TD Bank settles largest Rothstein investor lawsuit

The investors' legal team, led by Fort Lauderdale attorney William Scherer, has alleged that TD Bank and Gibraltar Private Bank & Trust Co. allowed Rothstein to pull off the $1.4 billion financial fraud, the largest in South Florida history. The Razorback Group consists of more than 50 investors who claim losses of more than $180 million. The name comes from one of the plaintiffs — Razorback Funding LLC.

Orlando Sentinel
February 24, 2012

TD Bank settles largest Rothstein investor lawsuit
Jon Burstein

TD Bank has settled the largest lawsuit filed against it by investors of Ponzi schemer Scott Rothstein, attorneys confirmed Friday in federal bankruptcy court.

Terms of the deal between North America's sixth-largest bank and the investors collectively known as the "Razorback Group" were not disclosed. The investors' legal team, led by Fort Lauderdale attorney William Scherer, has alleged that TD Bank and Gibraltar Private Bank & Trust Co. allowed Rothstein to pull off the $1.4 billion financial fraud, the largest in South Florida history.

The Razorback Group consists of more than 50 investors who claim losses of more than $180 million. The name comes from one of the plaintiffs — Razorback Funding LLC.

Scherer declined to discuss the terms of the settlement, while TD Bank spokeswoman Rebecca Acevedo said Friday afternoon that the bank would not comment at this time.

In January, a Miami federal jury leveled a $67 million verdict against TD Bank in a lawsuit filed by another group of Rothstein investors. The jurors found that TD Bank not only had knowledge that Rothstein was making false representations to investors but also "provided substantial assistance to advance the commission of the fraud."

TD Bank announced two weeks later that it had set aside about $255 million for potential litigation costs.

The TD Bank settlement came just days before the Razorback investors' case is scheduled to go to trial in Broward Circuit Court. Out of the 29 defendants who were once listed in the Razorback suit, Gibraltar will be the only one left.

U.S. Bankruptcy Judge Raymond B. Ray rejected an attempt Friday to postpone the trial. The bankruptcy trustee for Rothstein's Fort Lauderdale law firm, Rothstein Rosenfeldt Adler, wanted it delayed until Ray decided whether to approve an agreement reached between the trustee and Gibraltar.

Trustee Herbert Stettin reached a settlement last week with Gibraltar, with the bank agreeing to pay $10 million and two of the bank's insurers paying another $10 million. In addition, Gibraltar has agreed to allow the trustee to pursue a $50 million claim against its liability insurers.

If Ray approves the Gibraltar agreement after hearings next month, it would halt any other claims filed against the bank by Rothstein investors, including the Razorback Group.

Gibraltar's attorneys argued Friday that if the remaining investors' lawsuits are allowed to proceed, the claims are far greater than what the bank could survive. None of the investors would get money back if federal authorities have to take over the bank, said Gene Stearns, one of Gibraltar's attorneys.

The decision of whether jury selection will still begin March 1 rests with Broward Circuit Judge Jeffrey Streitfeld. He has scheduled a Tuesday court hearing on the matter.

Rothstein, 49, is serving a 50-year prison sentence for the Ponzi scheme. Seven others have taken plea deals related to Rothstein's criminal activities. More people are expected to be charged.

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Copyright © 2012, South Florida Sun-Sentinel

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