Bank Seeks Mistrial in Rothstein Case

Bank Seeks Mistrial in Rothstein Case

The first jury trial seeking to hold a financial institution liable for its complicity in Scott Rothstein's $1.4 billion Ponzi scheme faces uncertainty after the institution filed a motion seeking a mistrial following testimony of a key witness.  TD Bank, being sued by Texas investment partnership Coquina Investments, filed the motion after verbally making the motion following questioning of its former Vice President, Frank Spinosa, concerning his relationship with Rothstein.  Under the threat of possible pending criminal charges, Spinosa declined to answer the majority of the questions posed by Coquina's attorney and took the Fifth amendment.  

The Fifth Amendment applies to both criminal and civil proceedings, and is available to a witness who may have reasonable apprehension from providing a direct answer that may subject him or her to future criminal prosecution.  As eloquently stated by the Supreme Court in 1924,

The privilege is not ordinarily dependent upon the nature of the proceeding in which the testimony is sought or is to be used. It applies alike to civil and criminal proceedings, wherever the answer might tend to subject to criminal responsibility him who gives it. The privilege protects a mere witness as fully as it does one who is also a party defendant.  

McCarthy v. Arndstein, 266 U.S. 34, 40 (1924) [an enhanced version of this opinion is available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law].  While it is well-established in American jurisprudence that a judge may not allow a jury to make an adverse inference concerning a defendant's decision to not testify in his case, the result is different when a defendant chooses to testify but declines to answer based on the Fifth Amendment.  As the Supreme Court stated in Baxter v. Palmigiano [enhanced version / unenhanced version],

[T]he Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them: the Amendment ''does not preclude the inference where the privilege is claimed by a party to a civil cause.''

425 U.S. 308, 317 (1976).  

During the questioning, Spinosa took the Fifth amendment to more than 170 questions over a morning of testimony.  These questions included whether Spinosa flew on a plane with Rothstein to a Super Bowl or whether Spinosa accepted an envelope from Rothstein containing $50,000.  Following the questioning, United States District Judge Marcia Cooke granted a request by Coquina to allow the jury to draw an adverse inference from Spinosa's decision not to testify for fear of criminal prosecution.  Judge Cooke ruled that Coquina could propose an instruction to the jury to be considered during their deliberation that "[y]ou can infer that the answers would have been adverse to TD Bank's interest."  

While TD Bank's attorneys seem to acknowledge that an adverse inference may be taken from Spinosa's decision to plead the Fifth, they take exception with Judge Cooke's apparent wording that seemed to acknowledge that liability could be inferred.

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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