- Michael Zidell filed a federal lawsuit alleging that Citibank failed to stop suspicious transfers totalling nearly $4 million to scammer accounts.
- Zidell lost $20 million across multiple institutions after being lured into fake NFT investments through a Facebook romance scam.
Citibank has been sued by a victim of a romance scam on federal grounds, alleging that the bank did not take any measures to stop a huge romance scam. Michael Zidell accuses Citibank of overlooking the red flags as it sent close to $4 million in suspicious transfers to the accounts of scammers. The case of the Manhattan federal court raises the issue of increasing concern regarding the role of banks in identifying and preventing advanced cryptocurrency fraud schemes.
Bank Accused of Overlooking Red Flags in Sophisticated Investment Scam
The case that Zidell filed is based on a complicated pig butchering romance scam that he lost $20 million at various financial institutions. The scam started at the beginning of 2023 when a fraudster with the name of Carolyn Parker approached him via Facebook. Having created an impression of a blossoming romantic relationship, Parker persuaded Zidell to invest in non-fungible tokens. She said she had earned millions by investing in the same way and led him to a certain trading platform.
In a period of a few months, Zidell transferred a total of more than $20 million to different bank accounts suggested by the platform in 43 different transactions. The fraudsters justified that they needed several banks because the number of customers who deposited money in their operation was high. By the end of April 2023, the trading platform site was gone, and Zidell lost a lot of money.
The case is filed against Citibank in particular because it was processing 12 transfers totalling about $4 million to a company named Guju Inc., which is supposedly under the control of scammers. According to the legal team of Zidell, transfers of large round numbers should have been a trigger of investigative procedures within the bank. They say that Citibank did not take proper security precautions and did not pay attention to obviously suspicious patterns of transactions in the accounts.
The complaint alleges that Citibank assisted and encouraged the fraud scheme by carelessly overseeing customer accounts. Zidell states that the bank was legally obligated to observe proper due care in the detection of suspicious financial activity.
Romance scams have turned into a multibillion-dollar criminal business, with more than $5.5 billion lost by victims in 200,000 reported cases last year. Blockchain analytics firm Chainalysis estimated that in 2024, cryptocurrency-related fraud schemes stole about $9.9 billion. In the largest cryptocurrency seizure in Secret Service history, U.S. authorities have already seized $225 million this year related to pig butchering operations.
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