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Fraud claims central focus of new lawsuit against U.S. Bank

Florida residents may be aware of a new twist in the ongoing legal battles between U.S. Bank and Peregrine Financial Group. A lawsuit has been filed by the son of Russ Wasendorf Sr., who recently pleaded guilty to a range of crimes connected to the financial scandal. The new suit makes fraud claims against U.S. Bank, claiming the institution assisted Wasendorf Sr., former CEO of Peregrine, in lying to regulators concerning the misuse of customer funds during the investigation.

Wasendorf Jr. has filed the suit in the hopes that a favorable outcome will allow he and his wife to rescind a number of business loans that they personally guaranteed. The loans total in the millions, and are required to be paid using the couple’s personal assets. The lawsuit makes the claim that any agreement concerning the personal guarantee of loans should be void due to the bank knowingly making false assurances that the financial standing of Peregrine was ‘in good order.’

In addition, the suit alleges that U.S. Bank intentionally failed to maintain customer funds in a separate account, according to regulatory guidelines. In fact, the claim is made that U.S. Bank was aware that Wasendorf Sr. was moving funds from corporate accounts for unauthorized uses. The suit also claims that a bank employee falsely represented to auditors that an account held an amount of $7.2 million, when in fact it contained $221 million, although the employee did later correctly report the amount.

As this case moves to court, more details surrounding these fraud claims will likely surface. While U.S. Bank is planning to vigorously the allegations, a win for the Wasendorf’s could bring additional public scrutiny to not only U.S. Bank, but to other institutions within the banking industry. This case illustrates the complexities that can arise when charges of fraud are leveled, as well as the complicated legal approach that is required to defend against them, whether they arise in Florida or elsewhere.

Source: Boston.com, “US Bank: Lawsuit in fraud scandal ‘without merit’,” Ryan J. Foley, Sept. 18, 2012

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