Three US banks are being sued for their alleged role in a massive Ponzi scheme. The lawsuit claims Community Financial Services Bank, Mechanics Bank, and RABO AgriFinance knowingly or unknowingly helped a Kentucky farmer, Brian McClain, defraud investors.
A Cattle Ranching Scam
McClain, the mastermind behind the scheme, promised investors huge returns on a cattle investment. The problem? The cattle didn’t exist. The lawsuit alleges McClain paid early investors with money from new investors—a classic Ponzi scheme tactic. Investors lost millions.
Banks Allegedly Ignored Red Flags
The lawsuit claims the banks ignored numerous red flags. It alleges they allowed suspicious transactions and failed to act despite evidence of fraud.
- RABO AgriFinance: Reportedly loaned McClain over $70 million despite concerns about his cattle ownership and record-keeping.
- Community Financial Services Bank: Let McClain overdraft for over 100 days and didn’t investigate suspicious transfers, even after noticing a significant change in his financial situation.
- Mechanics Bank: Also allegedly allowed McClain to overdraft.
McClain died by suicide in April 2023, leading to the discovery of the scheme.
Lawsuit Seeks Damages
The class-action lawsuit seeks both compensatory and punitive damages from the three banks.