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Wells Fargo settles Ponzi scheme lawsuit for more than $3 million

A Wells Fargo Bank branch in Los Angeles.
A Wells Fargo Bank branch in Los Angeles. AP

Thousands of victims — many of them working-class Haitian Americans from South Florida — are one step closer to receiving restitution for a Ponzi scheme that bilked them out of at least $30 million.

A federal judge on Friday approved the terms of a $3.175 million settlement between Wells Fargo Bank and a receiver appointed by the U.S. Securities and Exchange Commission to run the companies once owned by convicted scammer George Theodule.

The settlement came soon before a jury was expected to deliver its verdict after a 16-day trial.

“We’ve reached the point where we’ve finally gotten enough funds to start the process of repaying Theodule’s victims,” said W. Barry Blum, an attorney who represented the receiver.

In a lawsuit filed in federal court in West Palm Beach five years ago, Jonathan Perlman — the receiver appointed to handle Theodule’s companies after his scheme collapsed — alleged that Wachovia Bank had turned a blind eye as Theodule moved millions of dollars of investors’ money in and out of the bank during the spring of 2008. Wells Fargo purchased Wachovia at the end of that year.

Previous accounts held by Theodule, who wasn’t licensed as a broker, were shut down for suspicious business activity by Washington Mutual before the bank’s own collapse.

"Had Wachovia simply called WAMU, it would have, of course, learned that WAMU had determined that the transactions Theodule was conducting were inconsistent with any legitimate business," the suit said.

In a statement, Wells Fargo called the settlement “a fair resolution of the parties' dispute.”

Settlements have also been reached with Bank of America ($2.75 million) and TD Ameritrade ($1.25 million). Another lawsuit seeks $13.9 million in damages from OptionsXpress, an online brokerage owned by Charles Schwab Corp.

Between the summer of 2007 and the end of 2008, Theodule, billing himself as a Christian pastor, used his radio show and South Florida’s tight-knit, Haitian-American community to attract millions of dollars to his so-called investment fund. Theodule promised to double the money of those who entrusted him with what often amounted to their life savings.

Anithe Grigou Saint Jean, 58, of Plantation, said a local pastor urged her to invest in Theodule’s fund, saying he had turned a $15,000 investment into $30,000 within three months. Saint Jean, a nurse’s aide and devout Christian born in Haiti, was so enticed by the get-rich-quick scheme that she took out an $80,000 line of credit on her home.

“In six months, they said I would have $300,000,” Saint Jean said.

In fact, Theodule’s operation — run through small investment clubs with names such as Wealth Builders and Dream Makers — was a scam. While he paid some early investors back, Theodule stole the rest to finance a lavish lifestyle for himself and his associates while using victims’ money to make disastrous bets that the stock market would go up just as the financial crisis hit.

“I lost everything,” said Saint Jean, whose daughter and family are now helping her get by. “It hurt so bad. I don’t have no savings.”

Theodule pled guilty to wire fraud in federal court in 2013. He was sentenced to 12 1/2 years in federal prison last year.

Saint Jean said she was able to get her mortgage refinanced after explaining to her bank that she had been the victim of a scam. She’s happy she can keep her home.

“But I’ll be paying off my mortgage until I’m 98 years old,” she said. “Can you believe that?”

Victims of Theodule’s Ponzi scheme can seek restitution by calling the toll-free number 888.405.5254 or visiting the website http://creativecapitalreceivership.com/

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