Leadenhall Bank & Trust, a Bahamian private bank, and its credit card affiliate, Axxess International Ltd., were sued in federal court last week by about 2,000 people who loaned money for Cash 4 Titles operations.
Cash 4 Titles was shut down in 1999 when securities investigators said the Atlanta-based company was running a Ponzi scheme that paid a promised tax-free return of up to 36 percent to old investors with money from new ones.
William Jennings, a director of Leadenhall, said Monday that he was unaware of the lawsuit and had no comment on it. A phone number for Axxess reached a recording saying it was not in service.
Cash 4 Titles operated 36 stores offering short-term, high-interest loans to borrowers who pledged their auto titles as collateral, but the lawsuit said it was taking in more money from investors than it needed for operations and diverting it.
Owner Charles Homa and chief fund-raiser Michael Gause were sent to prison after Homa turned on his former partner and went to federal investigators in New York, the lawsuit said.
While denying any wrongdoing, the Bank of Bermuda has paid about $50 million to settle claims that its Cayman Islands branch supported the fraud. A court-appointed receiver has recovered another $30 million.
“The investors have not yet been paid 100 percent of their losses,” one of their attorneys, Lawrence Kellogg, said Monday.
Leadenhall and Axxess promoted Cash 4 Titles and their own banking services, including account offerings and credit cards, while hosting investors on their trips to the Bahamas, the lawsuit said. Cash 4 Titles investors accounted for 80 percent of Axxess’ business.
James Owen, a Leadenhall officer, was part of investor recruitment seminars and traveled to North Carolina as part of the fraud, the suit said.
Leadenhall and Axxess vouched for Cash 4 Titles, helped provide an air of legitimacy and were “critical in sustaining and attracting necessary additional cash flow to ensure that the prior investors would continue to receive some ‘return’ on the investment,” the suit said.
Millions in Cash 4 Titles money was moving through Leadenhall and Axxess on a daily basis just before its collapse, the suit said.
The racketeering suit seeking class-action status for investors is the latest in a series of lawsuits, prosecutions and enforcement actions involving Cash 4 Titles.
Investors included Jacksonville Jaguars running back Fred Taylor and former college football coaches Jim Carlen, Brad Scott and Danny Ford, who were brought in by sports agent William “Tank” Black.
The lead plaintiff, bridge champion Robert Wolff of Fort Worth, Texas, said he invested $125,000 as a nine-month loan and received none of the promised profits.
Individual investments ranged from $5,000 to $22 million, with the average around $100,000. Large clusters of investors were in Atlanta, Florida, Illinois, Maryland and South Carolina.
By Catherine Wilson, AP Business Writer
