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A Florida federal court judge imposed sanctions against TD Bank and its law firm, Greenberg Traurig, for "willfully" hindering and obfuscating the production of evidence that painted a much more culpable role of TD Bank in Scott Rothstein's $1.2 billion Ponzi scheme. The order by United States District Judge Martha G. Cooke comes after the successful attempt by a Rothstein investor, Coquina Investments, to hold TD Bank liable for its participation in Rothstein's fraud. A federal jury deliberated for four hours in January 2012 before rendering a $67 million verdict against TD Bank, including the imposition of punitive damages.
The dispute arose concerning the sufficiency of TD Bank's participation in discovery, the court-supervised exchange of information in a lawsuit. One of Coquina's central contentions was that TD Bank knew that Rothstein was a high-risk customer, but ignored the warning signs associated with the fraud in favor of the lucrative relationship it had with Rothstein. During the trial, TD Bank maintained that it had not designated Rothstein as a "High Risk" customer, which would have required enhanced due diligence by the bank including robust monitoring and scrutiny. In support, TD Bank offered Rothstein's Customer Due Diligence Form into evidence, which did not contain any indication that Rothstein was considered a high-risk customer. This distinction was emphasized by the bank's testifying expert, and played a key role in its defense. Many observed that the jury award could have been much higher had Rothstein indeed been a high-risk customer.
Coquina's attorney, David Mandel of Mandel & Mandel, is also representing another Rothstein victim in a related trial against TD Bank. That case, Emess Capital v. TD Bank, not only features the same charges pursued by Coquina, but also possible treble damages under the Racketeering Influenced and Corrupt Organizations Act (RICO). RICO was originally used primarily against organized crime defendants, but has recently been used to target white collar crime. During ongoing discovery in that case, Mandel's team discovered that TD Bank had produced Rothstein's Customer Due Diligence Form, the same one it produced in the Coquina trial, albeit with an important distinction - the newly-produced Form had a bright red band at the top that read "HIGH RISK". According to Mandel, "the "HIGH RISK" designation appears to have been blacked out and omitted from" the form produced in the Coquina trial.
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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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