A $300 million Ponzi scheme that defrauded nearly 1,300 investors — many of them Marin County residents — was abetted by a bank in Novato, a federal lawsuit alleges.
The class-action lawsuit involves two Novato-based companies, Professional Financial Investors Inc. and Professional Investors Security Fund Inc. The fraud came to light after the companies’ founder, Ken Casey, died of a heart attack in 2020.
The companies issued investors promissory notes or memberships in limited liability companies. They used the investors’ money to buy real estate.
At the height of the scam, Casey and his accomplice, Lewis Wallach, had accumulated 80 large properties: 29 in Novato, 10 in Sonoma and the remainder scattered throughout Marin.
Holders of the promissory notes were paid interest on their investments monthly while the LLC members were paid interest through quarterly distributions.
“The real estate investments were real, but they did not generate anywhere near enough rental income to pay investors as promised and were so encumbered as to make investors’ collateral worthless or nearly worthless,” says the lawsuit, which was filed in U.S. District Court for the Northern District of California.
The suit also states that “bank records show that Casey and Wallach used at least $26 million of investor funds for their own personal benefit between 2015 and 2020.”
To keep the scheme going, Casey and Wallach had to continually raise new investment revenue to pay…
