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Banking and Finance

TD Bank Sued In New South Florida Ponzi Scheme

 A south Florida attorney who disappeared before being arrested on federal bank fraud charges has been accused of perpetrating a million-dollar Ponzi scheme in a recently-filed lawsuit that also includes TD Bank, N.A. as a defendant.  Timothy McCabe, 55, disappeared in early April after being accused of unethical behavior by the Florida Bar, and authorities later discovered that several million dollars was missing from his law firm's trust account.  While McCabe sent cryptic messages alluding to committing suicide, he later returned to face criminal charges.  Now, a recently-filed lawsuit accuses McCabe of misappropriating funds to support a $1.2 million Ponzi scheme.  Also named in the lawsuit is TD Bank, which has already paid out hundreds of millions of dollars since being implicated in another south Florida Ponzi scheme - the infamous $1.4 billion Ponzi scheme perpetrated by disgraced Florida attorney Scott Rothstein. 

McCabe was a partner at Lake Worth law firm McCabe and Samiljan LLC ("M&S"), which advertised itself as a real estate and foreclosure defense law firm.  M&S also served as a title agent for Old Republic Title Insurance Company ("Old Republic"), assisting in the issuance of title insurance policies and serving as a closing agent in real estate transactions.  McCabe was also a managing member of City Title, LLC ("City Title").  

The lawsuit alleges McCabe used his position as principal of City Title and as a signatory on the M&S Escrow Trust account to commingle incoming funds, which often included the deposit of checks in the M&S Trust Account held at TD Bank that were directed to City Title.  McCabe is also alleged to have diverted hundreds of thousands of dollars intended for the satisfaction of client mortgages for unauthorized purposes, including the sustenance of an "investment club" McCabe operated that is alleged to have been nothing more than a Ponzi scheme.  

The complaint asserts Racketeer Influenced and Corrupt Organization ("RICO") charges against McCabe and numerous other defendants, including McCabe's law partner, Old Republic, and M&S.  The Complaint also accuses TD Bank of failing to exercise proper supervision over the M&S Trust Account by allowing McCabe to improperly deposit checks into the account that were made payable to other parties.  TD Bank has been embroiled in numerous lawsuits relating to its role in Scott Rothstein's $1.4 billion Ponzi scheme, which has resulted in hundreds of millions of dollars in settlements and one jury verdict.  

A copy of the lawsuit is here.

 For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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