TD Bank, Rothstein Creditor Reach $41M Deal To Resolve Ponzi Scheme Claims

by Tara Arick on March 5, 2013 · 0 comments

in Bankruptcy

- From LexisNexis® Mealey’s™ Daily Legal News.

The federal bankruptcy judge presiding over the Chapter 11 proceeding of former law firm Rothstein Rosenfeldt Adler (RRA) on Feb. 26 agreed to a settlement in which TD Bank will pay $ 41 million to resolve allegations that it committed fraud and aided in money laundering as part of Scott Rothstein’s Ponzi scheme that led to RRA’s bankruptcy (In Re: Rothstein Rosenfeldt Adler, No.09-34791, S.D. Fla. Bkcy.).


RRA filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Florida in 2009 following the discovery of Rothstein’s Ponzi scheme. Rothstein was convicted and sent to prison.

Under the agreement approved Feb. 26, the bank will pay $ 41 million to Emess Capital LLC to settle claims brought by Emess against TD Bank in the U.S. District Court for the Southern District of Florida (Emess Capital LLC v. Scott W. Rothstein and TD Bank, No. 10-60882, S.D. Fla.).

Emess contended that Rothstein and TD Bank owed it $ 61 million for fraud and money laundering related to the Ponzi scheme and the subsequent bankruptcy of RRA. Emess was the largest secured creditor in the bankruptcy proceeding.

Liquidation Plan

On Feb. 5, the trustee overseeing the Chapter 11 liquidation filed a liquidation plan that included a $ 72.45 million settlement with TD Bank that would have barred all parties and creditors from asserting claims against the bank or the bankruptcy estate.

That plan called for TD Bank to pay $ 72.45 million to the bankruptcy estate and in exchange, all parties, including creditors and parties asserting claims against TD Bank who could have filed claims against RRA’s bankruptcy estate, would be “forever barred and enjoined from asserting, continuing or prosecuting any claim or cause of action against any TD Bank release pertaining to Rothstein’s Ponzi scheme.”

Instead, TD Bank and Emess reached the current agreement that resolves the fraud and money-laundering claims related to the RRA bankruptcy and settles all disputes, differences, claims, charges, suits, causes of action, allegation, issues and other matters arising from the Ponzi scheme.

The liquidation trustee, Herbert Stettin, is represented by Paul Steven Singerman, Jordi Guso, Christopher A. Jarvinen and Isaac M. Marcushamer of Berger Singerman in Miami and John Genovese and Jesus Suarez of Genovese Joblove & Battista in Miami. TD Bank is represented by Daniel F. Blanks of McGuire Woods in Jacksonville, Fla., John B. Hutton III and Mark D. Bloom of Greenberg Traurig in Miami and Robert M. Kline and Audrey M. Pumariega of McDermott Will & Emery in Miami. Emess is represented by David S. Mandel of Mandel & Mandel in Miami.

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