A US District Court judge has denied a motion to dismiss a civil suit*, filed by the Securities & Exchange Commission, against former TD Bank Regional Vice President Frank Spinosa, who the agency accuses of facilitating the billion-dollar Ponzi scheme perpetrated by convicted fraudster/attorney Scott Rothstein. Rothstein's law firm was a major client of TD Bank, with 22 accounts. The three fraud counts include a 10b-5 charge.
(1) Issued what are referred to as "lock letters," which stated that settlement funds were restricted, to allow distribution of funds on deposit at the bank only to a particular investor, at Scott Rothstein's direction. Some of the letters "confirmed" $20m and $22m accounts, but in truth and in fact none of those accounts contained more than $100.
(2) Made false statements to investors regarding the existence of the funds.
The Court granted in part, and denied in part, the motion of defense counsel; the SEC will have twenty days to plead fraud with particularity; dismissal of the aiding and abetting count was denied.
Will criminal charges follow ? We cannot say, but Spinosa exercised his 5th Amendment privilege against self-incrimination , when appearing as a witness in another civil suit last year, and his attorney in this civil suit is a well-known Miami criminal defense lawyer.
*Securities & Exchange Commission vs. Spinosa, Case No.: 13-cv-62066-KAM (SD FL).