According to the court documents, Utah institution processed tens of millions of dollars of illegal online-poker payments in the mid-to-late-2000s and then helped a Logan businessman in sending at least $150 million overseas.
The poker payments are described in documents filed in criminal cases and may be why Zions reported it is under investigation by the U.S. attorney’s office in New York City.
The court documents mentions Zions Bank several times in the criminal case against Logan businessman John Scott Clark. Clark was also accused of a Ponzi scheme.
“Investors were promised extraordinary returns while Clark was actually diverting their money to make such extraordinary personal purchases as a fully restored classic 1963 Corvette Stingray,” said Ken Israel, Director of the SEC’s Salt Lake Regional Office. “Clark recruited new investors through referrals from earlier investors who thought the Ponzi payments they received were actual returns on their investments and sought to share the lucrative opportunity with family and business associates.”
The SEC alleges that in addition to buying multiple expensive cars and snowmobiles, Clark stole investor funds to purchase a home theater, bronze statues and other art for himself.
In 2012, Clark pleaded guilty to four charges of conspiracy and obstruction of justice for processing millions of dollars of illegal payments to online poker companies. He was sentenced in December to time served, which amounted to about a week in jail in mid-2009 before he bailed out, according to the case docket. Court records indicate Clark may be cooperating with federal investigators.
Mid-to-late-2000s seem to be the period of poorly supervised practices for the regional banking giant. In this period, Zions bank processed payments for legally questionable mass marketers like St. George businessman Jeremy Johnson. Meanwhile businessman Jeremy Johnson´s accounts were being closed by other banks because of high rates of consumer chargebacks.
James Abbott, spokesman for Zions Bancorp, corporate parent of Zions Bank said “Zions has taken great effort at a great cost to try to prevent fraud, to prevent merchants and other individuals from using the banking system for fraudulent purposes. Obviously we process millions of transactions, and there are situations that develop over time where we perhaps have given customers the benefit of the doubt and, in retrospect, perhaps that trust was misplaced.”
Zions Banks was fined $8 million by the federal government in 2011 for failing to adequately monitor its former foreign customers, including $7.9 billion of wire transfers to Latin America from 2006 to the end of 2008, before the bank shut down that operation.
“But I can assure you we do spend millions of dollars and are successful at preventing … potentially fraudulent merchants from doing business,” said Abbot. “We file hundreds, if not thousands, of suspicious-activity reports every year.”