The latest lawsuit over a sprawling special needs trust scandal in Clearwater does not target only the indicted entrepreneur at its center. It now reaches into the banking system that handled the money, accusing a major institution of failing to shield vulnerable beneficiaries from a $100 m loss. At stake is not just $100 million in allegedly looted medical trust funds, but a broader question of how far banks must go when red flags appear around a lucrative client.
I see this case as part of a growing reckoning over how financial firms treat people who rely on trusts for basic care, from Floridians with disabilities to elderly investors and tribal children. The allegations against the Clearwater mogul and his bank are unusually stark, yet they echo patterns that have surfaced in other trust scandals across the country.
The new lawsuit that pulls a bank into the $100 m scandal
The Bankruptcy trustee overseeing the collapse of a medical trust operation is now suing a bank, arguing it should have protected the accounts from an indicted Clearwater entrepreneur who allegedly siphoned off $100 m. According to the complaint, the trustee is trying to claw back $100 million that was bilked from medical trust funds that were supposed to pay for care and services for people with serious needs, and the bank is accused of looking the other way while the money moved out. The filing, brought by The Bankruptcy trustee, contends that the institution had ample warning signs as the indicted businessman’s companies shifted large sums through accounts tied to the trusts, yet continued to process transactions and collect fees on the activity.
The lawsuit builds on reporting that the bank’s relationship with the entrepreneur dates back to a trust company he co-founded in 2000, and it alleges that internal controls failed to stop suspicious transfers even as the trust business unraveled. In my view, that is the core of the case: not that the bank masterminded the alleged fraud, but that it allegedly ignored its duty to safeguard funds held for some of the most vulnerable clients in the financial system. The trustee’s claims about the $100 m loss and the role of The Bankruptcy trustee are detailed in a complaint described in medical trusts, which frames the bank as a gatekeeper that allegedly failed its post.
The Clearwater entrepreneur’s long trail of trust fund trouble
The bank’s legal exposure exists only because of the scale of the alleged misconduct by the Clearwater businessman whose dealings are now under criminal scrutiny. Earlier coverage describes The Clearwater businessperson as having been accused in bankruptcy court records of taking $100 m from special needs and medical trusts, leaving people with disabilities and other beneficiaries scrambling to cover basic expenses. In that civil litigation, plaintiffs alleged that the entrepreneur and his companies used complex internal transfers and related entities to move money out of the trusts, a pattern that regulators and the trustee say was designed to hide its wrongdoing and evade detection. Those accusations about The Clearwater businessperson and the missing $100 m are laid out in detail in a case summarized in bankruptcy records…