Posted On: January 19, 2012

TD Bank Ordered to Pay Texas-Based Coquina Investments $67M Over $1.2 Billion Ponzi Scheme

A jury has decided than TD Bank must pay Coquina Investments $67M for playing an assisting role in attorney Scott Rothstein’s $1.2 billion Ponzi scam. Coquina Investments is located in Corpus Christi, Texas. TD Bank is the US arm of Toronto-Dominion Bank.

The Texas securities lawsuit, filed by Coquina, contends that TD Bank officers had an “active role” in the Ponzi scam. They allegedly helped keep the fraud going by meeting with victims to make it appear as if legitimate business was actually taking place. For example, investors would meet with Frank Spinosa, who was then a TD Bank vice president.

Rothstein would tell investors that they were purchasing stakes in settlements involving sexual and employment discrimination cases that his law firm Rothstein Rosenfeldt Adler, PA had already gathered evidence for or confronted potential defendants. Apparently, the cases and the settlements were all bogus.

Per the Texas Ponzi fraud complaint, Rothstein would use TD Bank to pay investors their money from the bogus settlements and provide them with documents used to hide the truth, keep them involved in the scam, and get them to reinvest. Documents were also used to bring in new investors. Meantime, earlier investors were paid with the money brought in by new investors. Coquina’s legal team maintains that the Ponzi scam could not have existed without TD Bank’s help.

Shonda Smith, the foreman of the jury that issued the verdict, said that jury members were surprised at how much the bank allowed to go through it without doing anything to put a halt to the different transactions. TD Bank, however, maintains that it did nothing wrong. It is adamant that even though it served as Rothstein Rosenfeldt Adler’s bank it was Rothstein that actually bilked investors.

Of the $67 million verdict, $32 million is for compensatory damages and $35 million is for punitive damages. Meantime, there are groups of investors that have filed their securities fraud cases against TD Bank over its involvement in Rothstein’s Texas Ponzi scam.

Rothstein pleaded guilty to racketeering, money laundering, and fraud in 2010. He admitted to running the Ponzi scam between 2005 and 2009. He has also said that Level 3 Capital Fund, Centurion Structured Growth LLC, and Platinum Partners Value Arbitrage helped keep his financial scheme afloat during the last few months by agreeing not to disclose to potential investors that he hadn’t made payments to the three hedge funds (that were planning to give him and his team a positive credit rating.) Rothstein then used new investors’ funds to pay back the hedge funds.

The funds are disputing Rothstein ‘s claims and are suing TD Bank. Rothstein has been sentenced to 50 years behind bars for his crimes.

To schedule your free case evaluation to find out whether you have grounds for a Texas securities fraud lawsuit, contact our Ponzi fraud attorneys today. Shepherd Smith Edwards and Kantas, LTD LLP represents investors throughout the state.

Toronto-Dominion Loses $67 Million Jury Verdict Over Rothstein Fraud Role, Bloomberg, January 18, 2012

TD Bank Aided Rothstein Fraud, Investors’ Lawyer Tells Jury, BloombergBusinessweek, January 17, 2012

Rothstein pleads guilty, South Florida Business Journal, January 27, 2010


More Blog Posts:

Texas Securities Fraud: Unregistered Adviser Confesses to Selling Almost $400K in Promissory Notes and Investments Despite Cease and Desist Order, Stockbroker Fraud Blog, December 5, 2011

Texas Securities Fraud: Raymond James Financial Services Pays Elderly Senior Investor About $1.8M Following Loss of Appeal, Stockbroker Fraud Blog, December 2, 2011

Former Texan and First Capital Savings and Loan To Pay $4.5M for Alleged Foreign Currency Ponzi Scheme, Stockbroker Fraud Blog, November 11, 2011