Daily News: September 24, 2013

SEC Charges TD Bank and Former Exec for Roles in Ponzi Scheme

The Securities and Exchange Commission charged TD Bank and a former executive with violating securities laws in connection with a massive South Florida-based Ponzi scheme conducted by Scott Rothstein, who is now serving a 50-year prison sentence.

The SEC alleges that TD Bank and its then-regional vice president Frank A. Spinosa defrauded investors by producing a series of misleading documents and making false statements about accounts that Rothstein held at the bank and used to perpetuate his scheme. Spinosa falsely represented to several investors that TD Bank had restricted the movement of the funds in these accounts when, in fact, Rothstein could transfer investor money however he desired. Spinosa also orally assured investors that certain accounts held balances totaling millions of dollars, but each account actually held zero to $100.

TD Bank agreed to settle the SEC’s charges in an administrative proceeding and pay $15 million. The SEC filed a complaint against Spinosa in U.S. District Court for the Southern District of Florida.

“Financial institutions are key gatekeepers in the transactions and investments they facilitate and will be held to a high standard of accountability when their officers enable fraud,” said Andrew J. Ceresney, co-director of the SEC’s Division of Enforcement. “TD Bank, through a regional vice president, produced false documents on bank letterhead and told outright lies to investors, failing in its gatekeeper role.”

Eric I. Bustillo, director of the SEC’s Miami Regional Office, added, “Spinosa played a key supporting role in Rothstein’s Ponzi scheme by providing false comfort to investors that their money was safe and secure in the accounts at TD Bank. He enabled Rothstein to con investors into believing he couldn’t move their money when he could, and that the bank was holding money that it wasn’t.”

To read the full SEC press release, click here.