TD Bank assisted in Ponzi scheme, $100M lawsuit claims

TD Bank assisted in Ponzi scheme, $100M lawsuit claims
Investors claiming they were fleeced by a high-profile South Florida attorney filed a $100 million lawsuit Friday contending that the lawyer orchestrated a massive Ponzi scheme with the help of a Canadian bank's U.S. subsidiary and several accomplices.
DEC 23, 2011
Investors claiming they were fleeced by a high-profile South Florida attorney filed a $100 million lawsuit Friday contending that the lawyer orchestrated a massive Ponzi scheme with the help of a Canadian bank's U.S. subsidiary and several accomplices. The 147-page lawsuit, filed in Broward County Circuit Court, alleges that attorney Scott Rothstein and others in his now-defunct firm used faked legal settlements — or faked their involvement in real cases — to promise fat returns for investors. TD Bank, the lawsuit claims, "was complicit in this scheme" by making the deals appear more legitimate and reassuring investors. "The Ponzi scheme simply could not have gained traction without TD Bank's involvement in sanctioning, or otherwise, willingly failing to authenticate the origin of the enormous amounts of money coming through its doors," said the lawsuit, filed on behalf of six investors by attorney William Scherer. "TD Bank was the financial epicenter of the Ponzi scheme." The lawsuit claims numerous red flags were ignored, such as the movement of some $500 million through Rothstein accounts at a TD Bank branch in Fort Lauderdale in October alone. A TD Bank spokesman did not immediately respond to an e-mail seeking comment. TD Bank, with headquarters in Maine and New Jersey, is the U.S. subsidiary of Canada's publicly traded Toronto Dominion Bank. It has some $134 billion in assets and about 1,000 branches, according to the company Web site. Rothstein's attorney Marc Nurik declined comment on the lawsuit. "This is the first I'm hearing of it," Nurik said. Rothstein, 47, has not been charged with a crime. But the FBI has estimated his scam at $1 billion and federal authorities have already seized his yacht, luxury cars and begun forfeiture proceedings on several homes and properties. The once fast-growing law firm Rothstein Rosenfeldt Adler has been dissolved and Rothstein is seeking voluntary disbarment as a lawyer. The investors include several partnerships, including one known as D&L Partners LP that invested $45 million. Another partnership, Razorback Funding LLC, invested $32 million, and D3 Capital Club invested $13.5 million. The lawsuit details some investment sales pitches: —In October, Rothstein claimed to represent 450 people who were due $2 million each in wrongful death cases against fruit company Chiquita Brands International. While the case is real, Rothstein represents none of the plaintiffs and it is still pending in South Florida federal court. —Rothstein falsely told one investor that billionaire financier Jeffrey Epstein — convicted of soliciting prostitution from underage girls — had offered $200 million to settle sexual assault claims made by several young women. The offer came, according to the pitch, after Rothstein's investigators supposedly unearthed evidence that unnamed celebrities and other famous people had flown on Epstein's private jet when some of the assaults took place.

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