ST. LOUIS — The 8th Circuit Court of Appeals has affirmed summary judgment for St. Louis Bank in a case brought by investors who had been scammed in what a U.S. attorney called "one of the largest fraud schemes in Missouri history."
In a ruling filed May 24, a three-judge panel held that plaintiffs failed to show the bank had actual knowledge that St. Louis attorney Martin Sigillito misappropriated fiduciary funds, failed to prove the bank acted in bad faith, failed to show the bank knew Sigillito was using fiduciary funds for his personal benefit and that their common-law and anti-corruption law claims failed because their evidence did not create any genuine issues of material fact.
In April 2012, Sigillito had been found guilty by a jury in a Ponzi scheme that stole more than $52 million from its victims over a 10-year period from 2000-10, according to an FBI press release.
Sigillito was sentenced to 40 years in prison without parole and is serving time at a medium-security federal correctional institution in Memphis, Tennessee.
The ruling states that Sigillito and co-conspirator, Leawood, Kansas, attorney J. Scott Brown, had formed the British Lending Program (BLP) in the late 1990s to facilitate loans to an English law firm that would fund coal miners' black lung cancer cases.
The BLP later began marketing loans for "purported" investments in English real estate developments. Sigillito would direct its U.S. investors to deposit funds for BLP loans into his Interest on Lawyers Trust Account (IOLTA), the ruling states, but instead of moving the funds to England for investment, he fraudulently drew funds out of the IOLTA for himself and others.
Post-conviction, St. Louis Bank was sued by investors because it held several commercial accounts for Sigillito, whose scheme involved depositing most of the BLP investor funds into the IOLTA and then immediately transferring them into another account.
According to the FBI, Sigillito gained more than $6 million from the fraud scheme and used it to support "an affluent lifestyle."
At trial, Sigillito was also found guilty of nine counts of wire fraud. Jurors found that Sigillito wired funds across state lines as part of the scheme in which wire transfers typically involved “hundreds of thousands of dollars and, in one case, a transfer of $15 million,” the FBI release states.
The jury also convicted Sigillito of four counts of mail fraud related to documents that were mailed to lenders and six counts of money laundering related to financial transactions with funds illegally obtained by wire fraud.
The panel at the 8th Circuit included Chief Judge Lavenski Smith and Judges Roger Wollman and William Benton.