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Judge Allows Class Action Against HSBC USA to Proceed for Allegedly Assisting Ponzi Scheme

Court Denies HSBC USA’s Motion to Dismiss Alleged Ponzi Scheme Case Citing Sufficient Allegations in Complaint Regarding Alleged Knowledge and Substantial Assistance to WCM777 Fraud.  United States District Judge Allows Class Action To Go Forward Against HSBC USA.

Attorneys Julio J. Ramos, Steven M. Nunez and the Ward Hagen, LLP law firm obtained a significant legal victory in a class action against HSBC USA. Allegedly, the defendant maintained a correspondent banking account for HSBC Hong Kong. Correspondent banking is a practice in which the U.S. bank facilitates wire transfers between foreign financial institutions and their customers, even though the U.S. bank does not have a direct relationship with the institution’s customers.

Allegedly, between July and December 2013, thousands of investor victims of the WCM777 fraud, wire transferred over USD $37 million to HSBC Hong Kong after several United States regulators had commenced enforcement proceedings against WCM777 accounts in the United States. Allegedly, as its correspondent bank, HSBC USA processed many of these wire transfers.

Judge Wright’s ruling specifically stated: “Because Rule 9(b) provides that ‘malice, intent, knowledge, and other condition of mind may be averred generally,’ and because Plaintiffs have alleged knowledge of the fraud, the Court finds that Plaintiffs have adequately satisfied Rule 9(b)’s pleading requirements. See, e.g., Neilson, 290 F. Supp. 2d at 1120 (‘courts have found pleadings sufficient if they allege generally that defendants had actual knowledge of a specific primary violation.’) And, as in Gonzales, Plaintiffs averred sufficient facts for the Court to draw a reasonable inference in support of their allegation of aiding and abetting fraud. The Court therefore denies the Motion with respect to this claim.”

Judge Wright also denied HSBC USA’s attempt to strike the class action allegations.

The case is Ramiro Giron v. Hong Kong and Shanghai Bank Company, Ltd., No. 2:15-cv-08869-ODW-JC