CINCINNATI – Four parties claiming to be victims of Glen Galemmo's multimillion-dollar Ponzi scheme are suing three local banks to try to recover their losses.
The suit accuses PNC Bank of depositing $450,700 worth of investment checks, written to Galemmo's Queen City Investments or his affiliates and marked "for deposit only," into a "third-party account."
The plaintiffs say the banks that issued the checks, Fifth Third and PNC, have refused to refund or recredit their value as required by law.
The plaintiffs (and the listed value of their checks issued between 2011 and 2013) are:
> Kathryn L. Kreeger, Cincinnati: $200,000;
> John G. Tenkman, West Chester, Ohio: $150,000;
> Murray Law LLC, a Cincinnati law firm: $50,700;
> Paul and Nancy Hamann, Rogers, Ky.: $50,000.
The plaintiffs lost all of that money as well as subsequent investments with Galemmo, the suit says.
Federal officials said Galemmo spent most of his investors' money on himself and his family and there was little left to recover and distribute to victims.
The suit accuses U.S. Bank of negligence in allowing "the sort of foreseeable misuse of bank accounts to convert and launder funds that occurred in this case."
The suit adds: "But for U.S. Bank breach of its duties, the fraud perpetrated … could not have been accomplished without detection."
Galemmo, 48, pleaded guilty in January to federal charges of wire fraud and money laundering.
In a plea agreement, Galemmo admitted cheating investors out of $7 million to $20 million, but the actual amount was higher, Assistant U.S. Attorney Ken Parker acknowledged.
More than 160 investors suing Galemmo claim they lost up to $300 million.
The plea agreement said Galemmo collected $116 million from clients between 2005 and 2013.
Galemmo used the proceeds from his scam to buy an office building, two homes in Cincinnati and Florida and multiple vehicles; pay private school tuition for his children, and operate two sports entertainment complexes, Midwest Hoops in Florence and Midwest Sportsplus in Cincinnati, the government said.
Galemmo was ordered to turn over more than $1.7 million from personal investment and checking accounts, along with the office building, homes and vehicles. Some of the money and property are under the name of his wife, Kristine Galemmo.
"Once we get a final amount, we'll work with the victims and hopefully get a little bit of their money back," said Kathy Engstrom, an IRS criminal investigator.
Galemmo lured clients with claims of more than 30 percent returns, according to Engstrom.
Judge Herman Weber will sentence Galemmo on May 28.
Galemmo faces up to 40 years in prison (20 on each count), but he is likely to get between eight years and 16 years, according to sentencing guidelines.