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Banco de Chile, Santander Chile sued for negligence in Ponzi scheme case

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Banco de Chile, Santander Chile sued for negligence in Ponzi scheme case

A group of Chilean investors is suing Banco de Chile and Banco Santander Chile for 6.00 billion pesos due to their negligence in a Ponzi scheme case involving Alberto Chang and his companies, Grupo Arcano and Onix Capital LLC, Diario Financiero reported.

In a court document, the complainants said the banks failed to notify financial crime watchdog UAF of "suspicious transactions" committed by Chang and his companies. The banks did not comply with regulatory norms that would have prompted them to report Chang's activities to authorities, resulting in "damages that were completely avoidable," the plaintiffs claimed.

The companies linked to Chang had an extensive history of "suspicious operations" that should have triggered the "alarms of the banks within the framework of due diligence" as stipulated in their internal policies as well as those by regulatory agencies, the investors added.

The plaintiffs further stated that Chang instructed the banks' executives to transfer large sums of money belonging to them from marked accounts to his accounts abroad, "with no other justification than for his personal expenses."

The banks should have also realized that Onix Capital had not invested in shares for more than five years since it started operations in 2009, as required by the nature of its business, the investors said.

The damages sought by the plaintiffs from the banks account for an amount not covered by a previous bankruptcy proceeding against Chang.

The defendant allegedly scammed nearly 1,000 upper-class clients for about $100 million by convincing them to invest in Grupo Arcano, which was an unregulated entity. The investments, which involved financial instruments that offered a guaranteed return of 10%, had not been made.

In 2016, Chang was arrested in Malta but was subsequently released after paying bail of €1,000. A Maltese court ruled in 2017 that there was insufficient evidence to qualify Chang's crimes as extraditable under the Palermo Convention.

As of Sept. 11, US$1 was equivalent to 715.61 Chilean pesos.