Bank of Bermuda is facing claims for millions of dollars in compensation after a group of victims of the Cash 4 Titles Ponzi scheme filed a new lawsuit in the United States.

The lawsuit was filed in Florida by some 40 of the victims of the Cash 4 Titles scheme who are collectively seeking $43.4 million from a group of defendants, including the Bank of Bermuda, according to maverick newsletter Inside Bermuda.

The defendants are part of a group that opted out of an out-of-court settlement which saw Bank of Bermuda pay out $67.5 million last year.

The scandal engulfed Bank of Bermuda which saw almost half of the $300 million lost by investors go through its Cayman Island offices. There were at one point three separate suits against Bermuda's largest bank.

But last night the bank said that many of the filings had been made in violation of the settlement made in October last year and already some had withdrawn their filings.

"This in no way changes the estimates of what the opt out is going to be," said Peter Smith, head of communications at the Bank of Bermuda last night.

And the bank said that over half of the money being sought in the new legal action had already been dismissed and they expected others to follow suit.

"The recent settlement of the US Class Action lawsuit agreed in October 2001 made a provision to recognise opt outs," a statement said from the bank. "A small number of investors chose that option and the bank was aware that they might chose to sue the bank.

"We have only recently been made aware of the case filed at the Federal Court in Miami. At this early stage, it appears that a significant portion of the claims in this case may have been filed in violation of the settlement.

"Indeed since first we received news of the case this week, we have been advised that three of the plaintiffs, whose claims totalled $23.5 million, have voluntarily dismissed their claims against the bank. Nothing in this lawsuit changes our previous views concerning our remaining potential exposure to opt out claims."

The filing was made on February 11, 2002 by the victims under the Racketeering Influenced and Corrupt Organizations Act in the US District Court for the Southern District of Florida. The defendants are listed as Bank of Bermuda (Cayman) Ltd., Richard Homa, Michael Gause and unidentified "fictitious parties" which includes any parties that handled monies in the case.

The scheme was the brainchild of businessman Michael Gause, who was indicted in the US in October 1999 on conspiracy, securities fraud and international money laundering. He pled guilty to the offences in April 2001.

According to that 1999 complaint 46-year-old Gause and his partner Charles Horna raised funds from investors in the mid 1990s to October 1999 by offering returns of between two and five percent per month or 24 to 60 percent annually.

Cash 4 Titles was allowed to charge its US customers loan interests of up to 25 percent a month. This fact made investors in the scheme believe that the returns touted were achievable. But instead of using the money raised to fund the high interest short-term loans, as they purported, Gause and Horna were charged with using the money for themselves.

According to Inside Bermuda, receiver Phillip Stenger that 2,200 people had made claims totalling $165 million and he told the newsletter, which is published out of Miami, that the total number of victims could be as high as 3,000.