By Brian Kindle, Special to BrowardBulldog.org
TD Bank lost a $67 million jury verdict in January in a case related to the notorious Fort Lauderdale lawyer and swindler Scott Rothstein. Now, the Canadian-owned bank is accused of withholding evidence during the 70-day trial.
Coquina Investments, one of hundreds of reported victims of Rothstein’s $1.2 billion Ponzi scheme, has filed court papers in the case it won accusing TD Bank of “altering” its internal assessment that Rothstein’s law firm was a “high risk” for money laundering. Keeping that secret could have shielded the bank from further liability.
Coquina, based in Corpus Christi, Texas, has asked the court to sanction the bank.
Coquina’s successful lawsuit argued the bank aided and abetted the enormous fraud. Rothstein testified in a December deposition that bankers were key to his scheme, and that he paid off TD Bank’s regional vice president, Frank Spinosa, according to the Sun-Sentinel.
Rothstein, who once lived a flashy lifestyle and hobnobbed with politicians, is currently serving 50 years in prison.
The alleged evidence of TD Bank’s duplicity at trial are 2009 “Customer Due Diligence” forms for Rothstein, Rosenfeldt and Adler. Such forms are used to evaluate the risk involved in dealings with customers and assessments.
Lawyers for Coquina assert the bank removed the warning “HIGH RISK” from the form and changed its coloring from red to black when presenting the evidence in court. At trial, the bank produced a money-laundering expert who stated that Rothstein’s firm was not a high risk, according to post-verdict court filings made late last month.
Coquina’s lawyers call that a “fraud on the court and jury” by TD Bank.
TD Bank acknowledged a mistake in its own court filings last week, but said it was a “copying error” by clerical staff that did not hurt the plaintiff’s case. It has apologized. The bank also said Coquina’s lawyers knew of the gaffe and referred to it in their closing arguments to the jury.
TD Bank declined requests for comment by ACFCS.org, citing its policy of not commenting on “pending litigation.”
FRAUD OR MISTAKE?
Coquina’s Miami lawyer David Mandel, a former federal prosecutor, filed court papers this week asserting the “the trial would have proceeded much differently had the defendant produced the true document.” Coquina’s $67 million verdict included $35 million in punitive damages. Mandel had asked the jury to award $140 million in punitive damages.
The jury may have awarded higher damages, Mandel argued, adding that the altered document affected cross-examinations.
TD Bank’s response did not address the testimony of their witness, money-laundering expert Ivan Garces.
Garces testified that the bank did not consider Rothstein, Rosenfeldt and Adler high risk.
“It’s your opinion, sir, that TD Bank did not consider RRA [Rothstein's law firm] to be a high-risk customer of the bank; is that right?” a Coquina lawyer asked Garces on the stand.
“Yes, ma’am. That’s correct” Garces replied.
Mandel has asked US District Court Judge Marcia G. Cooke to sanction TD Bank, and refer the matter to the US Department of Justice for possible criminal investigation. Federal law makes it a crime to intentionally alter a document for use in a trial.
Brian Kindle is editorial director for ACFCS.ORG, the Association of Certified Financial Crime Specialists, an independent research and information organization based in Miami whose members are financial crime experts in the public and private sector.