TD Bank Settles With Feds In Rothstein Case
TD Bank N.A. agreed to pay $52.5 million in penalties to federal regulators for moving money around for ex-law firm chairman Scott Rothstein’s $1.2 billion Ponzi scheme.
The Financial Crimes Enforcement Network ordered a $37.5 million penalty, and the Securities and Exchange Commission added a $15 million penalty for violating the Securities Act of 1933.
The SEC cease-and-desist order said Rothstein’s Fort Lauderdale law firm, Rothstein Rosenfeldt Adler, banked with TD Bank from 2005 to October 2009 when the Ponzi scheme collapsed.
The SEC order said a TD Bank regional vice president, who was not named in the order, helped Rothstein fool investors in his scheme by providing so-called lock letters to reassure potential investors about the safety of their commitments.
Rothstein, who is serving a 50-year federal prison sentence, said in depositions that he paid $50,000 in bribes to TD Bank regional vice president Frank Spinosa, who left the bank shortly after the Ponzi collapsed.
TD Bank made no admission of wrongdoing in the settlements, and Spinosa did not reach a settlement.
The SEC order said the vice president “made material misstatements and omissions to investors and prepared false and misleading documents that he knew Rothstein would provide to investors.”
Eric Bustillo, the SEC regional director in Miami, said the agency is seeking a civil injunction against Spinosa in Miami federal court.
“In essence, the message is obviously financial institutions need to be vigilant,” he said. “In this case, Spinosa played a key supporting role of Rothstein’s Ponzi scheme by providing a false sense of comfort to investors that their money was safe and secure in accounts in TD Bank.”
Rothstein told his investors that plaintiffs wanted to collect a lump-sum cash settlement from their employment lawsuits, and investors would receive periodic payments for financing the early payouts. It turned out Rothstein was forging judge’s signatures on bogus settlements.