ridge Capital Partners. The men said as money came in to the Volatility and Energy funds Moumen quickly moved it to the Capital Partners account, and from there moved it to personal bank or brokerage accounts “where he traded the money into oblivion or simply stole the money.”
Over three years, about $6.6 million went into the accounts, mostly through wire transfers, according to the complaint. Praither invested more than $731,000 and Caliva put in $240,000, just days before Moumen bought a Tesla for $90,188. They said Moumen hasn’t paid any of his court-ordered restitution and are suing to recover losses because he “could not have perpetrated this scheme without the assistance of the primary banking institution he utilized … which lent this scheme an air of legitimacy that plaintiffs relied on and provided critical support, including at times when the scheme would have otherwise collapsed.”
The class would include anyone who invested in either the Volatility or Energy funds from February 2013 through February 2017 and whose capital was deposited into one of the three Northbrook Bank accounts.
According to the complaint, “Moumen had no experience managing a hedge fund or investment firm,” had suffered substantial personal financial loss and was using “investor money to support his lifestyle and pay personal expenses.” The plaintiffs said his advertised connection to a reputable bank bolstered his reputation and noted many class members belonged to the same mosque, alleging Moumen “used his religious affiliation to attract other Muslim investors, which has the effect of affinity fraud.”
Of the $6.6 million deposited in the accounts in question, “all but $1,300” came from investors, according to the complaint, which further noted the bank took in an additional $776,000 from putative class members in February 2017 two months after the FBI subpoenaed the bank as part of its investigation into Moumen.
The complaint accuses the bank of failing to adhere to Bank Secrecy Act and Financial Institutions Examinations Counsel standards and regulations that should have indicated Moumen’s conduct was illegal or suspect. Although the plaintiffs said the bank knew Moumen as a customer, per requirements, it nonetheless “engaged in banking transactions that were directly related to the scheme,” ignoring the alleged reality that “Moumen was using Northbrook Bank accounts to engage in illicit activity.”
Had the bank not authorized Moumen’s suspicious fund transfers, the complaint said, the fraud would’ve collapsed due to insufficient balances before the FBI detected the scheme.
“It is curious that Moumen would choose a small Chicago area bank as the partner in his Ponzi scheme,” according to the complaint, “and discovery will likely show a nefarious reason or some deeper personal connection resulting in this choice of Northbrook Bank for his scheme.”
Formal claims against the bank include negligence and aiding and abetting breach of fiduciary duty. The complaint also accuses Moumen of unjust enrichment. In addition to a jury trial and class certification, the men want the court to award financial damages, including to strip Moumen of any fees and commissions he collected for selling investments to class members.
Representing the plaintiffs, and seeking to serve as putative class attorneys, are lawyers from Stoltmann Law Offices, P.C., of Chicago.