A Landstone Legal Battle
Michael Zidell’s $20 million nightmare began with a Facebook message. It ended in a groundbreaking crypto romance scam lawsuit now shaking the U.S. banking industry. His lawsuits against Citibank, East West Bank, and Cathay Bank allege these institutions ignored screaming red flags while processing $20 million in fraudulent transfers tied to a “pig butchering” scam—a brutal scheme where scammers fatten victims with fake romance before financial slaughter.
This isn’t just about one victim’s loss. It’s a direct challenge to banks’ legal duties under the Bank Secrecy Act. Zidell claims these banks skipped critical safeguards:
No Enhanced Due Diligence for accounts receiving multimillion-dollar transfers
Zero Suspicious Activity Reports filed despite 43 rapid-fire wires
KYC protocols ignored for entities like Guju Inc., whose first transfer alone exceeded its stated annual revenue.
Romance scams now drain $5.5 billion yearly from victims globally. Yet Zidell’s battle spotlights a darker truth: Financial institutions might be complicit enablers when they neglect monitoring. His case could redefine victim recourse, forcing banks to confront their role in the fraud food chain.
The stakes? A legal precedent holding banks accountable as “aiders and abettors” in crypto fraud—especially for elders, a group losing $2.8 billion annually to such scams. This crypto romance scam lawsuit isn’t just about money. It’s about systemic failure. And it’s unfolding now.
The Anatomy of a $20M Pig Butchering Scam
The $20 million theft from Michael Zidell wasn’t a hack or a breach. It was a meticulously orchestrated psychological operation known as “pig butchering”—a term derived from scammers’ practice of fattening victims with false trust before financial slaughter. Here’s how it unfolded:
Phase 1: The Bait
Social Media Hook: In early 2023, a persona named “Carolyn Parker” contacted Zidell on Facebook. She presented herself as a successful, attractive businesswoman, leveraging the platform’s social graph to appear legitimate.
Profile Engineering: Like Jacqueline Crenshaw’s “blue-eyed widower” scammer, “Parker” used stolen photos and a fabricated backstory—avoiding video calls while building emotional intimacy over weeks.
Phase 2: Trust Fattening
Daily Bonding: Conversations migrated to WeChat, blending personal stories with subtle financial success hints. Scammers exploit loneliness—Crenshaw’s “Brandon Miller” even prayed with her daily, creating profound emotional leverage.
Gift Bombing: Victims receive unexpected deliveries to cement trust. Crenshaw received house listings and a “blank cheque” for her birthday yacht party—all funded by her own money.
Phase 3: The Investment Hook
Fake Crypto Portal: By February 2023, “Parker” introduced Zidell to OpenRarityPro, a professional-looking NFT trading platform mirroring real sites like OKX.
Fabricated Returns: Zidell saw a dashboard showing fake balances soaring to $300 million. Scammers use this illusion to justify larger “investments”—identical to platforms that vanished after fund transfers.
Phase 4: Execution
43 Wire Transfers: Between January–April 2023, Zidell sent $20 million across three banks. Scammers justified multiple accounts as necessary for “high client volume”.
Urgency Tactics: Like Crenshaw’s fake “broker Mike,” third parties pressured Zidell with “limited-time opportunities” or threats of “missing exponential gains”.
Phase 5: Disappearance & Money Laundering
Platform Vaporization: In April 2023, OpenRarityPro vanished—along with “Carolyn Parker” and Zidell’s $20 million. This mirrors Secret Service seizures of domains which laundered millions before disappearing.
Shell Company Layering: Funds funneled through entities like Guju Inc.—a front likely tied to operations using shell firms for cross-border laundering.
Crypto Cycling: Stolen money converted to cryptocurrency, cycled through thousands of transactions via blockchain mixers—similar to seizures tracing back to Philippines “fraud compounds”.
Why Victims Comply: “I thought he was a gift from God. Someone was finally going to take care of me.” —Jacqueline Crenshaw, $1M scam victim.
Scammers weaponize emotional voids and financial hope. Zidell’s transfers weren’t reckless—they followed months of psychological conditioning where refusal felt like betraying a partner.
The Banks’ Alleged Role: Ignoring Screaming Red Flags
Michael Zidell’s lawsuits don’t just accuse Citibank, East West Bank, and Cathay Bank of passive oversight. They allege willful blindness to fraud indicators so glaring they violated federal anti-money laundering mandates. Here’s how each bank allegedly failed:
Citibank: The $4 Million Blind Spot
Ignored Business Reality: Zidell wired $4 million to Guju Inc. through Citibank. Guju’s account documents claimed monthly transactions under $250,000. Yet Citibank processed 12 transfers—including a single $500,000 wire that exceeded Guju’s stated annual revenue.
No Enhanced Due Diligence: Federal law requires EDD for high-risk transactions. Citibank allegedly skipped this—even as transfers spiked 1,900% above Guju’s projected activity.
East West Bank & Cathay Bank: Patterned Negligence
Velocity Red Flags: East West processed 18 transfers ($6.9M) for Zidell in under 90 days. Cathay Bank handled 13 transfers ($9.7M). Both ignored “bulk round-number transfers” atypical for personal accounts.
Shell Company Facilitation: Transfers flowed to entities like “Guju Inc.” and “Mingda Group”—shell firms with minimal history. East West and Cathay allegedly waived KYC checks despite the accounts having no prior large transactions, mismatched business purposes, and beneficiaries in crypto high-risk jurisdictions.
The Regulatory Violations
All three banks stand accused of breaching the Bank Secrecy Act by failing Suspicious Activity Reports for transactions over $5,000 involving suspected fraud. Zero were filed for Zidell’s 43 wires.
Bypassing Transaction Monitoring Systems: Standard AML software flags “structuring”. The banks’ systems allegedly ignored sequential transfers to multiple accounts and rapid funding of crypto exchange-linked wallets.
Ignoring Elder Financial Exploitation Protocols: Though Zidell’s age is sealed, banks train staff to scrutinize sudden large withdrawals by older adults. No holds or inquiries occurred.
“Banks are the last line of defense. When they ignore AML rules, they become fraud enablers.” — U.S. Secret Service Cyber Fraud Division.
Funds vanished into a laundering vortex: Crypto Conversion via unregulated exchanges, Chain Hopping through mixers, and Offshore Cashing Out in Southeast Asia—mirroring seizures tied to Philippines scam compounds. This crypto romance scam lawsuit argues banks weren’t just negligent. They were essential to the scam’s success.
Legal Arguments: Negligence, Aiding Fraud, and Elder Abuse
Michael Zidell’s lawsuits deploy a triple-threat legal strategy to hold Citibank, East West Bank, and Cathay Bank accountable. This crypto romance scam lawsuit doesn’t just claim oversight—it frames banks as active enablers. Here’s the breakdown:
Theory 1: Negligence
The Core Argument: Banks have a statutory duty under the Bank Secrecy Act to monitor transactions for fraud patterns. Zidell alleges all three banks ignored “obvious red flags” that would trigger investigations at compliant institutions.
Violated Internal Protocols: Citibank’s own AML policy requires “enhanced scrutiny” for transactions over $250,000 to new accounts. Yet it processed 12 wires averaging $333,000 to Guju Inc.—a shell firm with no transaction history.
Ignored Industry Standards: The Federal Financial Institutions Examination Council mandates “know your customer” verification for high-risk accounts. None occurred despite Guju’s first transfer exceeding its declared annual revenue.
“Banks can’t plead ignorance when AML systems exist to flag exactly these patterns.” — FinCEN Advisory on Romance Scams.
Theory 2: Aiding and Abetting Securities Fraud
The Core Argument: By processing transfers to fake NFT platforms like OpenRarityPro, banks provided “substantial assistance” to fraudsters.
Willful Blindness Doctrine: Courts recognize liability when parties deliberately avoid confirming fraud. Zidell claims banks ignored round-number transfers typical in scams, sequential wires to multiple accounts, and crypto exchange addresses in beneficiary details.
SEC Rule 10b-5 Link: Funds flowed to unregistered “NFT investment contracts”—securities under the Howey Test. Banks facilitated these illegal transactions.
Theory 3: Aiding and Abetting Elder Abuse
The Core Argument: East West Bank and Cathay Bank violated California’s elder protection laws by enabling financial exploitation.
Enhanced Liability: California law allows triple damages for elder abuse. Though Zidell’s age is sealed, plaintiffs over 65 qualify.
Ignored Red Flags: Banks failed to follow CA-mandated protocols for elder financial protection, including no holds on unusual transfers from retirement accounts, no staff inquiries about sudden large withdrawals, and disregarding “urgency narratives”.
A victory would redefine bank liability in three ways: Extending “Duty of Care” to outgoing wires, validating “Fraud-Enabler” suits, and aligning state/federal regulations through California’s elder abuse laws.
Stat Spotlight: 83% of pig butchering victims are over 50. Elder financial exploitation losses hit $28.3B annually.
The Broader Context: Romance Scams as a Global Epidemic
Michael Zidell’s $20M loss isn’t an outlier—it’s a snapshot of a $75.3 billion criminal industry exploiting human vulnerability worldwide. Pig butchering scams now outpace ransomware and drug trafficking as organized crime’s top revenue source. Here’s why this crisis demands urgent attention:
The Scale of the Crisis
2020–2024: 200,000+ reported cases drained $75.3B from victims. 2024 saw $9.9B in losses—a 33.2% YoY jump—with crypto involved in 86% of cases. 72% of victims are women over 50; 41% lose life savings.
Industrialized Fraud: The “Scam Compound” Pipeline
Modern romance scams are operated by transnational syndicates using human trafficking victims as scam laborers: Recruitment through fake job offers, captivity in compounds, AI-generated scripts targeting Western victims, and operators taking 70%+ of stolen funds.
“We raided a Phnom Penh compound with 800 scam workers. They targeted 200 victims daily.” — Cambodia Anti-Cybercrime Police.
Crypto’s Critical Role
Crypto fuels this epidemic through irreversibility making funds unrecoverable, pseudonymity allowing scammers to hide, and cross-border speed enabling rapid movement of funds. Regulatory gaps persist through weak crypto KYC, low bank reporting of crypto scams, and jurisdictional black holes in corrupt regions.
Case in Point: Jacqueline Crenshaw lost $1M to a fake trader whose platform used Hong Kong shell companies—identical to Zidell’s OpenRarityPro.
Industry Implications: Will Banks Face Stricter Rules?
Michael Zidell’s crypto romance scam lawsuit could trigger the most significant banking reforms since the 2008 financial crisis. If courts side with his allegations of negligent monitoring, three seismic shifts loom:
Regulatory Hammer Down
Expect immediate action accelerating FedNow’s fraud detection protocols, mandating real-time AI transaction screening for scam patterns, and requiring banks to cross-check crypto platform registrations.
“Banks must treat outgoing wires like incoming ones—with equal scrutiny.” — CFPB Director.
Victim Recourse Revolution
Current recovery odds are grim with under 5% of crypto scam funds recovered and zero success suing overseas scammers. Zidell’s case could establish banks as liable third parties by proving negligence equals aiding fraud, triggering elder abuse enhancements, and enabling class actions for similar scam patterns.
Crypto-Fiat Gateway Crackdown
Regulators now target banks facilitating “crypto on-ramps” with stricter KYC for crypto-linked accounts, mandatory cooling periods for large transfers, and exchange blacklists blocking wires to high-risk platforms.
Cost Impact: Compliance could cost banks $32B annually—likely passed to consumers. The banking dilemma: Tighter rules risk financial exclusion for legitimate crypto startups, yet inaction is costlier with romance scams projected to drain $12.4B+ in 2025.
Protecting Yourself: Critical Red Flags & Defense Tactics
Michael Zidell’s $20M loss reveals systemic gaps—but you can armor yourself against pig butchering scams. Here’s how to spot bank-level red flags and act decisively:
Red Flags You Control
For urgent investments with multiple beneficiary accounts: Demand platform SEC/FINRA registration. For fake crypto platforms with mismatched account names: Refuse transfers to unverified entities. For romance pressure with rapid transfers: Enforce 24hr hold rules with your bank.
Proactive Defense Protocol
Verify, Don’t Trust: Reverse-image search contacts and cross-check platforms with regulatory databases. Bank Hardening Tactics: Set transfer caps, require payee whitelisting, and demand SAR copies if banks flag transactions. Digital Paper Trail: Record calls with bank reps, save scammer chat logs, and document platform URLs.
“By the time victims realize it’s a scam, the money is in Cambodia.” — FBI Financial Crimes Division.
Emergency Response
Freeze Transfers: Call your bank’s fraud department insisting on holds and SAR filings. Report Aggressively: Notify FTC, FBI IC3, and local DA’s Elder Abuse Unit. Preserve Evidence: Capture dashboard screenshots, bank statements, and scammer messages.
Recovery Reality Check: Act within the 72-hour window to notify exchanges. Evidence of ignored bank red flags strengthens negligence claims in lawsuits like this crypto romance scam lawsuit.
A Watershed Moment for Financial Accountability
Michael Zidell’s crypto romance scam lawsuit against Citibank, East West Bank, and Cathay Bank isn’t just about $20 million. It’s a reckoning for an industry that prioritized transaction speed over consumer protection. As this landmark case unfolds, three irreversible shifts are emerging:
Banks Can No Longer Hide Behind Compliance Theater
The “we followed basic KYC” defense is crumbling. Courts now demand proof of active fraud monitoring—not box-ticking exercises. If Zidell wins, transaction pattern analysis becomes mandatory, elder protocols get teeth with triple damages, and crypto gateways face scrutiny.
A New Path for Victims Emerges
For years, romance scam survivors faced dead ends with crypto’s irreversibility and untouchable overseas scammers. This crypto romance scam lawsuit creates a radical alternative: Sue the enablers.
“Banks are the only solvent link in the fraud chain. This case makes them answerable.” — Harvard Financial Justice Lab.
The Looming Regulatory Avalanche
Washington won’t wait for verdicts: FedNow will deploy real-time AI fraud shields, a SEC/FinCEN task force will blacklist scam-linked platforms, and strict liability proposals could make banks automatically liable for transfers to non-KYC’d entities.
The ultimate stakes: If banks win, romance scams keep draining $500,000 per hour globally. If Zidell wins, we enter a new era where banks deploy wartime-level fraud analytics, compliance costs rise alongside consumer trust, and victims gain leverage for restitution.
A Final Word to Survivors: Your loss isn’t inevitable. This crypto romance scam lawsuit proves systemic failure—not your “gullibility”—enabled these crimes. Document every detail: bank responses, transaction IDs, scammer chats. Report to FTC and FBI IC3, preserve evidence, and fight back. The financial system is being rewired. Your vigilance will shape its new code.
