The bankruptcy trustee in charge of liquidating the Rothstein Law Firm has sued Toronto Dominion Bank for allegedly assisting a $1.2 billion Ponzi scheme run by the former law firm chairman.
Scott Rothstein pleaded guilty to five counts of racketeering, money laundering and wire fraud in January 2010. He also admitted he sold investors interests in bogus settlements in fake sexual harassment and whistleblower cases. He received a 50-year sentence in prison.
The bankruptcy trustee, Herbert Stettin, says the bank’s authorized agents let Rothstein use its name, facilities and accounts to deceive investors. He accused the bank of ignoring red flags.
“Td Bank played a central role in this massive fraud by giving Rothstein’s settlement program the appearance of legitimacy,” Stettin said in a filing in U.S. Bankruptcy Court.
The law firm of Rothstein Rosenfeldt Adler PA went under when other attorneys in the firm found evidence of Rothstein’s illegal side business. Rothstein said he used the law firm to run a scheme that financed his lavish lifestyle and let him buy political insurance.
A spokesman for TD Bank says they plan to aggressively defend against the lawsuit brought on by the bankruptcy trustee.
It is entirely possible that the Ponzi scheme has been around in some form long before Charles Ponzi brought it to light, and there will always be greedy people who will try to use Ponzi schemes to steal from others. Potential investors need to do their due diligence and investigate when something seems too good to be true. Otherwise, you might find yourself in bankruptcy.
Benjamin Brand Services – Chicago bankruptcy lawyer