Facts

Robert H. Shapiro operated a series of entities, known as the Woodbridge Group of Companies LLC, purportedly operating as a real estate investment company. Comerica Bank acted as the exclusive banker for Woodbridge. Through Woodbridge, Shapiro offered low-risk, high-yield investments backed by high-interest real estate loans to third-party commercial buyers in the form of promissory notes and other offerings. In reality, however, Woodbridge had minimal revenue aside from money raised through new investors and made few loans to independent borrowers. Unable to pay returns on investments owed to investors, Shapiro operated Woodbridge as a massive Ponzi scheme, paying the returns using new investor money. By the time the scheme ended, Woodbridge had taken in more than $1.22 billion from over 8,400 investors. After the Ponzi scheme fell apart, Shapiro was charged with multiple federal offenses, and he pled guilty to conspiracy to commit wire and mail fraud and tax evasion. Woodbridge investors faced losses of several hundred million dollars. Plaintiffs filed suit against Comerica Bank on behalf of themselves and on behalf of all others similarly situated.

PLAINTIFFS' CONTENTIONS: Plaintiffs contended that Comerica processed over $1.6 billion dollars in transfers among Woodbridge accounts; that Comerica's internal investigation and monitoring tools for detecting fraud, illegal transactions, and other suspicious activities raised hundreds of internal alerts warning Comerica of suspicious activity in Woodbridge accounts; that Comerica bankers ignored these alerts and continued to sign off on and process Woodbridge transfers, including after state regulators had ordered Woodbridge to cease operations; that Comerica was aware that Woodbridge was operating a Ponzi scheme; and Comerica continued to accept deposits of invetors' funds and process transfers at Shapiro's direction.

DEFENDANT'S CONTENTIONS: Defendant denied all wrongdoing and denied all of Plaintiffs' allegations.

Result

A settlement agreement was reached wherein Comerica admitted no wrongdoing but will fund a $54.2 million fund to settle the class action.