Richard Aguilar v. PNC Bank, N.A., 853 F.3d 390

Background

Martin Sigillito ran the British Lending Program (BLP), later found to be a Ponzi scheme; he solicited U.S. investors and often had them hold BLP loan notes in self-directed IRAs.
Allegiant Bank (later acquired by National City, then PNC) served as custodian for some investors’ self-directed IRAs in 2000–2001; investors retained exclusive control and often designated Sigillito as their authorized representative.
Sigillito maintained an IOLTA at Allegiant and used that account in BLP-related transactions (including a September 2001 check used to buy an unmatured BLP note from investor Womack).
Allegiant trust officers learned of concerns (high fees paid to Sigillito, questions about borrower repayment) and, after internal review and meetings with MGM and others, resigned as custodian in late 2001 and facilitated transfer to another custodian.
After Sigillito’s later criminal conviction (2012) for fraud, 92 plaintiffs sued PNC (as Allegiant’s successor) alleging UFL violations, aiding and abetting and conspiracy to breach fiduciary duties, and a RICO conspiracy; the district court granted summary judgment for PNC and the Eighth Circuit affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
RICO conspiracy / common-law aiding & abetting and civil conspiracy	Evidence (Finn/Morse statements, Womack check, review of accounts) creates fact issues showing Allegiant joined/assisted Sigillito’s enterprise and breaches	Allegiant only became suspicious, investigated, and then resigned as custodian; no proof of agreement, substantial assistance, or participation in racketeering	Affirmed for PNC — plaintiffs failed to show meeting of minds, agreement to participate, or substantial assistance; RICO/conspiracy/aiding & abetting claims fail
UFL — Actual knowledge (§ 469.270 first prong)	Allegiant had present awareness that Sigillito was misappropriating funds (high undisclosed fees, Womack transaction, IOLTA activity)	Knowledge alleged is circumstantial and insufficient; bank had no direct proof the Womack funds were misappropriated or used for Sigillito’s personal benefit	Affirmed — no evidence Allegiant had actual knowledge that fiduciary funds were being misappropriated
UFL — Bad faith (knowledge via facts amounting to bad faith)	Allegiant’s acceptance/processing of the Womack check despite obvious red flags was commercially unjustifiable and passive avoidance of inquiry = bad faith	Bank reasonably relied on understanding of IOLTA uses and had no clear, obvious facts requiring inquiry; it investigated and then resigned	Affirmed — circumstances not so cogent/obvious to make failure to inquire bad faith
UFL — Strict liability (payee liable when instrument "known by the payee" to be for fiduciary’s personal benefit)	Second sentence of § 469.270 imposes strict liability on a payee who receives fiduciary proceeds used for fiduciary’s benefit	Statute requires actual knowledge ("known by the payee"); plaintiffs lack proof Allegiant knew the Womack purchase was for Sigillito’s personal benefit	Affirmed — plaintiffs did not show Allegiant knew the transaction was for Sigillito’s personal benefit; UFL strict-liability theory fails

Key Cases Cited

Myers v. Lutsen Mountains Corp., 587 F.3d 891 (8th Cir. 2009) (standard of review for summary judgment)
United States v. Darden, 70 F.3d 1507 (8th Cir. 1995) (elements of a RICO offense and conspiracy)
RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016) (examples of racketeering predicate acts include mail/wire fraud and money laundering)
United States v. Henley, 766 F.3d 893 (8th Cir. 2014) (definition of RICO enterprise)
United States v. Kragness, 830 F.2d 842 (8th Cir. 1987) (RICO enterprise structure requirements)
Watson Coatings, Inc. v. Am. Express Travel Related Servs., Inc., 436 F.3d 1036 (8th Cir. 2006) (UFL purpose and limits on bank liability)
In re Lauer, 98 F.3d 378 (8th Cir. 1996) (interpretation of the UFL in relation to common law duties)