TD Bank, which has had its problems in the Scott Rothstein Ponzi scheme, has agreed to pay $20m, to settle claims against the bank in a massive $223m life settlement fraud class action. TD Bank, an affiliate of Canada's Toronto Dominion Bank, allegedly vouched for customers that were administering the assets of a European life settlement company, Quality Investments, although the bank knew that there were serious problems.
The suit alleged that the bank allowed funds wired to trust accounts to be co-mingled, which meant that money invested for specific life insurance policies were used to pay unrelated premium obligations, to pay money to other investors (was it a Ponzi scheme ?), or to participants in the alleged scheme. TD Bank is said to have allowed the opening of more than thirty accounts, without identifying the investors, the nature of their investment, or their relationship to the life settlement company. The bank's verification of a customer relationship in good standing, with large balances, to investors was inaccurate and misleading, and may have facilitated investors to place their money with Quality.
Furthermore, TD bank reportedly failed to report wire transfers to known offshore tax haven jurisdictions known for money laundering activities, and it seemingly conveyed the impression, to investors, that it was overseeing the accounts.
While there have been criminal charges filed in the EU against four defendants, no criminal charges, arising out of this case, have been filed to date in the United States. Some observers have likened the case to the landmark life settlement case of Mutual Benefits Corp, which was a billion dollar Ponzi scheme.
The preliminary settlement is subject to approval of the US District Court in the Southern District of Florida.