New Jersey Doctor Leads Class Action Lawsuit against Lebanese Banks over Alleged Ponzi Scheme

Amidst the economic turmoil in Lebanon since 2019, thousands of American citizens and residents, including a New Jersey-based pediatrician, found themselves in a precarious situation. Dr. Karim Najjar, now 71, had invested his retirement savings in Lebanon, which was then experiencing economic growth and pegging its currency to the U.S. dollar. However, as Najjar would later discover, he had unknowingly become a part of a massive banking scheme fueled by government corruption, fraud, and mismanagement.

The Predicament of Dr. Najjar

Grown up in Lebanon during and after its civil war, Najjar had a sentimental attachment to his native country. Seeking to secure his retirement funds, he opened an account with Byblos Bank, which offered higher interest rates than U.S. savings accounts. What he didn’t know was that his alleged investment had become part of a Ponzi scheme.

Class Action Lawsuit Alleges Ponzi Scheme

On April 16, 2023, a class action lawsuit was filed against several Lebanese banks and auditors in the United States District Court for the District of New Jersey. Najjar was identified as the lead plaintiff. The lawsuit accuses these banks of systematically defrauding American depositors, among them Najjar, by promising unsustainable interest rates and misleading them about their financial health.

Denied Access to Savings

Najjar, along with countless others, found his savings evaporate when the Lebanese economy took a sharp turn for the worse in 2019. The value of the Lebanese currency plunged to a mere 2% of its former value, leaving depositors unable to access their accounts.

Seeking Justice

To seek justice for himself and other affected depositors, Najjar came forward as the lead plaintiff in this first-of-its-kind lawsuit. The lawsuit was filed by Cuneo Gilbert & LaDuca, Cecchi Brody & Agnello, Lockridge Grindal & Nauen, and Barrett Law against Banque du Liban, Byblos Bank, S.A.L., Ernst and Young Accounts, and other defendants.

Aggressive Marketing Campaigns

With an estimated 686,000 people of Lebanese ancestry living in the United States, according to the U.S. Census Bureau, the aggressive marketing of high-interest accounts reportedly reached deep into Lebanese American communities. Bankers used various tools, including WhatsApp calls and messaging, emails, and phone conversations to attract depositors.

Concerns of an Economist

Samar Issa, an assistant professor of Business Administration at St. Peter’s University Frank J. Guarini School of Business in Jersey City, voiced her concerns about the aggressive marketing campaigns. “As an economist, I would have said no, this doesn’t make sense,” stated Issa. According to her, government corruption played a significant role in the crisis. Banks paid high interest to clients but were then compelled to provide funds to the government at low rates of interest, leading to an unsustainable cycle that culminated in a wave of bank defaults and the government’s failure to meet its debt obligations.

Uncertain Future

The financial crisis in Lebanon continues to unfold, leaving affected depositors like Najjar with an uncertain future. Despite this, Najjar remains steadfast in his pursuit of accountability and justice, uniting with fellow depositors to reclaim their savings and bring those responsible to account.