Bank of America has asked U.S. District Judge Rosemary Collyer to hear oral arguments in its bid to be dismissed as a defendant in a lawsuit that alleged it aided and abetted a Ponzi scheme operated by alleged racketeers associated with Florida-based AdSurfDaily Inc.
Federal prosecutors seized at least $79.8 million from 15 bank accounts controlled by ASD President Andy Bowdoin or Golden Panda Ad Builder President Clarence Busby, saying the funds were the proceeds of a criminal enterprise that engaged in wire fraud, money-laundering and the sale of unregistered securities.
Three ASD members sued Bowdoin, Busby and ASD attorney Robert Garner under federal RICO statutes, claiming the men had engaged in racketeeringÂ — including indictable offenses — with unnamed others.
Bank of America was not named a RICO defendant. Rather, the bank was accused of aiding and abetting the RICO defendants in a fraudulent scheme.
The bank said the plaintiffs had failed to show that it had aided or abetted the RICO defendants in any way, repeating an earlier assertion that “banks are not guarantors” of their customers’ conduct.
“No law holds that a bank could be held liabile for conducting legitimate business activities with an entity that, as it turns out, also happens to be committing a fraud against others,” the bank argued. “Nor can there be if banks are to conduct business.”
The lawsuit was filed in January. In April, plaintiffs Mike Collins, Frank Greene and Natures Discount Inc. amended the complaint, alleging that Bank of America employees were moonlighting as ASD employees in Florida while ASD was commiting fraud in plain sight.
Collins, Greene and Natures Discount said that a “majority” of employees of Bank of America’s branch in Quincy, Fla., also worked for ASD, including the branch manager.
Bank of America, however, said moonlighting was “lawful” conduct.
“The alleged moonlighting activities of Bank of America employees did not occur within the scope of duty of the employees’ employment with Bank of America, and Plaintiffs do not allege that they did,” the bank argued.
“This conduct, as lawful as it is, cannot be imputed to Bank of America,” the bank continued. “Regardless, Plaintiffs alleged no facts demonstrating which Bank of America employees knew that ASD’s conduct was fraudulent, how they learned this, when or how they intentionally aided the scheme in some way.”
Bowdoin is the sole defendant in the RICO case not to have responded to the complaint. Prosecutors said he signed a proffer letter in the federal case and acknowledged ASD was operating illegally.
In January, Bowdoin submitted to the forfeiture. He changed his mind in late February and began to file pro se motions, chiding prosecutors by saying his filings “should really get their attention.”
Bowdoin promised to hold a conference call to update members nearly three months ago, but he has not done so. He also did not inform them of the proffer letter prosecutors said he signed or explain why he has not responded to the RICO complaint filed nearly five months ago.