Frank Palazzolo, a Greenburgh real estate investor who sued JPMorgan Chase Bank for inexplicably putting a $100 billion freeze on his business checking account, has stumbled onto a federal wire fraud investigation in Chicago.
Palazzolo is not the subject or target of the federal investigation, his attorney, Lawrence Gottlieb, said in a telephone interview, and the feds have since reduced the freeze to $150,000.
Palazzolo operates Coast to Coast Capital LLC, an investment firm based at Palazzolo Plaza on Central Park Avenue.
On June 13 he was checking his bank accounts, he states in an affidavit, when he “came upon what at first review seemed to be a kind of computer glitch entry.”
The account had a $3.4 million balance but was subject to an “eye-popping” $99,996,580,361.17 hold.
Coast to Coast has been a Chase customer ever since it was formed in 2016, and Palazzolo has been doing business with the bank for 40 years.
He wanted answers.
But when he and Gottlieb demanded an explanation, according to the affidavit, they were “advised that due to the ”˜nature”™ of the hold placed on the account, Chase would not disclose the basis for the restraint.”
Coast to Coast sued Chase on June 16 in Westchester Supreme Court. The $100 billion freeze was interfering with business transactions, including several deals that week totaling $3 million.
Coast to Coast demanded $1 million for damages to the business and its reputation and for a court order directing Chase to unfreeze the account.
Justice Gretchen Walsh ordered Chase to appear on June 30 at a show cause hearing on whether the bank should release the checking account or explain the legal basis for the restraint.
Two days before the scheduled hearing, Chase filed notice to remove the case to U.S. District Court in White Plains.
The U.S. Attorney”™s Office in Chicago had conducted a warrantless seizure of the checking account, according to Chase, and ordered the bank to freeze the funds.
In a June 13 letter to the bank, the same day Palazzolo discovered the freeze, Daniel Griffin, an assistant chief of the health care fraud strike force in Chicago, had said the “government has probable cause to believe that funds on deposit in the above referenced account ”¦ are subject to seizure and forfeiture” based on wire fraud violations.
“Given the nature of the property in question, exigent circumstances require that the funds be frozen immediately to prevent them from being dissipated,” the letter states.
Until the U.S. Department of Justice obtained a search warrant, the letter continued, “the funds should remain frozen and should not be released to anyone.”
Gottlieb called Griffin, who explained that the investigation concerned someone who had wired $150,000 to Coast to Coast Capital. Gottlieb said the money was received from someone with whom the firm had never done business to pay off a loan owed by someone else.
Griffin “bent over backwards to apologize,” Gottlieb said, and assured them that Coast to Coast was not the subject or target of an investigation.
The checking account freeze has been limited to $150,000 for now, Gottlieb said.
On July 7, Coast to Coast dismissed its lawsuit against Chase.
