The Seminole Tribe of Florida is suing Wells Fargo (WFC). The Tribe claims that the bank mismanaged its funds for years while charging it millions of dollars in fees that were not warranted. The plaintiff is claiming over $100M in losses.
The Seminole Tribe said that it set up a trust account with Wachovia Bank, which was Wells Fargo’s predecessor in interest, for the purpose of using the revenue from gaming facilities to help the Tribe garner self-sufficiency, economic development, and strong governments. Rather than helping the Tribe achieve its goals, the bank, instead, purportedly set up confusing and deficient accounts statements to conceal unauthorized fees. The tribe also said that they lost at least $100M from mismanagement and poor investment strategies. The Seminole Tribe contends that the bank failed to give proper investment advice, invested in a deficient portfolio to bilk minor beneficiaries, and charged fraudulent fees.
The trust fund is the Seminole Tribe of Florida Minors’ Per Capita Payment Trust Agreement. It was set up in 2005. The Tribe said it put in $16.8M into the trust during the first year, with the Trust principal eventually growing to about $1.4B.
According to the Tribe’s complaint, in 11/07, it merged its 2005 trust into three trust investments. Wachovia was reappointed as trustee. Wachovia then revised the fee schedule of the trust five times in five years. The Tribe contends that even though the fees were adjusted downward, Wachovia was also collecting fees that were concealed from the minor beneficiaries. It was last year while reviewing the account records of the Minor’s Trust that the tribe claims that they discovered an elaborate fraud involving the unauthorized fees.
The Seminole Tribe said that last year in the year before, the unauthorized fees ate up over 25% of the gains that the account had earned. The tribe said that when it brought up the fraudulent fees, Wachovia representatives continued to try to hide the scam. Soon after, however, the Trustee acknowledged the fraudulent charges that the tribe minor beneficiaries were asked to pay over the years.
Now, the tribe wants compensatory damages for breach of fiduciary duty, breach of trust, gross negligence, unjust enrichment, professional malpractice, and other violations.
Seminole Tribe Says Wells Fargo Ripped It Off, Courthouse News, January 22, 2016
Wells Fargo Seeks Dismissal Of Tribe’s $100M Fraud Suit, Law360, March 3, 2016