(Adds TD Bank comment)
By Dena Aubin
NEW YORK, July 29 A U.S. federal appeals court
has upheld a $67 million jury verdict against TD Bank, part of
Canada's Toronto-Dominion Bank, for helping convicted
former lawyer Scott Rothstein run a Florida Ponzi scheme that
cost investors more than $1 billion.
In a decision on Tuesday, a three-judge panel from the 11th
U.S. Circuit Court of Appeals, affirmed a lower court's decision
not to overturn the verdict or grant TD Bank a new trial in a
lawsuit brought by Texas investment partnership Coquina
TD Bank was accused in Coquina's 2010 lawsuit of playing a
crucial role in Rothstein's Ponzi scheme by assuring investors
that their funds were locked in a special account and were safe.
"TD Bank is disappointed with today's Coquina ruling and is
considering all of its remedies," spokeswoman Rebecca Acevedo
David Mandel, who represented Coquina, said he was gratified
by the court's decision.
"They say justice rides a slow horse," Mandel said. "The
wait has been excruciating, but it was worth it."
Rothstein was sentenced to 50 years in prison in 2010 after
pleading guilty to the investment fraud. In pronouncing the
sentence, U.S. District Judge James Cohn said Rothstein preyed
on wealthy investors, using their money to support an opulent
TD Bank last year agreed to pay $52.5 million to settle
separate U.S. regulatory charges that it failed to report
suspicious activity in accounts used by Rothstein. The bank did
not admit or deny wrongdoing.
Those charges were brought by the U.S. Financial Crimes
Enforcement Network, the Office of the Comptroller of the
Currency and the U.S. Securities and Exchange Commission.
According to Coquina's lawsuit, Rothstein sold investor
stakes in what he said were settlements of potential lawsuits
over sexual harassment or whistleblower claims. Rothstein told
investors that plaintiffs agreed to sell their rights to a full
settlement at a discount in exchange for an immediate lump sum.
TD bank told investors that funds from the settlements they
had purchased were being deposited into a separate TD Bank
account and could not be distributed to anyone other than the
investors, according to the lawsuit.
In reality, the funds were either siphoned off by Rothstein
or never actually deposited into the account, the lawsuit said.
The lawsuit accused the bank of racketeering and aiding and
A U.S. District Court in Fort Lauderdale had denied TD
Bank's bid to have the award overturned or to order a new trial.
TD Bank had appealed, arguing that Coquina did not have
standing to sue because it only acted as a conduit for
investors' money and was not itself injured.
The appeals court disagreed, saying Coquina invested with
Rothstein in its own name, paid for investments with funds from
its own bank account and suffered an economic loss from
The case is: Coquina Investments v Rothstein et al, 11th
Circuit Court of Appeals, Case No 12-11161
(Editing by Lisa Shumaker)