Banks can pay a heavy price for failing to identify clients who are Ponzi schemers. Gibraltar Private Bank and Trust, where convicted attorney/Ponzi schemer Scott Rothstein's law firm banked, has reportedly agreed to pay a large settlement to Herbert Stettin, the bankruptcy trustee for Rothstein Rosenfelt Adler (RRA). The trustee alleged that Gibraltar bankers routinely permitted hundreds of overdrafts in RRA accounts, many in the hundreds of thousands of dollars, and that the Ponzi scheme could not have been perpetrated without the bank's help. The bank was the subject of an Order to Cease and Desist*, for failing to maintain and effective and adequate anti-money laundering programme.
The reported terms of settlement:
(1) Ten million dollars will be paid directly to the trustee.
(2) Ten million dollars will be contributed by Gibraltar's insurers.
(3) The bank's $50m claim against its liability insurers, who have denied coverage, is to be assigned to the trustee.
Note that there are additional lawsuits pending against the bank, but the settlement, if approved by the United States Bankruptcy Judge, is said to bar those actions. One alone is reported to be for $200m.
Another bank used in Rothstein's elaborate Ponzi scheme, where investors purchased non-existent claims for discrimination and harassment, allegedly against prominent companies and individuals, Toronto-Dominion Bank, recently was hit with a $67m judgment. It was alleged that the bank gave investors assurances, later found to be untrue, that their money was safe, whilst the accounts were being depleted by Rothstein.
Over on the criminal side, RRA administrative assistant Marybeth Feiss has entered a guilty plea in US District Court** in Florida, to Conspiracy to Defraud the United States. Feiss, who illegally "bundled" campaign contributions for local, state and national candidates supported by Rothstein, who was seeking to gain influence, violated Federal Election campaign laws when she made contributions in the names of individuals whom were not the actual contributors. Feiss will be sentenced on 4 May, and could receive up to five years in Federal Prison; she has been cooperating with law enforcement.
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*Order No.: SE-10-046
http://ots.treas.gov/_files/enforcement/97490.pdf
**United States vs. Feiss, Case No.: 11-cr-60282-KAM (SD FL).
The reported terms of settlement:
(1) Ten million dollars will be paid directly to the trustee.
(2) Ten million dollars will be contributed by Gibraltar's insurers.
(3) The bank's $50m claim against its liability insurers, who have denied coverage, is to be assigned to the trustee.
Note that there are additional lawsuits pending against the bank, but the settlement, if approved by the United States Bankruptcy Judge, is said to bar those actions. One alone is reported to be for $200m.
Another bank used in Rothstein's elaborate Ponzi scheme, where investors purchased non-existent claims for discrimination and harassment, allegedly against prominent companies and individuals, Toronto-Dominion Bank, recently was hit with a $67m judgment. It was alleged that the bank gave investors assurances, later found to be untrue, that their money was safe, whilst the accounts were being depleted by Rothstein.
Over on the criminal side, RRA administrative assistant Marybeth Feiss has entered a guilty plea in US District Court** in Florida, to Conspiracy to Defraud the United States. Feiss, who illegally "bundled" campaign contributions for local, state and national candidates supported by Rothstein, who was seeking to gain influence, violated Federal Election campaign laws when she made contributions in the names of individuals whom were not the actual contributors. Feiss will be sentenced on 4 May, and could receive up to five years in Federal Prison; she has been cooperating with law enforcement.
____________________________________________________________________________
*Order No.: SE-10-046
http://ots.treas.gov/_files/enforcement/97490.pdf
**United States vs. Feiss, Case No.: 11-cr-60282-KAM (SD FL).
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