Crypto Scam Victim Ropes 2 More Banks Into $20M Fraud Suit

The self-claimed victim of a crypto romance scam who recently sued Citibank for failing to catch red flags has just filed a second lawsuit targeting two other banks. 

Michael Zidell sued East West Bank and Cathay Bank in a California federal court on Tuesday, accusing the banks of turning “a blind eye to their statutory duties and obligations.”

He claimed he sent 18 transfers totalling nearly $7 million to the alleged scammers’ account at East West Bank, and made 13 transfers totalling over $9.7 million to an account at Cathay Bank.

Zidell sued Citibank on June 24, accusing it of ignoring the red flags in 12 transfers totaling around $4 million to accounts at the bank allegedly held by scammers.

Cointelegraph contacted East West Bank and Cathay General Bancorp, the parent company of Cathay Bank, for comment.

Scam NFT investments made in Facebook romance

Zidell claimed in his lawsuits against the banks that “Carolyn Parker,” a purported business owner, contacted him on Facebook in early 2023, and the pair formed a romantic relationship.

Parker allegedly told Zidell a month into the relationship that she’d made millions investing in non-fungible tokens, suggesting he do the same and directing him to a trading platform. 

Zidell decided to invest and, over the next few months, said he sent 43 transfers totalling over $20 million to various bank accounts given to him by the platform, which claimed it needed to process the funds at multiple banks due to a large volume of customer deposits.

He said by April 2023, the website for the platform “was suddenly gone,” along with his millions. 

“Romance scam. Rug pull. Pig butchering. These are just some of the terms to describe the scam that befell the Plaintiffs.”

East West and Cathay allegedly aided fraud

Like his complaint against Citibank, Zidell’s latest lawsuit seeks to hold East West Bank and Cathay Bank liable for negligence and as “aiders and abettors” of securities fraud.

“Defendants through their recklessness, materially aided Parker and her co-conspirators by opening bank accounts, providing services including wire transfers and allowing them to be used to perpetrate the NFT Enterprise scam,” the suit alleged.

Related: 5 ‘insidious’ crypto scams to watch out for this year

It also argued the two banks had a “duty to exercise due care in monitoring suspicious transactions,” but “failed to detect clearly suspicious transactions.”

Zidell said the “large, round numbers of funds, among other things, should have triggered the bank’s investigation into the suspicious activity.”

Banks liable for elder abuse, suit alleges

The complaint is also looking to hold East West Bank and Cathay Bank liable for “aiding and abetting elder abuse,” an accusation he didn’t make against Citibank.

Zidell doesn’t mention his age in the complaint, but California law defines an elder as those 65 years old and over.

His lawsuit seeks compensatory damages, legal costs and interest at a jury trial.

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