The company wired over $7.4 million for what it believed was a legitimate business deal to another business’s accounts at the bank. The company was not a customer of the bank. The owners of the receiving business (the “scammers”) were using multiple accounts the business had with the bank to fraudulently obtain money from the company and others. The company alleged that the bank had knowledge of the scammers’ fraudulent scheme. Specifically, the company argued that there were mismatches between the name on the accounts and the designee on the wire transfers, large cash transactions, large transfers sent in round dollar amounts, repetitive transfers, and several accounts with insufficient funds or bounced checks, all of which the bank was aware of when it continued to process the wire transfers. It also alleged that the scammers’ personal client banker had intimate knowledge of its accounts and business dealings, such that she would have been aware that the activity in the accounts did not match the stated purpose of the accounts and that the indicated fraudulent activity. The company brought two claims against the bank—(1) aiding and abetting fraud; and (2) aiding and abetting conversion—for its role in facilitating the scammers’ fraudulent scheme. The bank moved to dismiss both of the company’s claims against it, arguing the company had failed to sufficiently plead claims for aiding and abetting.
In FW Distrib., LLC v. J.P. Morgan Chase Bank, N.A., No. 24-cv-21385, 2025 WL 1330210, 2025 U.S. Dist. LEXIS 87073 (S.D. Fla. May 7, 2025) (opinion not yet released for publication), the court dismissed the creditor’s claims against the bank for aiding and abetting with prejudice. The court first explained that under Florida law to assert an aiding and abetting claim, a plaintiff must allege “‘(1) an underlying violation on the part of the primary wrongdoer; (2) knowledge of the underlying violation by the alleged aider and abet[o]r; and (3) the rendering of substantial assistance in committing the wrongdoing by the alleged aider and abettor.’” Lawrence v. Bank of Am., N.A., 455 F. App’x 904 (11th Cir. 2012). Applying Florida law, the court asserted that generally banks do not have a duty of care to non-customers, and, therefore, there is a high standard for finding a bank liable to a non-customer for aiding and abetting. The court agreed with the bank’s argument that there is a specific requirement that a defendant have actual knowledge of the fraud to demonstrate liability. The court found that alleging ignored red flags (such as alerts or unusual activities), knowledge of fraud due to freezing of accounts, or negligence, or making conclusory statements of actual knowledge was not enough; rather, the complaint must have alleged “specific facts that [gave] rise to a strong inference of actual knowledge” of the fraud. The court explained that all the alerts and unusual activity that the company alleged in its complaint did not indicate the bank had knowledge of the fraud, but rather that the bank “merely…[had] information indicating suspicious activity.” The court went further and found that even if the company had alleged actual knowledge of the fraud, the company failed to adequately allege substantial assistance. “A defendant does not provide substantial assistance unless his action, or inaction, was a ‘substantial factor in causing the [underlying violation].’” Pearson v. Deutsche Bank AG, No. 21-cv-22437, 2023 WL 2610271, 2023 U.S. Dist. LEXIS 49783 (S.D. Fla. Mar. 23, 2023). The court noted that passive conduct, such as failing to close suspicious accounts, was insufficient and that inaction “constitutes substantial assistance only if the defendant owes a fiduciary duty directly to the plaintiff.” The court cited to the Eleventh Circuit, which previously found that allegations that a bank allowed a customer to do regular bank activities (create accounts, transfer funds, withdraw funds, or take out a line of credit) were not sufficient to establish that a bank substantially assisted in the customer’s fraud, as such activities were “passive routine banking service[s].” Ultimately, the court dismissed the company’s complaint with prejudice for failure to cure deficiencies in its complaint.
By Josie McClure [email protected]
Edited By Kristin Meurer [email protected]
Edited By Hayden Mariott [email protected]