“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.
