Financial Fraud Alert - July 2012

Author:Mr Timothy O'Driscoll
Profession:Drinker Biddle & Reath LLP

Who: Plaintiffs: RWRK Investments, LLC, Bonnie Barnett, Robert L. Kagan, Roger Wittenberns

Defendant: TD Bank, N.A. and Frank Espinosa

What: This complaint stems from an alleged Ponzi scheme perpetrated by Scott Rothstein and his law firm, Rothstein, Rosenfeldt and Adler ("RRA"). According to the complaint, Rothstein's Ponzi scheme involved "solicit[ing] investors to invest in purported confidential structured settlements [which] . . . were falsely presented as having been reached between putative plaintiffs and defendants based upon claims of sexual harassment and/or whistle blower actions." Plaintiffs, who were allegedly investors in Rothstein's Ponzi scheme, claim to have been "defrauded out of a total of $800,000."

The allegations further state that "[t]o further his criminal scheme, Rothstein regularly told investors that 'RRA's trust accounts were maintained with a well-established international banking institution. . . .'" Allegedly, "[t]hat well-established international banking institution was [defendant] TD Bank." The complaint alleges that "TD Bank was the financial nucleus of the Rothstein Ponzi scheme as hundreds of millions, if not over a billion, of Ponzi scheme dollars flowed through TD Bank accounts." The complaint states that TD Bank played a role in Rothstein's scheme by "lull[ing] investors, including Plaintiffs, into a false sense of security by providing written assurances that settlement funds existed in separate accounts and could only be disbursed directly to the investors." According to the complaint, assurances were provided by "so-called 'lock-letters' on TD Bank letterhead, signed by a bank officer, advising the investor that the settlement...

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