Victim of $20 million romance scam sues three US banks for negligence

A victim of a multi-million dollar romance scam has initiated legal action against three US banks, alleging negligence and complicity in the fraudulent scheme. Michael Zidell, the plaintiff, reportedly lost approximately $20 million to the scam, which involved transferring millions across accounts held at Citibank, East West Bank, and Cathay Bank without the institutions detecting or acting upon red flags.

According to the lawsuits, Zidell made 12 transfers totaling nearly $4 million to accounts at Citibank, 18 transfers totaling around $7 million to East West Bank, and 13 transfers totaling over $9.7 million to Cathay Bank. All transactions were allegedly directed by individuals behind a fake crypto investment platform operating under the guise of a romantic relationship, a common tactic used by scammers.

Zidell’s legal battle began with the lawsuit against Citibank, filed on June 24 in New York, which sought to hold the bank accountable for failing to detect and stop nearly $4 million in transfers. Just days later, on July 2, Zidell followed up with a second lawsuit in California, naming East West Bank and Cathay Bank as additional defendants.

Romance scams, commonly categorized under “pig butchering” scams, are a form of investment fraud in which scammers build fake online relationships with victims over weeks or months before encouraging them to invest in fraudulent platforms. Such schemes often begin on social media platforms, dating apps, or messaging services. Scammers gain the victim’s trust, typically posing as successful investors, and gradually introduce them to seemingly legitimate investment opportunities, often related to cryptocurrencies or other digital assets like non-fungible tokens (NFTs).

In Zidell’s case, he alleges that in early 2023, he was contacted on Facebook by a woman identifying herself as Carolyn Parker. As they began communicating, Parker introduced herself as a business owner based in California and slowly developed a relationship with Zidell over text and video chats on WeChat. A month into the relationship, Parker encouraged Zidell to invest in NFTs via a website called OpenrarityPro.com. She claimed to have earned millions and reportedly presented fabricated financial statements to gain his trust. Zidell began making transfers to various bank accounts provided by the platform, believing the funds were being routed through multiple banks due to a “large volume of customer deposits.” However, the entire scheme was a ruse, and by April 2023, the website had disappeared, along with his funds.

Zidell claims the banks should have detected clear red flags. In his lawsuits, Zidell argues the banks “turned a blind eye” to their regulatory obligations and enabled the scam by processing multiple wire transfers without proper scrutiny. As such, he claims the banks “materially aided” the scheme by letting the scammers open accounts and facilitate the suspicious transfers. According to court filings, the account at Citibank was registered under Guju Inc., a company whose account opening documents projected monthly wire activity below $250,000. Yet, Zidell claims his very first transfer to that account surpassed its stated annual revenue. He argues that such discrepancies, combined with the volume and frequency of the transactions, should have triggered internal investigations under Know Your Customer and Anti-Money Laundering regulations.

Across both suits, Zidell is seeking compensatory damages, legal fees, and interest, and has requested a jury trial. The outcome of these lawsuits could set a precedent for how financial institutions are held accountable for their role in facilitating fraudulent activities, particularly in the context of romance scams and crypto investment fraud. The case highlights the need for enhanced due diligence and regulatory compliance within the banking sector to protect consumers from such sophisticated and deceptive schemes.