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Varga v. U.S. Bank Nat'l Ass'n

United States Court of Appeals, Eighth Circuit

August 21, 2014

Geoffrey Varga, in his capacity as Official Liquidator of Palm Beach Offshore, Ltd., and Palm Beach Offshore II, Ltd., Plaintiff - Appellant
v.
U.S. Bank National Association, Defendant - Appellee

Submitted June 11, 2014.

Page 834

[Copyrighted Material Omitted]

Page 835

Appeal from United States District Court for the District of Minnesota - Minneapolis.

For Geoffrey Varga, in his capacity as Official Liquidator of Palm Beach Offshore, Ltd., and Palm Beach Offshore II, Ltd., Plaintiff - Appellant: Joseph William Anthony, Anthony & Ostlund, Wells Fargo Center, Minneapolis, MN; Ashley McMillian, Stephen D. Susman, Susman & Godfrey, Houston, TX; Edgar G. Sargent, Susman & Godfrey, Seattle, WA.

For U.S. Bank National Association, Defendant - Appellee: Sarah A. Horstmann, Wayne S. Moskowitz, Richard Gregory Wilson, Maslon & Edelman, Minneapolis, MN.

Before LOKEN, BEAM, and GRUENDER, Circuit Judges.

OPINION

Page 836

GRUENDER, Circuit Judge.

Geoffrey Varga, in his capacity as the official liquidator of Palm Beach Offshore, Ltd. and Palm Beach Offshore II, Ltd. (collectively, " the Palm Beach Funds" ), sued U.S. Bank National Association (" U.S. Bank" ) for aiding and abetting a breach of fiduciary duty, willful and wanton negligence, and gross negligence. These claims arose from the Palm Beach Funds' investment through accounts maintained at U.S. Bank in what turned out to be a Ponzi scheme. The district court[1] granted U.S. Bank's motion to dismiss Varga's amended complaint. Varga appeals, and we affirm.

I. Background

In this appeal from the grant of a motion to dismiss, we accept as true the well-pleaded allegations in the amended complaint. Loftness Specialized Farm Equip., Inc. v. Twiestmeyer, 742 F.3d 845, 854 (8th Cir. 2014).

Tom Petters, through his company Petters Company, Inc. (" Petters Company" ), claimed to purchase excess consumer merchandise,

Page 837

such as electronics, from vendors. Petters Company financed these supposed transactions by selling high-yield promissory notes to investors through Petters Capital, Inc. (" Petters Capital" ), a wholly owned entity of Petters Company. These promissory notes were to be repaid once the consumer merchandise had been sold to and paid for by retailers, like Sam's Club and BJ's Wholesale Club, in transactions that Petters Company was to arrange. This investment structure enabled Petters Company to grow into what appeared to be a multi-billion dollar operation. But the investment scheme peddled by Petters Company was entirely illusory: no vendors ever sold consumer merchandise, and no retailers ever purchased it. Instead, Petters Company generated fake purchase orders and sales confirmations and kept its scheme afloat by recycling ...


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