JPMorgan, which is accused of aiding Ponzi scheme Bar Works, calls the plaintiffs’ discovery-related applications unfounded.
JPMorgan Chase & Co. (NYSE:JPM) and JPMorgan Chase Bank, N.A., which are accused of aiding and abetting Renwick Haddow and his Bar Works fraudulent scheme, have opposed discovery-related demands by the plaintiffs in a civil lawsuit launched in a New York court. Let’s recall that 27 Chinese investors, defrauded by Ponzi scheme Bar Works, are suing the bank for a total of $3,050,000 in damages.
The investors have asked the New York Southern District Court to compel JPMorgan Chase to provide them with loads of data, including all documents related to Bar Works, Renwick Haddow, Jonathan Black, Zoia Kyselova aka Zoe Miller aka Zoia Haddow aka Koia Kyselova.
On Wednesday, January 3, 2018, the law firm representing the bank filed a Letter objecting to the discovery-related demands made by the plaintiffs. The defendants argue that the plaintiffs’ discovery-related applications are unfounded, because the plaintiffs simply are not entitled to discovery at this stage.
In addition, the bank will be prepared to file a motion for a protective order, pursuant to Rule 26(c), staying the discovery currently sought by the plaintiffs in this action until the Court rules on JPMorgan Chase’s motion to dismiss. There is good cause for such a stay here, the defendants say, as the plaintiffs seek broad and burdensome discovery.
Let’s recall that the defrauded investors allege that JPMorgan had actual notice that Haddow was laundering investors’ money, as a result of Bar Works Inc’s deposits being immediately transferred out of the business operating account to known overseas money laundering havens such as Mauritius, the Seychelles and Morocco.
According to the plaintiffs in the case, there were numerous “red flags” that JPMorgan should have noticed and should have reacted to. The list of such “red flags” include suspicious wire activity with offshore entities. “Through the bank account with JPMorgan, Haddow frequently engaged in transactions with high-risk, offshore entities, such as so-called “binary trading” operations”, the plaintiffs say.
The plaintiffs assert seven causes of action against JPMorgan: (i) knowing participation in a breach of trust; (ii) aiding and abetting embezzlement; (iii) aiding and abetting fiduciary breach; (iv) aiding and abetting conversion; (v) unjust enrichment; (vi) commercial bad faith; and (vii) gross negligence.
The case is captioned ZHAO et al v. JPMorgan Chase & Co., et al (1:17-cv-08570).