Scott Rothstein Saga: TD Bank Accused of Being Complicit in Ponzi Scheme
As you may recall, Rothstein's computer nerds for his now-defunct Rothstein Rosenfeldt Adler law firm, Curtis Renie and William Corte, pleaded guilty to a charge of creating a fake TD Bank website on the law firm's computers to falsely give investors faith that their shares were growing.
Stettin's lawsuit contends that it was a little more encompassing than a fake website and that TD Bank was responsible for letting Rothstein's scheme grow.
"TD Bank played a central role in this massive fraud by giving Rothstein's settlement program the appearance of legitimacy," Stettin said in court papers reviewed by the Wall Street Journal. "Without TD Bank's active participation in concert with Rothstein, the Ponzi scheme would not have grown so large nor lasted so long."
Stettin contends that TD Bank not only facilitated Rothstein's fraud but actually "aided" Rothstein's cause, according to the Journal:
According to Mr. Stettin, TD Bank aided in the fraud by issuing letters to investors that gave them false assurance that the large sums of money deposited for their benefit were safely stowed in the law firm's bank accounts. In fact, Mr. Stettin said, the bank regularly allowed Mr. Rothstein to disburse these funds at his discretion. The bank also allegedly prepared letters for investors to confirm bank-account balances that were "nonexistent," the trustee said, adding that the bank's motivation was profit.
For those unfamiliar with Stettin's role in the Rothstein case, he's been the Chapter 11 trustee, meaning he's been responsible for recovering money -- mainly through liquidation of the Rothstein Rosenfeldt Adler law firm -- that was lost by the victims in Rothstein's scheme.
Now he's alleging that TD Bank saw all of the "funds" coming into its possession -- and the fees associated with it -- and played ignorant to the fact it was all fraudulent.
Stettin is seeking $10 million from TD Bank that he contends was deviously deposited by Rothstein, as well as the unspecified damages that Stettin says is the bank's "breach of fiduciary duty and negligence," according to the Journal.
Stettin names multiple red flags -- including Rothstein's personal expenditures -- that he contends the bank should have caught if it had even given a glance to how Rothstein was operating his 26 bank accounts with TD.
A TD Bank spokeswoman told the Journal the bank plans to "aggressively defend itself."
As a reminder, the next round of criminal indictments from federal prosecutors is expected to be filed in December, in which "a dozen to two dozen" people are expected to be charged.
After that indictment, Rothstein is scheduled to return to South Florida to give a deposition to creditors.
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