Geoffrey Varga v. U.S. Bank National Association, 764 F.3d 833

The Palm Beach Funds invested over $700 million in promissory notes sold by Petters Company, which operated a Ponzi scheme; those investments were routed through Palm Beach Finance and accounts at U.S. Bank.
Palm Beach Finance maintained an escrow account (for the Funds) and a collateral account (for collections) at U.S. Bank; a collateral-account agreement governed the collateral account and involved U.S. Bank, Palm Beach Finance, and Petters Capital (not the Palm Beach Funds themselves).
The investment structure contemplated a “direct payment system” (retailers pay collections directly into the collateral account), but Petters Company instead funneled funds through intermediaries and recycled investor funds to pay earlier investors.
Varga, the liquidator, alleged that Palm Beach directors and manager breached fiduciary duties by failing to ensure the direct payment system was used; he settled those claims separately.
Varga sued U.S. Bank for aiding and abetting the fiduciary breaches (by knowing of and substantially assisting concealment), and for willful/wanton and gross negligence, alleging U.S. Bank re-coded account statements and made affirmative misrepresentations about the flow of funds.
The district court granted U.S. Bank’s motion to dismiss; the Eighth Circuit affirmed, holding Varga’s allegations insufficiently plausible to establish the bank’s requisite knowledge, substantial assistance, or a duty to disclose.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Aiding & abetting breach of fiduciary duty	Varga: U.S. Bank reviewed documents showing the direct payment system was required, re-coded account statements to hide Petters as the source, and made misrepresentations — showing knowledge and substantial assistance	U.S. Bank: The collateral-account agreement permitted and required acceptance of deposits from Petters/its agents; re-coding followed customer directions and earlier statements disclosed Petters as source; no plausible inference of knowing assistance	Dismissed — allegations do not plausibly show U.S. Bank knew of a fiduciary breach or substantially assisted it
Negligence (willful/wanton, gross)	Varga: U.S. Bank had a duty to inform the Palm Beach Funds about the flow of funds given the bank’s role and the Funds’ reliance on the bank	U.S. Bank: Contracts reflect ordinary arm’s-length relationship; collateral-account agreement disclaims duties to third parties and required acceptance of non‑retailer deposits; no special circumstances creating a disclosure duty	Dismissed — no legal duty to disclose alleged; special‑circumstances rule not satisfied

Loftness Specialized Farm Equip., Inc. v. Twiestmeyer, 742 F.3d 845 (8th Cir. 2014) (standard for accepting well-pleaded allegations on motion to dismiss)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleadings)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim for relief)
Witzman v. Lehrman, Lehrman & Flom, 601 N.W.2d 179 (Minn. 1999) (elements and analysis for aiding and abetting under Minnesota law)
E-Shops Corp. v. U.S. Bank Nat’l Ass’n, 678 F.3d 659 (8th Cir. 2012) (knowledge element critical for bank aiding-and-abetting claims)
Camp v. Dema, 948 F.2d 455 (8th Cir. 1991) (substantial assistance requires some element of blameworthiness)
Klein v. First Edina Nat’l Bank, 196 N.W.2d 619 (Minn. 1972) (bank generally has no duty to inform absent special circumstances)
Louis v. Louis, 636 N.W.2d 314 (Minn. 2001) (existence of duty is generally a legal question under Minnesota law)