Investors in the sprawling Ponzi scheme led by imprisoned Raleigh banker William Wise will recover $4.6 million, settling a class-action case brought by nearly 200 victims.
A federal judge in Massachusetts approved a settlement last month against JP Morgan Chase Bank, which was alleged in a 2012 lawsuit to have intentionally aided Wise in a multimillion-dollar scheme that fueled his jet-powered lifestyle.
In the suit, JPMorgan stood accused of helping Wise sell certificates of deposit to an estimated 1,200 people. Wise pleaded guilty in 2015 to running his scheme from 1999 to 2009 and is serving 21 years in federal prison.
His Millennium Bank, licensed in the Caribbean, issued the CDs promising high rates of return — sometimes 17 percent, federal prosecutors said.
Investors were told their investments were backed by a nonexistent Swiss bank, court records said. Those investments were diverted to Wise's personal accounts at Washington Mutual and later JPMorgan, lawsuits said.
JPMorgan, in its court filings, disputed all claims and admitted no wrongdoing, settling due to the expense of defending a complex lawsuit and "its desire to conduct its business unhampered by the distractions of continued litigation."
Wise triggered $129 million in fraudulent CD sales, federal officials said, spending $50 million of it on himself. Among his purchases: a private plane, luxury property in the Caribbean, gold, diamonds, a quarter-million-dollar wine collection and millions in cash.
"Fairly often in these types of fraud cases, there is at least some sort of legitimate business going on," Florida attorney Tal Lifshitz told the Daily Business Review. "This was just a total sham."
Wise, 64 at the time of his 2015 conviction, once lived in the luxury, gated Olde Raleigh subdivision in Midtown. In 2009, a court-appointed receiver attempted to recover some of investors' lost money by auctioning off some of his ill-gotten loot.
At the time, Wise was a fugitive.
"To the best of the receiver's knowledge, William Wise has fled the country," Richard Roper, a Texas attorney also involved in the settlement, told the N&O.
His Mercedes convertible sold for $80,000. A Louis Vuitton bag brought $2,500. A gold ring encrusted with a nearly 4-carat diamond went for $150,000.
Wise, indicted in 2012 on charges including wire fraud, mail fraud, money laundering and a North Carolina charge of tax evasion, surrendered to authorities.
The settlement gives relief to investors who bought Millennium CDs between September 2008 and March 2009, each of whom will be entitled to a pro-rata share of the funds depending on net losses.