Another abject lesson for bankers who love major clients too much to continually monitor them for potential financial crime. In the Scott Rothstein Ponzi scheme case, we have previously* covered Mr. Rothstein's from-prison objection to TD Bank, his primary bankers, settling all claims with and through the bankruptcy trustee. Now, others have filed objections.
Creditors of the Rothstein law firm, as well as victims, have also joined in with their objections to limitations upon claims and litigation against TD Bank, alleged to have facilitated the Rothstein Ponzi scheme. Nobody wants to be barred from filing multi-million dollars suits against the bank.
Should these objections result in the Court denying the bank a solution to its contingent liability, through a finite settlement with the bankruptcy trustee. With no bar upon further civil litigation, a number of future large suits, with possibly punitive damage awards, will probably occur. This is not good news for the bank.
Therefore, remember well that your failure to identify a Ponzi schemer as a current bank client, early on, could later result in a continuing litigation nightmare. Whenever you have a major client who enjoys extraordinary success in his or her business, often on an accelerated basis, you want to be sure that the success is not generated through criminal activity.