DOJ sues California bank in alleged fraud case

By Shaun Zinck | Mar 23, 2015


The U.S. Department of Justice (DOJ) filed a lawsuit against a small California bank on March 10 for allegedly failing to report suspicious activity by one of its account holders to the federal government.

CommerceWest Bank (CWB) was sued by the DOJ over allegations that one of the bank's account holders, V Internet, committed fraudulent demand drafts, which affected several merchants and businesses.

V Internet's business allegedly processed payments for merchants that were considered high risk. Those businesses had been prevented from accepting other forms of payments such as credit cards.

Many of V Internet's merchants stopped using the service within the first six months of 2012. Some of the company's largest merchants claimed V Internet wrongfully took money from the merchants' reserve account and refused to return it.

The DOJ said CWB was aware of the claims by the merchants and even had printed files of online complaints.

The lawsuit seeks civil penalties against the bank and an injunction against the bank to prevent it from processing financial transactions for companies similar to V Internet.

The DOJ is represented by Benjamin C. Mizer, acting assistant attorney general, and Jonathan F. Olin, deputy assistant attorney general.

United States District Court for the Central District of California case number 8:15-cv-00379.

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