12:42pm PT by Ashley Cullins
Wells Fargo Hit With Film-Finance Fraud Suit
Wells Fargo is facing a multimillion-dollar film-finance fraud lawsuit, capping off a 2016 of legal woes for the banking giant.
British financiers Vandermolen Film Co. and Bridgeworks Media Capital claim Wells Fargo employees conned them into funding bridge loans and they're owed at least $14 million, according to a complaint filed in Florida state court last week.
"Upon information and belief, the brazen and repeated acts of fraud, theft, conversion, and negligence on the part of the WELLS FARGO DEFENDANTS detailed in this Complaint are the result of systemic defects in the way the WELLS FARGO DEFENDANTS manage, train, supervise, hire, reward, and punish their employees," writes attorney Roy Altman in the complaint.
The suit notes that earlier this year Wells Fargo made headlines when it was revealed its employees had opened more than 2 million accounts that may not have been authorized by customers in order to meet sales goals. That resulted in $185 million in fines and a $5 million payout to customers.
Here, the financiers claim they were purposely misled into agreeing to participate in short-term loans to fund films and the defendants stole and diverted their money as part of an "extensive fraudulent enterprise."
It was supposed to work like this: The financiers would deposit funds worth half the budget for a film into a Wells Fargo account that would remain untouched until Forrest Capital, a purported film production financing and investment business, had deposited the other half from its own assets. Then, Wells Fargo would issue a line of credit for the full amount. Half of that credit would be used to pay back the financiers and the other half would be used as equity to finance the remaining cost of the film.
Vandermolen and Bridgeworks say they were assured that Wells Fargo had successfully funded many similar lines of credit with Forrest Capital, that Forrest had access to hundreds of millions in assets at Wells Fargo, and that their funds could not be withdrawn from the accounts without their express written consent.
According to the complaint, none of those assurances were valid.
The suit names three individual bank employees as defendants: Benjamin Rafael, Hernan Bermudez and Paul Zoch. It also claims there have been no fewer than eight civil lawsuits related to similar schemes involving Forrest Capital — five of which named the Wells Fargo defendants in this complaint.
The financiers say they are owed more than $14 million in unpaid principal from five loans, plus interest, and are seeking compensatory and punitive damages.
Wells Fargo declined to comment on the suit at this time.