Friday, May 4, 2012 |
3 years ago
The banks used by Ponzi schemer Scott Rothstein are still feeling the heat from their involvement in the $1 billion-plus scheme that put him away for 50 years -- in two separate cases this week, the two main banks involved in the scheme saw civil proceedings move forward that could end up costing them millions.
When it comes to Coral Gables-based Gibraltar Private Bank and Trust, we already knew the bank posted a $7.7 million fourth-quarter loss back in February that included $10.1 million in unexplained expenses that were speculated to be in connection with a settlement with Rothstein investors
The South Florida Business Journal
confirmed Wednesday that not only was the $10.1 million set aside to pay for lawsuits but that Gibraltar actually revised the report
last month to reflect that it had decided to set aside $16.5 million instead.
While the articles point out that Gibraltar "has said it was a victim of Rothstein's fraud and did nothing wrong
," the bank agreed to a settlement with a group of Fort Lauderdale-based investors earlier this year rather than take it to trial.
Rothstein wasn't shy about throwing the bank under the bus
to investigators at his depositions last December: He said he had several Gibraltar employees, including Chairman and CEO Steve Hayworth, "in my pocket, and they were essential for me being able to do what I needed to do without having interference with the federal or state authorities."
Rothstein said he got them on his side by using the one resource he had plenty of -- money, which he used to give the higher-ups access to "the rock-star lifestyle in exchange for protecting us at the bank." He also says he invested $5 million in Gibraltar because they said they wouldn't investigate him if he did.
As for T.D. Bank, which Rothstein said was "critical" in his scheme, it found out this week that the judge in a $33 million suit against it is allowing racketeering claims into the suit
, which under the RICO Act means damages found against the bank will automatically triple, according to the South Florida Business Journal.
According to Rothstein, T.D. was not simply complicit in the scheme -- he said bank employees knowingly passed on fake balance statements and gave out false "lock letters" telling investors their money was protected. Rothstein also said T.D. executive Frank Spinosa covered for the firm when people got suspicious, "on several occasions actually verifying phony balances."
This, after the bank lost a $67 million case in January and reportedly spent another $170 million on a settlement a month later -- it was eager to take Rothstein's cash, but now it might be shoveling it back out again for a while.