Faughn et al v. JPMorgan Chase Bank, NA

Filing 53

AMENDED COMPLAINT against All Defendants filed by Rick D. Holtsclaw on behalf of All Plaintiffs.(Holtsclaw, Rick)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
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MARK FAUGHN, TERRIE FAUGHN,
MARVIN L. GLASS, CAROLYN S.
GLASS, THOMAS MCINTYRE,
DEBORAH MCINTYRE and ROGER
SPARKS,
Plaintiffs,
v.
JPMORGAN CHASE BANK, N.A.,
Defendant

Case No. 4:14-cv-00245

AMENDED COMPLAINT
COME NOW Plaintiffs, and for their cause of action against defendant JPMorgan Chase
Bank, N.A. (“JPMorgan”), state as follows:
PARTIES
1.

Plaintiffs Mark and Terri Faughn are citizens of Butler County, and reside at 71

County Road 454, Poplar Bluff, Missouri.
2.

Plaintiffs Marvin L. and Carolyn S. Glass are citizens of Butler County, and reside

at 60 Hawkeye Lane, Harviell, Missouri.
3.

Plaintiffs Thomas and Deborah McIntyre are citizens of Dent County and reside at

19816 E. Highway 32, Salem, Missouri.
4.

Plaintiff Roger Sparks is a citizen of Jackson County and resides at 524 N.E. Oaks

Ridge Drive, Lees Summit, Missouri.

5.

Defendant JPMorgan is a subsidiary of JPMorgan Chase & Co., a Delaware

corporation, with its principle place of business at 270 Park Avenue, New York, NY. JPMorgan
may be served through its registered agent, CT Corporation System, at 111 Eighth Avenue, 13th
Floor, New York, New York 10017.
JURISDICTION AND VENUE
6.

This Court has personal jurisdiction over defendant by reason of defendant’s

contacts within this judicial district.
7.

This Court has subject matter jurisdiction of this action pursuant to 28 U.S.C. §

1332(a)(1) based on total diversity with an amount in excess of $75,000.00 in controversy.
8.

Venue is proper pursuant to 28 U.S.C. § 1391(a)(2) because the Plaintiffs are all

residents of the State of Missouri and forwarded all issued payments to Millennium from the State
of Missouri.
9.

Divisional venue in Kansas City, Missouri is proper because defendants are non-

residents and Plaintiff Roger Sparks is a resident of Jackson County in the Western Division.
ALLEGATIONS COMMON TO ALL COUNTS
10.

William Wise (“Wise”) orchestrated a Ponzi scheme which involved using the

internet to advertise the sale of Certificates of Deposit (“CDs”) with unusually high rates of
interest. Investors’ money was then laundered and moved to offshore accounts controlled by Wise.
11.

The CDs were fake and were worthless.

12.

Plaintiffs collectively paid a total $1,878,500.00 for the CDs Wise and the Hoegels

purported to sell.
13.

William Wise (“Wise”) orchestrated the scheme.

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14.

Jacqueline Hoegel and her daughter, Kristi Hoegel, (collectively, “the Hoegels”)

assisted Wise with the scheme.
15.

In 1999, Wise established Millennium Bank (“Millennium”) in St. Vincent and

Grenadines in the Caribbean.
16.

Millennium purported to be a subsidiary of a Swiss bank known as the United Trust

of Switzerland.
17.

Wise and the Hoegels opened accounts at Washington Mutual Bank (“WAMU”) in

Las Vegas, Nevada for several Las Vegas limited liability companies, including UT of S, LLC,
United T of S, LLC and Sterling I.S., LLC (collectively, “Millennium Accounts”). All used the
same business address in Napa, California.
18.

Investors, including Plaintiffs, mailed checks to Napa, California, where the

Hoegels operated an office, or wired funds directly to bank accounts in the United States that were
designated by Wise and the Hoegels.
19.

The Hoegels took the investors’ checks to two WAMU retail bank locations on a

frequent basis, depositing hundreds of checks in the Millennium Accounts.
20.

Employees at WAMU, including a branch manager, Tamara Miller (“Miller”), and

a commercial banking officer, Bianca Greeves (“Greeves”), actively assisted the Hoegels with the
bulk deposits.
21.

Miller, Greeves and other WAMU employees helped Wise and the Hoegels to wire

funds from the Millennium accounts out to bank accounts which were in off-shore banking
locations and were controlled by Wise.
22.

WAMU ignored the activities of Wise and the Hoegels.

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23.

Miller and Greeves offered the Hoegels the ability to make deposits remotely and

to remotely wire funds off-shore.
24.

Given remote access, the Hoegels began moving investor monies in and out of the

Millennium Accounts from their own office.
25.

WAMU was aware of the rapid movement of money in and out of the Millennium

Accounts.
26.

JPMorgan acquired WAMU’s assets, including the Millennium accounts, from the

Federal Deposit Insurance Company on September 25, 2008, following WAMU’s failure.
27.

Wise and the Hoegels continued to make transactions with the investor monies after

JPMorgan’s acquisition of WAMU’s assets.
28.

JPMorgan was aware of fraudulent activity involving the WAMU accounts,

including the rapid movement of money from Millennium Accounts to offshore accounts.
29.

For six months, JPMorgan failed to take appropriate action to prevent the

movement of investor monies or the use of its accounts in fraudulent activity. During those six
months, JPMorgan continued to provide uninterrupted banking services to Wise.
30.

JPMorgan was legally required to notify a law enforcement agency of the illegal

activity the Millennium accounts, but failed to do so.
31.

While JPMorgan was aware of the fraudulent activity, but failed to prevent it or

notify law enforcement about it, over $16 million passed in and out of the bank, and ended up in
overseas accounts beyond the reach of U.S. law enforcement authorities.
32.

JPMorgan, by its acts and omissions, knowingly aided and abetted the Millennium

fraud, causing investors, including Plaintiffs, to lose their investment monies.

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33.

The loss of Plaintiff’s investment monies was a reasonably foreseeable result of

JPMorgan’s failure to notify law enforcement of the Millennium scheme.
COUNT ONE
AIDING AND ABETTING COMMON LAW FRAUD
Come now Plaintiffs, and for their cause of action against Defendant under Count One of
this Amended Complaint, state and allege as follows:
34.

Plaintiffs incorporate Paragraphs 1 through 33 of this Complaint as though fully set

forth herein.
35.

Wise and the Hoegels represented to the public and to the Plaintiffs that Millennium

was a St. Vincent & Grenadines bank offering Certificates of Deposit for sale, and that Millennium
was a subsidiary of a Swiss bank, UT of S.
36.

These representations were false and intended to deceive potential investors so that

Wise and the Hoegels could collect and steal investor funds.
37.

The Plaintiffs relied on Wise and the Hoegels’ representations in electing to

forward monies to them in exchange for fake certificates of deposit issued to them, which were
worthless.
38.

JPMorgan knew that Wise and the Hoegels were not conducting any banking

business, but were rather collecting and moving investor monies to accounts that Wise and the
Hoegels had established outside of the U.S.
39.

JPMorgan provided substantial assistance to Wise and the Hoegels, including, but

not limited to the following acts and omissions:
a.

Allowing Wise and the Hoegels to use JPMorgan bank accounts for
laundering and stealing investor monies;

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b.

Providing remote deposit and wiring services to Wise and the
Hoegels, which facilitated the theft of investor funds;

c.

Failing to close the Millennium Accounts after Defendant became
aware of fraudulent activity; and

d.

Failing to notify law enforcement about the ongoing illegal activities
by Wise and the Hoegels.

40.

Wise and the Hoegels were able to steal sums in excess of $16 million, including

monies invested by the Plaintiffs, as the direct and proximate result of JPMorgan’s failure to act
on its specific knowledge of the Millennium fraud.
WHEREFORE, Plaintiffs respectfully request judgment against Defendant under Count I
of this Complaint for such damages as are fair and reasonable together with their costs and fees,
for interest, and for such other and further relief as the Court deems just and proper under the
circumstances.
COUNT TWO
CONSPIRACY
Come now Plaintiffs, and for their cause of action against Defendant under Count Two of
this Complaint, state and allege as follows:
41.

Plaintiffs incorporate Paragraphs 1 through 40 of this Amended Complaint as

though fully set forth herein.
42.

Defendant JPMorgan engaged in a civil conspiracy with Wise and the Hoegels

through the acts and omissions alleged herein.
43.

The purpose of the conspiracy was to profit from the Millennium fraud.

44.

Defendant, Wise and the Hoegels had a unity of purpose and common design.

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45.

Defendant profited from the funds that Wise and the Hoegels funneled through the

Millennium Accounts.
46.

Defendant deliberately elected not to report the money laundering to law

enforcement.
47.

Defendant kept its knowledge and evidence of money laundering by Wise and the

Hoegels a secret for a period of time while money was moved from the Millennium accounts to
offshore accounts.
48.

By keeping the money laundering by Wise and the Hoegels a secret, Defendant

permitted Wise and the Hoegels to move the funds in the Millennium Accounts beyond reach of
recovery by U.S. law enforcement.
49.

As the direct and proximate result of Defendant’s participation in the conspiracy,

Plaintiffs were damaged.
WHEREFORE, Plaintiffs respectfully request judgment against Defendant under Count II
of this Amended Complaint for such damages as are fair and reasonable together with their costs
and fees, for interest, and for such other and further relief as the Court deems just and proper under
the circumstances.

Respectfully submitted,
/s/ Rick D. Holtsclaw
Rick D. Holtsclaw, MO#32866
HOLTSCLAW FIRM
2029 Wyandotte, Suite 100
Kansas City, Missouri 64108
Telephone: [phone]
Facsimile: [phone]
[e-mail]
ATTORNEY FOR PLAINTIFF
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REQUEST FOR TRIAL BY JURY
COMES NOW the plaintiff and hereby respectfully requests trial by jury of all issues so
triable in the above-captioned cause.

/s/ Rick D. Holtsclaw
ATTORNEY FOR PLAINTIFF70

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