Executives of the two Bahamian banking companies named in a US federal court lawsuit, involving approximately 2,000 plaintiffs who claim they were defrauded of $158 million, said yesterday they have not been contacted regarding the lawsuit.<\/P><\/p>\n
Last week, the investors commenced legal action against Leadenhall Bank and Trust and Axxess International Ltd., the company contracted to process Leadenhall’s credit card business. <\/P><\/p>\n
The claimants – predominantly from Atlanta, Florida, Illinois, Maryland and South Carolina – allege that they each invested between $5,000 and $22 million with Cash 4 Titles.<\/P><\/p>\n
Atlanta-based company Cash 4 Titles reportedly ran a Ponzi scheme, which promised a tax-free return of up to 36 percent, using money obtained from existing investors to pay new investors.<\/P><\/p>\n
According to the suit, Leadenhall and Axxess lent legitimacy to Cash 4 Titles’ operations and were ultimately “critical in sustaining and attracting necessary additional cash flow to ensure that the prior investors would continue to receive some return on the investment.”<\/P><\/p>\n
Florida newspaper Sun Sentinel reported Monday that Cash 4 Titles operated 36 stores offering short-term, high-interest loans to borrowers who pledged their automobile titles as collateral. <\/P><\/p>\n
The lawsuit, meanwhile, further stated that the company took in more money from investors than it needed to maintain operations and diverted the funds. <\/P><\/p>\n
Additionally, the suit said Leadenhall and Axxess promoted Cash 4 Titles and their own services, while hosting investors on their trips to The Bahamas.<\/P><\/p>\n
In 1999, securities investigators – determining that Cash 4 Titles was operating a Ponzi scheme – ordered the company to cease operations. <\/P><\/p>\n
Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s.<\/P><\/p>\n
In the scheme, money from new investors is used to pay off earlier investors until the whole scheme collapses.<\/P><\/p>\n
On Tuesday Leadenhall Director William Jennings said he would not be able to comment on the suit as he had yet to be apprised about the action taken against his company.<\/P><\/p>\n
Said Mr. Jennings, “We’ve had absolutely no contact whatsoever and nothing has come through to me at all.”<\/P><\/p>\n
By Darrin Culmer, The Bahama Journal<\/B><\/p>\n","protected":false},"excerpt":{"rendered":"
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