The suit accuses Wells Fargo of failing to inquire into the activities of an employee accused of co-masterminding the scam.
The plaintiffs assert that the Wells Fargo subsidiary failed to make appropriate inquiries into its financial advisor James Seijas — as per the firm’s policy mandating employees to regularly report activities relating to outside interests.
Crypto Ponzi victims sue Wells Fargo for vicarious liability
Q3IRV is seeking damages and interest for vicarious liability for the actions and omissions of Seijas.
The plaintiffs assert that Wells Fargo did not inquire into Siejas’ role at Q3 while he operated the scheme, despite the firm’s policies for employees:
“Wells Fargo Advisors’s policies and procedure required employees to regularly report to Wells Fargo Advisors concerning work they did outside the scope of their employment…"
The lawsuit emphasizes that as Seijas touted himself as an investor working on behalf of Wells Fargo while he was an employee of the firm, “the acts and omissions described herein were committed in his capacity as an agent for Wells Fargo Advisors.”
The lawsuit also names Wells Fargo Advisors in counts of unjust enrichment, negligence and fraud.
Seijas worked at Wells Fargo Advisors for five years
The lawsuit alleges that Siejas, alongside fellow co-founders Quan Tran — a certified general surgeon, and Michael Ackerman — a former UBS securities employee, formed the Q3 Trading Club in 2017.
Q3 purported to pool investors funds to trade crypto assets using a proprietary algorithm, promoting the scheme to physicians on social media, including a Facebook group called “Physicians Dads’ Group.”
The suit alleged that, after raising upwards of $1 million, Q3 became a limited partnership and expanded to take in $33 million from 150 investors across the United States.
Q3IRV claims that only $10 million the funds raised were invested in virtual currencies, with over $10 million being diverted to the trio:
"Despite Defendants' representation to potential and existing Q3 Investors that their virtual currency trading was highly successful and that Q3 Investors were free to withdraw the profits earned in their accounts after one year, Defendants did not trade virtual currencies successfully and most of Q3 Investors' money was misappropriated or lost in trading."
Q3’s operators also diverted $4 million in purported licensing fees for access to their proprietary algorithm into their personal bank accounts, according to the plaintiffs.