One at a Time: The Payne Case

This one was filed in the LA Court system back in March against City National Bank and Patrick Brian Fitzwilliam.  Looking at the case summary, it seems to be going better than the Nairn case, which looks like it’s on life support.

This class action suit is only open to those who lost money with NASI and who are over the age of 65 (they’re going for an elder abuse claim, in addition to others). Considering that many of the investors were elderly at the time the Dickwad Duo convinced them to lose their life savings, this is not a bad angle.  Unfortunately, not all were elderly so…that…sucks.

In any event, the complaint outlines some facts and a bit of a timeline.  Of course, these facts will have to be proven, but it’s interesting nonetheless.

Fitzwilliam became Senior Vice President and the branch manager for the Woodland Hills branch of the bank in 2004. By this time, NASI had grown to one of the largest depositors at the branch. Whenever deposits were made, Wishner would almost always bring them to Fitzwilliam to deposit. During those visits, Ed would also initiate transfers between bank accounts to cover the checks.  In 2004, Fitzwilliam told Joel that he knew that the ATM business profits were not being deposited at City National Bank, but assumed that they were being deposited elsewhere.

In 2006, Fitzwilliam invested with NASI and told Joel that he had to use a business that he and his wife Betty Saleh had registered.  He told Joel not to tell anyone at the bank due to the conflict of interest. Also in 2006, the bank requested documentation about the ATMs, and Ed responded by threatening to move their business to a different bank.

By 2009, Fitzwilliam was a banking reference for NASI so they could lure in new victims and retain old ones.  Joel told Fitzwilliam that he was only allowed to disclose the bank balance of the NASI accounts. It was around that time that the whole Madoff fiasco was happening, so one of the investors, known in the complaint as JC contacted Fitzwilliam.  He assured JC that NASI wasn’t a Ponzi scheme.  JC, using the knowledge that NASI owned all the ATMs, attempted to calculate the monthly net income (income after expenses) and determined that NASI was raking just under $1 million per month.  He asked Fitzwilliam if the bank records reflected that to which Fitzwilliam agreed that it did.

Still, in 2009, Fitzwilliam had NASI buy back half the ATMs he leased, assuring that he would pull a profit no matter what.  His wife was fired from Wedbush for violating securities laws and engaging in deceitful practices.  A long list of deceitful practices.

Now, as branch manager, Fitzwilliam would have to review a daily report about which accounts have checks trying to clear which will bounce. Prior to August 2014, he would contact Ed and Ed would assure him that the amount would be transferred.  Fitzwilliam would then allow the checks to clear anyway.  Between 2006 and 2014, he allowed 390 checks for almost $800k to clear the bank that otherwise would have bounced.   The examples don’t really provide much of a pattern (and are about $100k shy of the total), but August 5, 2009 was the absolute worst of it.  That time NASI nearly bounced 131 checks for a grand total of $363,291.10.  The bank covered it, on Fitzwilliam’s say-so.

That pretty much wraps it up.

It’s hard to tell how it all stands since those LA Court “dockets” are just awful, but it doesn’t look like anything catastrophic has happened.