TD Bank Slammed with $67 Million in Aiding Ponzi Scheme


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Dear Lawyers Who Would Like to Make a Ton of Money:

Here is a case where the guilt and liability of the Bank (read that as Deep Pocket) was predicated upon circumstantial and direct evidence — the kind of thing that you are currently ignoring in the foreclosure fraud marketplace. This case is a reminder to you that juries will come back with huge verdicts if they are presented with the right evidence and if you don’t concede your case before you begin.

The Rothstein scheme was no better and no worse than the Wall Street securitization scheme. But he only stole $1 billion whereas Wall Street titans stole trillions of dollars plus millions of homes, so far. The only thing different was the numbers.

The specific accusation here is that TD Bank employees knew of the fraud and assisted in assuring investors their money was sound. In the Fake Securitization of home mortgages scheme, the banks and non-bank entities, as well as title companies, title agents, real estate agents, appraisers, closing agents, and pretender lenders knew of the fraud and assisted in assuring people who were buying homes and assisted in assuring people who were buying mortgage bonds that they were buying a safe “investment.”

Everybody except the borrower and the investor knew the deal was cooked, that the appraisal wasn’t real, that the ratings weren’t real and that the pool couldn’t work because the investment bank had already withdrawn more money than could ever be covered, and that the house could never sustain the value used to close the deal.

Everyone knew that the money being used to pay the investors was coming from the flow of new investments and their own money — that is everyone except the person who bought bogus mortgage bonds and the person who bought a bogus loan product.

Like the fraudulent foreclosure marketplace, the Rothstein business model used people who pretended to be bank employees — in the Bank. Sounds like robo-signing and surrogate signing, doesn’t it? And the party named in the loan origination documents as the lender was pretending to be a lender when in fact the real lender was hiding behind four layers of curtains.

Accordingly, both borrowers and investors were deceived into believing and relying upon the assurances that all industry standards of due diligence, review and confirmation were being performed when in fact they were intentionally ignored for the simple reason that the schemers needed the loans to fail and the mortgage bonds to default in order to make even more money from side-bets on the guaranteed to fail deals.

The truth was that everyone in the false securitization chain was being paid to act as though the loans were securitized in communication with the investor and were paid to act as though the loans were not securitized in communications with the borrowers.

The loans were treated as though they were securitized when it suited the investment banks who created the bogus mortgage bonds and then treated as though they were not securitized when it suited them — fabricating, forging and simulating transactions in which the loan was “Sold” without any money exchanging hands, but profits were taken out of the money due investors.

Based on those “sales” they then posed as creditor lenders in foreclosures and who submitted credit bids at the auction which was conducted by their own affiliates if it was a non-judicial state or by clerks of the court in judicial states.

Rothstein is serving a 50+ year sentence. What do you need, Mister or Madame lawyer, to get off your chair and look into this. Using standard contingency fees and applying them against the $6+ trillion stolen already, there is at least $2.4 trillion in fees waiting for you to pluck off the tree on the low hanging branches. What are you waiting for?

MIAMI –  A federal jury decided Wednesday that Toronto-based TD Bank owes an investment group $67 million for its role in a $1.2 billion Ponzi scheme that was operated by a now disbarred attorney, Scott Rothstein.

The verdict came in a lawsuit filed by Coquina Investments, based in Corpus Christi, Texas. It was the first to go to trial of several pending lawsuits filed by wronged investors against the bank and others. Coquina attorney David S. Mandel said the jury “sent exactly the right message to TD Bank.”

Once a prominent South Florida attorney, Rothstein is serving a 50-year prison sentence after pleading guilty to running a massive scam involving investments in phony legal settlements that imploded in 2009. The 49-year-old lawyer has been cooperating extensively with federal prosecutors, and more people are expected to face criminal charges; seven besides Rothstein have already been charged.

The scheme was one of the largest frauds in South Florida history and triggered the failure of the once high-flying Fort Lauderdale law firm Rothstein Rosenfeldt Adler. Rothstein has boasted about paying bribes to unnamed politicians, judges and law enforcement officials, and he raised thousands of dollars for the campaigns of many state and national politicians.

Testimony and court documents show that Rothstein used an account at a TD Bank branch as an integral part of the scheme. Conspirators in his scheme allegedly posed as TD Bank employees, and one of Rothstein’s associates devised a fake TD Bank website on which fake account balances were posted for investors.

“This bank was integral to the fraud, and the fact is that it could not have succeeded without their active participation in the Ponzi scheme,” Mandel said. “TD Bank was Rothstein’s partner in crime.”
Spokeswoman Rebecca Acevedo said TD Bank would explore its legal options and insisted the massive fraud should be blamed squarely on Rothstein.

“We will continue to defend the bank against claims of wrongdoing,” Acevedo said.

TD Bank, a subsidiary of Toronto-Dominion Bank of Canada, operates 1,280 branches in 15 states and Washington, D.C., according to the bank’s website. It had $160 billion in total deposits and $202 billion in assets as of Oct. 31.

Mandel said key TD Bank employees knew of the fraud and assisted Rothstein in assuring investors their money was sound. In a lengthy sworn deposition in December, Rothstein claimed he gave former TD Bank vice president Frank Spinosa more than $50,000 to ignore obvious signs of illegal activity.

Called to testify in the Coquina trial, Spinosa invoked his Fifth Amendment right against self-incrimination. His attorney has repeatedly denied Rothstein’s accusations, contending that Rothstein is falsely implicating other people in hopes of winning a sentence reduction recommendation from federal prosecutors.

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