The Bank of Utah is being sued for its alleged knowledge in a $29 million Ponzi scheme conducted by a local investment adviser, Salt Lake City CBS-affiliate KUTV reported Wednesday.

Clients of Steve Swensen, a registered investment adviser who died last year, allege that the bank and some of its senior executives were suspicious of Swensen’s financial activity but neglected to file a suspicious activity report with the Financial Crimes Enforcement Network, as is required by law.

The lawsuit alleges that this lack of action allowed Swensen to steal $15 million dollars, half of what he’s accused of embezzling by the U.S. Securities and Exchange Commission; and now, his former clients want the bank to reimburse them.

Swensen’s scheme was uncovered last fall in an SEC investigation, which found that starting in 2011, he convinced clients to invest in his solely-owned fraudulent investment fund Crew Capital Group by telling them that the fund guaranteed a minimum 5% return annually and up to 10%, depending on S&P 500 performance.

Swensen, however, “misappropriated essentially all investor funds to make Ponzi payments to other investors and to pay for [his] personal expenses, such as real estate, vehicles and multiple private aircraft, and [his] living expenses,” the SEC said.

The lawsuit against Bank of Utah, according to KUTV, said that Swensen accessed his client’s retirement savings “by convincing them to open a Self-Directed Individual Retirement Account, where he allegedly would have them sign over control of the account in his name as their financial representative.”

The bank allowed Swensen to withdraw money out of client retirement accounts without contacting his clients, despite the penalties for withdrawals resulting in losses of up to $100,000, according to the lawsuit.

In a lengthy statement to KUTV, the Bank of Utah said, “Because of Bank of Utah’s specialty in custodial trust services, we are often chosen to administer investment accounts such as Self-Directed IRAs. As the name suggests, investment decisions involving funds in Self-Directed IRAs are provided exclusively by the Account Holder, not the Bank. ... While a Self-Directed IRA provides greater investment flexibility, it also comes with increased responsibility.”

“In this case, Bank of Utah complied with all federal IRA regulations and was unaware of any fraudulent activity,” the bank said.

Bank of Utah did not return a request for further comment from Banking Dive.

Swensen’s former employer Wealth Navigation Advisors is also the subject of a separate lawsuit, filed by former Swensen client Mark Fox in May. Fox claimed the firm to be at fault for not overseeing Swensen’s financial dealings while under its employ. Fox, according to the suit, lost more than $850,000.

Swensen joined WNA in 2019, which eventually fired him on June 6, 2022 for trying to poach clients, according to an earlier KUTV report. Swensen died by suicide the same day.

Wealth Navigation Advisors did not return a request for comment by press time.