Barclays could face liability of up to £37 million in connection with a collapsed £90 million Ponzi scheme operated by the Liverpool-based investment firm Denaro, after a judge ruled against the bank’s attempt to dismiss the lawsuit.

The FTSE 100 lender provided banking services to Denaro from 2013 until the company’s collapse last year. Liquidators for Denaro, which left nearly 1,000 retail investors with creditor claims exceeding £90 million, contend that the fraud could not have occurred without Barclays’ involvement.

Denaro was established by three individuals without financial industry experience and promised investors unusually high returns of three percent per month. Instead, the funds were allegedly circulated among various company accounts to pay returns to earlier investors and to enrich the founders, consistent with the structure of a Ponzi scheme.

Legal representatives for the liquidators accuse a Barclays relationship manager of “dishonestly assisting” the directors by approving tens of millions of pounds in transactions without raising the necessary alarms. Court documents revealed that in 2020, the banker misrepresented Denaro’s operations to colleagues, portraying it as a transparent members’ club, which contributed to risk managers authorizing continued account use.

Barclays had sought to have the case dismissed, but the judge determined there was sufficient evidence to allow the claim to proceed to trial. This judgment exposes the bank to possible significant damages related to its role in facilitating Denaro’s activities.

Barclays declined to provide a comment on the case, and a director from Denaro did not respond to requests for comment.