A class-action lawsuit certified by a federal court in South Carolina alleges that Charles Schwab & Co. is liable for its role in a Ponzi scheme because it was the broker-dealer for the victims of the scheme.

Al Parish, a former Charleston Southern University economics professor, was convicted last year after pleading guilty to masterminding a Ponzi scheme that defrauded nearly 600 investors of roughly $90 million through his unregistered private investment pools. Parish operated a venture called Parish Economics, whose logo featured a cartoon likeness of himself wearing a Superman-like outfit and calling himself Economan.

Parish is currently serving a 24-year sentence in the same Butner, N.C. prison that houses fellow financial swindlers Bernard Madoff and John and Tim Rigas, former Adelphia Communications executives who were convicted of securities and other fraud. Parish has been ordered to pay $66 million in restitution.

The class action includes at least 53 people in 13 states who held IRA and other investment accounts with Schwab and invested in any Parish investment vehicle through the brokerage and custodial services provided by Schwab. The class-action claims are based on Schwab's alleged role as a broker-dealer in materially aiding the sale of securities and as a control person of those liable under the South Carolina Uniform Securities Act of 2005.

"Al ran this scheme for many years," says Badge Humphries, an attorney with Motley Rice LLC, a Mt. Pleasant, S.C. law firm that's part of the plaintiffs' legal team.

He says Parish got some of his investors to establish self-directed IRA accounts with him. Investors thought they were invested in one of Parish's investment pools, Humphries continues, but in reality all they had were promissory notes that were custodied at Equity Trust Co., an Ohio-based custodial bank.

Humphries says that when Equity Trust told Parish it wouldn't handle the notes anymore because he couldn't prove they were legitimate, he went to Schwab and the company agreed to serve as custodian for the notes.

According to Motley Rice, a previous ruling had limited discovery in the case to class-certification issues, and the federal court's decision to certify the class-action lawsuit filed by victims of Parish's scheme against Schwab reopens the discovery process and broadens its scope to all facts relevant to the case's merits.

"Schwab didn't have any relationship with him [Parish] other than serving as custodian for assets held under management," says Sarah Bulgatz, Schwab's director of corporate public relations. "He wasn't a Schwab employee, and we didn't refer any clients to him, and we weren't aware of or participate in his misappropriation of assets.

"We believe the allegations in the lawsuit are totally without merit," Bulgatz says.