Wells Fargo Bank NA is facing a proposed class action in Florida federal court, accused of aiding and abetting a $300 million Ponzi scheme that deceived over 1,000 investors, many of whom were elderly and lost substantial life savings.

Plaintiff Fanny Millstein filed the complaint on Tuesday, alleging that from 2011 to 2021, Wells Fargo was aware of and assisted in the Ponzi scheme orchestrated by Marshal Seeman, Eric Holtz, and Brian Schwartz through several entities, including Para Longevity, Centurion, and National Senior Insurance Inc. While these individuals are not defendants in the current suit, they were named in a separate action filed by Millstein in 2021, which was voluntarily dismissed.

The complaint alleges that National Senior Insurance and its agent sold promissory notes to investors, claiming they were secured by life insurance policies known as "stranger-originated life insurance" (STOLIs) and life settlements. Investors were promised returns funded by the death benefits of these policies.

"However, as Wells Fargo knew, instead of properly using new investor money to fund premiums for new STOLI policies, the scheme operators took a substantial portion of those newly invested funds to pay existing investors, and further looted significant sums through improper, exorbitant, or fictitious fees and expenses," the complaint states.

Wells Fargo allegedly knew that many of the STOLIs serving as collateral were fraudulently pledged or transferred to other lenders through the Centurion companies. Instead of reporting or stopping the fraud, Wells Fargo chose to assist and profit from it, according to the complaint.

From 2011 to 2021, Wells Fargo had a comprehensive view of the scheme through its role as the primary depository bank for the investment funds. The bank allegedly facilitated improper transfers of funds, including round-trip transactions of new investor money to pay existing investors and the pilfering of funds by the scheme operators.

Millstein claims the bank must have known the notes were not properly registered as securities, did not qualify for exemption from registration, and were sold by unlicensed agents.

The lawsuit states that the scheme left many investors without their life savings and reliant solely on Social Security benefits for retirement. The scheme was uncovered in 2021 by the Florida Office of Financial Regulation, which brought suit in Florida state court. Daniel Stermer, appointed receiver for National Senior Insurance and other entities, determined through a forensic review that the scheme and Wells Fargo's actions substantially damaged the entities.

"As a direct and proximate consequence of Wells Fargo's knowing and substantial assistance of the scheme, the [Para Longevity companies] and other receivership entities had their assets stolen, the STOLIs they purchased, pledged and ultimately foreclosed on by third parties, and their bank accounts pilfered by the scheme operators," the complaint said.

Stermer's review led to a supplemental proceeding against Wells Fargo for aiding and abetting the scheme. Millstein alleges that without Wells Fargo's involvement, the scheme would have stalled, allowing the entities to engage in legitimate investments.

"The scheme raised more than $400 million in capital since 2011 through the sale of the notes, and there are currently more than $300 million in outstanding notes held by more than 1,000 current investors," the complaint states. "Even though the notes have fully matured, the [Para Longevity companies] and other receivership entities do not possess any significant underlying assets to pay back the monies owed to plaintiff and the class."

Wells Fargo declined to comment, and representatives for Millstein and Seeman did not immediately respond to requests for comment. Schwartz and Holtz are deceased.

The suit seeks damages, civil penalties, and a jury trial.

Millstein is represented by Seth Miles, David M. Buckner, and Brett E. von Borke of Buckner & Miles, Scott L. Silver, Ryan A. Schwamm, and Peter M. Spett of Silver Law Group, and James D. Sallah and Joshua A. Katz of Sallah Astarita & Cox LLC.

The case is Millstein v. Wells Fargo Bank NA, case number 1:24-cv-22142, in the U.S. District Court for the Southern District of Florida.