Case Number: 10-60786-Civ-COOKE/BANDSTRA
Date Filed: September 28, 2012
Plaintiff: COQUINA INVESTMENTS
Defendant: SCOTT W. ROTHSTEIN and TD BANK, N.A
Case Information: Coquina Investments (“Coquina”) sued TD Bank and Ponzi schemer and former attorney Scott Rothstein. Coquina alleged that TD Bank aided and abetted Rothstein’s fraud against Coquina and made fraudulent misrepresentations to Coquina. The trial will include testimony from various witnesses including former TD Bank employees, Coquina partners, and experts who discussed TD Bank’s mishandling of Rothstein's accounts, the fraud, and bank’s compliance with anti-money laundering regulations.
Trial Discussions:
Coquina's first witness was TD Bank's former Regional Vice President Frank Spinosa, who asserted his Fifth Amendment privilege to all substantive questions regarding his involvement with the Rothstein Ponzi scheme and with Coquina.
Coquina called as witnesses Coquina partners Melvin Klein, Kathleen White, and Barrie Damson, who testified that the partnership made a number of investments from April to September 2009 with Rothstein after meeting with him and conducting their own due diligence. Coquina’s partners confirmed that they received “lock letters” signed by Spinosa. These letters served as a formal assurance that a particular account’s funds were restricted and could only be distributed to Coquina. This was meant to instill confidence between the investors ensuring that their funds were secured and properly handled in a manner consistent with their understanding and agreement with TD Bank. The receipt of these “lock letters” was crucial factors in Coquina’s decision to make further investments with Rothstein as they believed that their funds were safeguarded by TD Bank. However, it came to light that there are several inconsistencies and misrepresentations related to these ”lock letters.” For example, On August 17, 2009, the Coquina witnesses testified that they met with Spinosa, who confirmed that Coquina's account was segregated and contained $22 million. The Coquina witnesses testified that they decided to make more investments after receiving Spinosa's assurances. Additionally, it was revealed that the instructions contained in the 'lock letters' were not the same instructions Spinosa gave to other bank staff about the account, leading to questions about the true nature of the safeguards in place.
Coquina called two experts to support the case against TD Bank, Catherine Ghiglieri, a banking expert, testified about TD Bank’s failure to comply with anti-money laundering (AML) and Bank Secrecy Act (BSA) requirements, especially ignoring warning signs in certain accounts. Maria Yip, a damages expert, talked about how money was sent and received between Coquina and Rothstein and explained how much money Coquina made off these deals. She also talked about the settlement payment with a bankruptcy official. These two experts showed how the bank didn’t follow rules and explained the money transactions in his case.
Coquina also called certain of Rothstein’s co-conspirators to testify about the details of Rothstein’s fraud. This includes creating fake TD Bank websites and impersonating a plaintiff. TD bank argued that they followed procedures for fraud detections and concluded that there was no suspicious activity in accounts.They also mentioned that Coquina should have recognized that the Rothstein's deals were too good to be true, suggesting that they should have known the investments were fraudulent. TD Bank called in Ivan A. Garces who testified about TD Bank’s compliance with AML/BSA requirements. TD Bank also called in Samuel Rubin, a forensic expert and said that certain documents were forged on RRA computers.
On January 18, 2011, the jury’s verdict ruled in favor of Coquina and against TD Bank on fraudulent misrepresentation and aiding and abetting claims. The jury awarded Coquina $16 million in compensatory damages for each claim and $17.5 million in punitive damages for each claim.
On October 17, 2011, Coquina settled with the RRA bankruptcy trustee, paying an initial $12.5 million. They also agreed to further payments tied to another legal action: 75% of any award until they've paid a total of $18.5 million to the trustee, then 25% of any award until reaching a total of $31.1 million. The bankruptcy court approved this settlement.
Laws Cited:
RICO Violation Through Conduct of an Enterprise, 18 U.S.C. § 1962(c)
Conspiracy to Violate RICO, 18 U.S.C. § 1962(d)
Fraudulent Misrepresentation
Aiding and Abetting Fraud
Case Verdict:
For the foregoing reasons, it is ORDERED and ADJUDGED that:
TD Bank's Renewed Motion for Judgment as a Matter of Law (ECF No. 760) is DENIED:
TD Bank's Motion for New Trial, to Alter and Amend Judgment, and for Remittitur (ECF No. 759) is DENIED.
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