Rosemann v. St. Louis Bank, No. 15-3965 (8th Cir. 2017)
Annotate this CaseThis case arose from Martin Sigillito's Ponzi scheme known as the British Lending Program (BLP). Plaintiffs, seeking to recoup losses due to the BLP, filed suit against St. Louis Bank, alleging violations of Missouri's Uniform Fiduciaries Law (UFL); aiding and abetting the breach of Sigillito's fiduciary duties; conspiracy to breach Sigillito's fiduciary duties; and conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d). The Eighth Circuit held that the district court properly denied summary judgment to plaintiffs on their UFL claim where plaintiffs have failed to show that St. Louis Bank had actual knowledge that Sigillito misappropriated fiduciary funds; that St. Louis Bank acted in bad faith; and that St. Louis Bank knew that Sigillito was using the fiduciary funds for his personal benefit. The court also held that plaintiffs' common-law and RICO claims failed because the evidence did not create any genuine issues of material fact. Accordingly, the court affirmed the judgment.
Court Description: Chief Judge Smith, Author, with Wollman and Benton, Circuit Judges] Civil Case - RICO. District court's grant of summary judgment in suit by defrauded investors against St. Louis Bank for violation of Missouri's Uniform Fiduciaries Law, aiding and abetting breach of fiduciary duty, conspiracy to breach fiduciary duty and conspiracy to violation RICO is affirmed. The Uniform Fiduciaries Act requires actual knowledge or bad faith that the fiduciary was defrauding the principal or using the fiduciary funds for private purposes; the record does not support that the bank had a duty to investigate or should have been put on notice the funds were misused. Bank employees lacked actual knowledge of breach of fiduciary duty or source of IOLTA funds. Covering overdrafts did not by itself amount to bad faith, especially in light of uniqueness of IOLTA funds. There is no authority that repayments of debts guaranteed by a fiduciary are for the fiduciary's personal benefit. Common law breach of fiduciary duty claims also failed; bank not liable for failing to object or mere negative acquiescence in the fraud and there was no evidence bank had a meeting of the minds to carry out unlawful purpose or conspire to violate RICO.
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