Eugene, Ore.-based banks Pacific Continental Bank and Summit Bank as well as Roseburg, Ore.-based Umpqua Bank, will be paying $4.9 million, $90,000, and $11 million, respectively, to settle charges related to their alleged involvement in the Berjac Ponzi scheme, The Oregonian reported Jan. 26.
Accounting firm Jones & Roth has also agreed to pay a $1.25 million settlement to the victims of the scheme, which involved duping investors into putting money in Berjac of Oregon and Berjac of Portland, which claimed to be insurance policy financing businesses.
Thomas Huntsberger, the trustee overseeing the Berjac bankruptcy, initially sought to recover at least $50 million in damages from the banks, which then included another Eugene-based institution, Century Bank, which was acquired by Pacific Continental in 2013.
According to Huntsberger, Berjac's use of the lines of credit provided by the four banks were essential to the continuation of the scheme. He also claimed that the banks should have known that something suspicious was afoot with Berjac's financials.
The news outlet reported that Umpqua released a statement saying that it continues to deny the allegations but decided to settle to avoid costly litigation. Pacific Continental did not issue a statement on the matter.
Pacific Continental Bank is a unit of Pacific Continental Corp. while Umpqua Holdings Corp. is the parent company of Umpqua Bank.