Reported by Julie Manganis

State Street Bank and Trust Co. willfully ignored red flags and violated anti-money laundering requirements to allow the transfer of $8.3 million worth of securities into an account controlled by a man later charged in an alleged $155 million Ponzi scheme, a lawsuit filed in Massachusetts state court alleges.

The complaint, filed in Suffolk County Superior Court on Monday by broker-dealer Insight Securities Inc., says State Street should have rejected the transactions, in which securities owned by three of Insight’s customers were deposited into a Deutsche Bank custody account that was being misused by accused fraudster Fernando Haberer Bergson.

The suit, which seeks at least $28 million in damages, claims State Street circumvented anti-money laundering rules and a cease-and-desist order by the Federal Reserve Bank in 2017 against Deutsche Bank concerning its alleged failures to monitor for potential money laundering.

Insight principal Carlos Legaspy told Law360 that he initially thought that the situation was a “rogue employee” or a mistake.

“They knew,” Legaspy said in a phone interview Monday. “Those accounts had been flagged.”

Read full report: https://www.law360.com/articles/1713520/state-street-accused-of-aiding-alleged-ponzi-schemers?copied=1

Read Complaint (court filling): https://assets.law360news.com/1713000/1713520/insight.pdf