Frank Spinosa, the TD Bank Regional Vice President who authorities charge facilitated Scott Rothstein's massive Ponzi scheme, by writing bogus "Lock Letters," which falsely stated that investor profits were frozen, has entered a plea of guilty, and executed a plea agreement. Spinosa pled to a single count, meaning that his maximum sentence is five years in Federal Prison, and a $250,000 fine.
Was his signature on some of those letters forged by the individuals who worked with Rothstein, to perpetrate the Ponzi scheme, as the defendant claimed ? Inasmuch as the case will not now go to trial, that question will remain unanswered, as will any involvement of senior TD Bank executives in the fraud, if any. Did anyone at the executive level know that it was a Ponzi scheme, and when did they know it ?
The takeaway for compliance officers, from the Rothstein case: if you have a successful bank client, always check out whether he or she is really engaged in the business that is driving the financial success that the bank is profiting from. In this case, nobody apparently ever check to verify whether the Rothstein law firm had ever filed the hundreds of civil cases which gave rise to the sale of court settlements to the victims. The court dockets are a matter of public record, and anyone making inquiries would have seen immediately that the firm's caseload did not support the huge volume of money it was taking in.