Los Angeles, CA: Bank of America has been named as a defendant in a consumer fraud class action lawsuit filed in Los Angeles Superior Court, Central District, on behalf of hundreds of LA homeowners and investors who lost millions of dollars in a highly complex Ponzi scheme run by one of Los Angeles' most notorious fraud operators, Juan Rangel.
The lawsuit, filed on behalf of the mostly Latino plaintiffs, alleges that Bank of America employees as well as bank management were aware or should have been aware of the Ponzi scheme and despite such knowledge provided banking services to Juan Rangel and his associates. Notably, Dony Gonzalez, a former Bank of America branch manager was indicted and pled guilty to receipt of bribes by Juan Rangel. The lawsuit alleges that from about November 2007 to July 2008, Rangel used his firm, Financial Plus Investments, as well as other financial companies he owned, to defraud middle-class working families through investment, mortgage and foreclosure rescue schemes that netted Rangel about $30 million. Rangel's firms shut down in July 2008 and Rangel was arrested by federal agents in August 2008.
According to the lawsuit, Rangel preyed on Spanish-speaking, working class families in his own community. He used common ties to get them to invest money that they could not afford to lose. Rangel and fellow defendants told investors that their money would be used to buy and sell properties and make high interest loans to distressed homeowners. Rangel guaranteed returns as high as 60 percent each year, and told them that their investments were safe because they were guaranteed by titles to real property.
In return for the funds invested with Financial Plus, Rangel and others acting at his direction provided investors with promissory notes that guaranteed a high rate of return, typically five percent each month, as well as the return of their invested principal. But, according to the lawsuit, only a small fraction of the money that Financial Plus received from investors was used to invest in real estate or to make loans to distressed homeowners. Instead, Rangel and Financial Plus used the money from other investors, or the investors' own principal, to make payments to investors each month that Rangel falsely characterized as investment profits. Moreover, Rangel diverted a significant portion of the invested funds for his own personal use.
According to the lawsuit, Rangel not only took investor monies, he also operated a mortgage fraud scheme that targeted distressed homeowners who had equity in their homes but were behind on mortgage payments. Rangel offered these homeowners assistance in bringing their loans current and saving their properties. As part of these transactions, however, the homeowners' equity in their properties was invested with Financial Plus and, in some cases, Rangel also took title to their properties.
The Class Action Complaint, case number BC464530 is filed with the Los Angeles Superior Court, and is assigned to Judge Emilie H. Elias, Dept. CCW-324.
