TD Bank pays $1.2 Billion to settle Ponzi Scheme Case

TD Bank agreed to pay $1.2 billion to settle claims arising from a giant Ponzi scheme involving Stanford Financial. Stanford Financial collapsed in February 2009 after investigations by the Securities and Exchange Commission questioned whether the returns on the company’s C.D.s were too good to be true.

In 2009, The Securities and Exchange Commission accused Robert Allen Stanford, the chief of the Stanford Financial Group, of conducting “a massive ongoing fraud” in the sale of about $8 billion of high-yielding certificates of deposit held in the firm’s bank in Antigua. Also named in the suit were two other executives and some affiliates of the financial group.

In the complaint, filed in Federal District Court in Dallas, the SEC accused Stanford and two associates — James Davis, a director and chief financial officer of Stanford Group and the Antigua-based bank affiliate, and Laura Pendergest-Holt, the chief investment officer of both organizations — with misrepresenting the safety and liquidity of the uninsured CD’s.

The CD’s were sold by Stanford International Bank through the firm’s registered broker-dealer and investment adviser, which are in Houston. Both the bank, which claims $8.5 billion in assets and 30,000 clients in 131 countries, and the brokerage unit, which operates about 30 offices in the United States, were named in the SEC suit. Stanford Financial asserts that it advises about $50 billion in assets. Those CDs ended up essentially worthless because the bank did not have enough assets to back them up, and any federal bank insurance program did not guarantee the deposits. Federal prosecutors ultimately charged R. Allen Stanford, the firm’s founder, with engineering a long-running scheme to divert investors’ money to invest in real estate and finance a lavish lifestyle. Mr. Stanford was convicted in 2012 after a trial in a federal court in Houston, where Stanford had its U.S. headquarters. Mr. Stanford, 72, was sentenced to serve 110 years in federal prison. He is currently being held at a U.S. penitentiary in Sumterville, Fla.

Jeffrey Newman is a whistleblower lawyer representing clients worldwide and he can be reached at 617-823-3217 or at jeff@jeffnewmanlaw.com