Sigillito lawsuit against St. Louis Bank can move forward, judge rules

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Martin Sigillito

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Jacob Kirn

Digital Producer- St. Louis Business Journal

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A U.S. District Court judge has denied St. Louis Bank's motion to dismiss a lawsuit that alleges it was complicit in Martin Sigillito's massive Ponzi scheme.

The move by Judge Linda Reade, of the Northern District of Iowa, allows the lawsuit, which alleges Racketeer Influenced and Corrupt Organizations Act (RICO) violations, to move forward.

RICO allows civil suits for acts performed as part of a criminal organization.

The suit, filed in May, says that Sigillito held investors' monies in a client trust account at St. Louis Bank from 2006 to 2010, and that the bank "chose to continue to participate in and directly benefit from Sigillito's thievery." More than $41 million flowed through his interest on lawyer trust account (IOLTA), according to the lawsuit.

It also said that two bank employees, Craig Hingle and Julie Ohms, were in contact with Sigillito regularly, and "permitted and approved these circular transactions to occur despite their evident lack of legitimacy."

Further, St. Louis Bank concealed large overdrafts in Sigillito accounts, and moved loan proceeds through Sigillito's business accounts to fund deficiencies in his IOLTA, according to the lawsuit.

Judge Reade wrote in her decision Friday, "The Complaint includes allegations of falsifying bank records, creating loans and lines of credit and using fiduciary funds for various payments in furtherance of the fraudulent scheme. The Complaint also includes emails between Sigillito and St. Louis Bank employees purporting to demonstrate a conspiracy to violate RICO. Therefore, the court concludes that Rosemann (the plaintiff) has adequately pled sufficient facts to show that there was an objective manifestation of an agreement on the part of St. Louis Bank."