Charles Schwab may have a big elder fraud problem on its hands.
For the third time in less than two months, Schwab and its affiliates have been accused of doing virtually nothing to prevent scammers from draining its clients' accounts of their retirement savings. The latest case, filed Wednesday in federal district court in Northern California, accuses Schwab of standing idly by while bad actors directed an elderly Los Angeles County couple to take nearly $30 million out of their accounts and transfer much of it to a cryptocurrency exchange via Bank of America.
Ultimately, $18.5 million of that was converted into crypto and sent to the scammers, making it likely unrecoverable, according to the suit.
The allegations come just over a month after Schwab was accused in another federal suit of doing too little to stop scammers from defrauding a 92-year-old client of roughly $278,000. And on Monday, a Financial Industry Regulatory Authority arbitration panel hit TD Ameritrade, which was acquired by Schwab in 2020, with a $100,000 fine for failing to stop a similar scheme.
In all three cases, the alleged scam was run essentially along the same lines.
Fraudsters hacked into prospective victims' computers and took over their financial accounts. They then posed as law enforcement or financial firm representatives seeking to move assets elsewhere, for the ostensible purpose of safekeeping. In reality, though, they were merely bringing the money within their own grasp.
That's just what Lawrence Liu, 84, and his wife, Ling-Ling Liu, 76, allege in their suit filed Wednesday against Charles Schwab, Bank of America and the crypto exchange Unchained Trading. The Lius' suit asks the same question posed in other recent cases of alleged elder abuse: Why did their trusted financial institutions ignore obvious warning signs and not intervene sooner?
"This case arises from the calculated and devastating abuse of vulnerable elders, committed by financial institutions that are required to — but which failed in this instance to — prevent the very type of anomalous and suspicious fraudulent activity visited upon plaintiffs," according to the suit.
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A spokesperson for Schwab said, "We sympathize with the Liu family, and we hope the criminals who stole their money are brought to justice. But the allegations in the complaint cross the line from advocacy to outright falsity."