Lawsuits and reported investigations involving Synapse

analysisOn September 13, 2024 Yotta Technologies sued Evolve Bancorp and Evolve Bank & Trust in the U.S. District Court for the Northern District of California (No. 3:24-cv-06456), accusing the bank of fraud and negligence among other claims; its lawyers alleged grotesque misconduct and described the bank as having a rotten core, and Yotta alleged that Evolve had known of a shortfall long before Synapse's bankruptcy. Evolve moved to dismiss, arguing among other things that it was entitled to the fees it took. Yotta dropped its claims against Evolve Bancorp in January 2025. On May 15, 2025 Judge Trina L. Thompson dismissed the claims against the bank with leave to amend, ordering Yotta to plead jurisdiction and Synapse's status as a joint tortfeasor and noting that Synapse might be a necessary party. Yotta amended on June 4, 2025; on February 18, 2026 the court granted Evolve's renewed motion, holding according to the trade press that Synapse was a necessary party, and it closed the case the next day without reaching the merits. Yotta appealed to the Ninth Circuit (No. 26-1535), whose mandate was entered on the district-court docket on October 6, 2026; the retained docket does not show the appeal's outcome. ^{1 2 3 4 5}

analysisOn March 13, 2026 Yotta sued Evolve Bank & Trust again, in California state court, alleging, as reported by the trade press, that Evolve stole millions of dollars from Yotta's customers in a Ponzi or Ponzi-like scheme, lied about its controls and capabilities and concealed the deficit with false transaction and balance information, and that Yotta's end users were still deprived of $80 million. It named Synapse as a second defendant only out of an abundance of caution after the federal ruling, saying it had no intention of bringing claims against Synapse. No ruling in the state case is in the record. In the wider dispute between Evolve and Synapse, Evolve's position is that only Synapse could keep accurate ledgers of each end user's funds, while Pathak attributes the shortfall to discrepancies between the two companies' records and to fees Evolve debited; these are competing statements, and no court or regulator has decided between them. ^{4 6 7 2 8 9}

analysisEnd users' putative class actions against the partner banks are consolidated in the U.S. District Court for the District of Colorado under lead case No. 24-cv-03259-DDD-NRN, with five related cases, against Evolve Bank & Trust and Evolve Bancorp, AMG National Trust Bank and Lineage Bank; the court describes the action as arising from the collapse of Synapse, through which consumers' money was deposited with those banks. On April 16, 2026 Magistrate Judge N. Reid Neureiter extended the schedule: fact and class discovery closes on January 15, 2027, class-certification motions are due by March 17, 2027 and dispositive motions by September 29, 2027. A further putative class action, filed in the Central District of California on November 27, 2024 (No. 2:24-cv-10317) against Evolve, Evolve Bancorp and Lineage, was transferred to Colorado on October 16, 2025 under the first-to-file rule, leaving undecided the plaintiff's motion to add Synapse, Synapse Brokerage, Mark Paverman and Jeffrey Stanley as defendants. The consolidated Colorado action was pending at the evidence cutoff, with no finding of liability. ^{1 2}

analysisAMG has moved for summary judgment, arguing that it distributed all or almost all end-user funds according to Synapse Brokerage's instructions and the final trial balance it received after the bankruptcy, and that it owed the plaintiffs no duty because its contract was with Synapse Brokerage; the plaintiffs dispute the reliability of that data and method. Citing plaintiffs' counsel, the court noted that the case requires tracing deposits in pooled FBO accounts across several banks, involving hundreds of millions of dollars and more than ten terabytes of data, and that neither the trustee nor any defendant had completed a full reconciliation. These are the parties' positions as the court summarised them in a scheduling order. AMG opposed the schedule extension, which the other defendants did not oppose, and the court granted it; AMG's motion was undecided at the cutoff. ¹

analysisOn March 5, 2026 a putative class action classified as a racketeering (RICO) case was filed in the Central District of California (No. 2:26-cv-02385) against Synapse, Synapse Brokerage, Mark Elliot Paverman, Sankaet Pathak and Jeffrey Alan Stanley, and assigned to Judge Wu as related to the 2024 case against Evolve. Paverman acknowledged service on May 4, 2026; Synapse was served through California's secretary of state under an alternative-service order and the clerk entered its default on July 1, 2026; a summons to Pathak issued on April 7, and by July 29 the docket showed no proof of service on him. After an order to show cause for lack of prosecution, the court set a status conference for September 17, 2026. The docket shows no ruling on the merits, and a default entered by the clerk is not a judgment. ¹

analysisOn December 11, 2023 Mercury petitioned the San Francisco Superior Court for provisional relief in connection with an arbitrable controversy with Synapse. Mercury's claim that Synapse withheld $30 million in revenue and Synapse's counterclaim of more than $36 million are reported from filings that are not retained. No ruling or settlement appears in the record; in June 2025 the trustee reported having looked for financing, including contingency counsel, to pursue any claims. ^{2 3 4 5}

analysisTwo older suits named Pathak personally. In April 2021 the owner of a house in San Francisco's Twin Peaks neighbourhood, leased from April 2015 and used as Synapse's office, sued Bryan Keltner, Pathak and Synapse for breach of contract, fraud and damage to the property, seeking nearly $1 million; on August 30, 2023 the court sustained Pathak's and Synapse's demurrer to the amended complaint with leave to amend, and the case was unresolved at the bankruptcy. Press reports describe a suit filed around 2019 by three former employees against Synapse and Pathak alleging harassment and gender and age discrimination, including a claim that Pathak refused to pay the former head of sales during her maternity leave; it was eventually settled on terms not in the record, and a settlement is not a finding on the allegations. Pathak dismissed the allegations, along with critical online employee reviews, as cancel culture run amok. ^{6 7 4}

analysisAccording to a March 2025 business-press report, a court filing in late January 2025 showed that the U.S. Attorney's Office for the Southern District of New York had convened a grand jury in a criminal investigation into Synapse dating back to at least October 2024, had subpoenaed former corporate controller Victor Medeiros and was examining possible violations including accounting fraud and wire fraud; another report dated the subpoena to November 2024. The filing is not retained, Medeiros has not been accused of wrongdoing, the U.S. Attorney's Office declined to comment and no criminal charge appears in the record. Pathak said in November 2024 that he knew of no criminal investigation and had not been contacted by law enforcement, though he had spoken with FINRA, and in March 2025 that prosecutors had not contacted him; the trustee and Judge Barash said repeatedly that they could neither confirm nor deny any referral to law enforcement. ^{1 2 3}

analysisSeparately, a trade-newsletter headline of September 7, 2025 reported, citing sources, that the FBI was probing Evolve's fintech program and that Mercury was among the programs under scrutiny for transnational money movement. Only the headline and subheading are retained; the record contains no confirmation from the FBI, Evolve or Mercury and no charge against either company. ⁴