TD Bank to pay US $52.5 million for allowing Ponzi scheme

Posted Sept. 25, 2013, at 8:40 a.m.

FORT LAUDERDALE, Fla. — TD Bank has agreed to pay $52.5 million in penalties to the federal government after regulators said it allowed Scott Rothstein’s $1.4 billion Ponzi scheme to flourish.

The fines come on top of the more than $400 million the bank has paid in restitution to victims of the attorney who pulled off the largest financial fraud in South Florida history. Rothstein’s financial empire crashed in October 2009, when he quickly made a plea deal and was sentenced to 50 years in prison.

TD Bank reached a $37.5 million settlement with the Office of the Comptroller of the Currency and Financial Crimes Enforcement Network, and a separate $15 million deal with the U.S. Securities and Exchange Commission, federal authorities announced Monday.

William Scherer, an attorney for more than 80 Rothstein investors, said Monday that he was unimpressed with how much TD Bank will have to pay in fines. Scherer secured more than $224 million from TD Bank for Rothstein victims.

“It’s way too little, way too late,” he said. “Do you think paying $50 million is going to punish an entity that makes $6 billion a year? They won’t feel it.”

Federal regulators accused TD Bank of failing to file suspicious activity reports despite the massive amounts of money flying through the bank accounts of Rothstein’s Fort Lauderdale law firm, Rothstein Rosenfeldt Adler. The bank filed five late SARs in 2011 involving an estimated $900 million in suspect transactions.

“In the face of repeated alerts on Mr. Rothstein’s accounts by the bank’s anti-money-laundering surveillance software over an 18-month period, the bank did not do enough to prevent the pain and financial suffering of innocent investors,” said FinCEN Director Jennifer Shasky Calvery.

The SEC alleged that TD Bank and a regional vice president, Frank Spinosa, made false statements to some of Rothstein’s investors and produced a series of misleading documents to help the now-disbarred lawyer.

“Financial institutions are key gatekeepers in the transactions and investments they facilitate and will be held to a high standard of accountability when their officers enable fraud,” said Andrew J. Ceresney, co-director of the SEC’s Division of Enforcement. “TD Bank through a regional vice president produced false documents on bank letterhead and told outright lies to investors, failing in its gatekeeper role.”

Spinosa had assured some investors that accounts held millions of dollars in them when they held less than $100, federal regulators allege.

The SEC filed a civil lawsuit Monday against Spinosa, who has maintained that he didn’t do anything wrong and is a victim of Rothstein too.

“To be clear, Mr. Spinosa did not know about the fraudulent conduct perpetrated by Scott Rothstein,” said Spinosa’s attorney, Sam Rabin. “Furthermore, Mr. Spinosa never purposefully acted in any way to advance Scott Rothstein’s many schemes. Mr. Spinosa has been targeted because he was the path to TD Bank.”

Rabin said Spinosa will “vigorously defend” himself in the SEC case.

TD Bank issued a brief press release Monday afternoon acknowledging the agreements with federal regulators.

“TD Bank is please to resolve these regulatory concerns and to put the Rothstein matter behind us,” said Rebecca Acevedo, a bank spokeswoman.

Much of the civil litigation involving the Rothstein case is over, while the criminal investigation continues. Federal prosecutors recently indicted two attorneys for alleged involvement in Rothstein’s criminal machinations and Rothstein’s wife, Kimberly Rothstein, is set to be sentenced Nov. 12 after admitting that she conspired to hide more than $1 million in jewels from authorities after the Ponzi scheme unraveled.

Distributed by MCT Information Services

 

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