TD Bank reaches $1.2 billion settlement in Ponzi lawsuit

New York (CNN) TD Bank (AMTD) will pay $1.2 billion to settle a lawsuit alleging his involvement in an infamous $7 billion Ponzi scheme orchestrated by disgraced financier Allen Stanford more than a decade ago.

The Toronto-Dominion Bank agreed to pay $1.205 billion to a court-appointed receiver who will in turn reimburse victims of the scheme, but denied any wrongdoing, the bank said in a statement Monday.

Stanford was sentenced to 110 years in prison in 2012 after being convicted of 13 counts related to fraud in Houston. Prosecutors accused Stanford of selling billions of dollars in fraudulent certificates of deposit administered by Stanford International Bank Ltd., an offshore bank in Antigua, ensnaring thousands of victims.

The lawsuit claimed that TD Bank collected these deposits in US and Canadian dollars and continually ignored red flags about the Antigua-based bank over the years.

“As has been the case throughout these proceedings, TD expressly denies any liability or wrongdoing with respect to the multi-year Ponzi scheme operated by Stanford and makes no admissions in connection with any Stanford matters under the settlement. “said the Canadian company. the bank said in a statement.

“TD provided principally correspondent banking services to Stanford International Bank Limited and maintains that it acted properly at all times,” the bank said.

The announcement of the settlement comes the same day the banks were due to stand trial in federal court in Houston, avoiding a trial. In addition, HSBC will pay $40 million and Independent Bank, formerly Bank of Houston, will pay $100 million, the receivership attorney confirmed.

“HSBC is pleased to have resolved this claim, which relates to matters over a decade old, without any admission of liability or wrongdoing,” the bank said in a statement.

Independent Bank did not immediately respond to a request for comment. In a securities filing, the company denied any liability or wrongdoing.

Investors alleged five banks – Trusted brand (TRMC)TD, Bank of Houston (now Independent banking group (IBTX)), HSBC (HBCYF) and Societe Generale Private Banking, or Switzerland – knew or should have known of the alleged fraud perpetrated by Stanford, and that they aided and abetted the disgraced financier in the 20-year scheme.

The latest settlement brings the total amount of recoveries to more than $1.6 billion.

“Given all the challenges the receivership has faced since 2009, this is nothing short of a monumental recovery,” Kevin Sadler, lead receivership counsel, said in a statement.

TD said it agreed to settle to “avoid the distraction and uncertainty of continuing lengthy legal proceedings.”

Stanford customers were told that the certificates of deposit they purchased had on average a 3-4% higher rate of return than US CDs and that the bank made safe investments in products such as stocks and the obligations. But the money was actually used to fund the Texas mogul’s lavish lifestyle, including several homes in the Caribbean and the United States.

Societe Generale reached a $157 million settlement and Trustmark agreed to pay $100 million earlier this year.

— James O’Toole contributed to this report.

Leave a Comment