Trials & Litigation

11th Circuit OKs $67M verdict against bank in case linked to ex-law firm chief's $1.2B fraud


A federal appeals court in Atlanta on Tuesday affirmed a $67 million jury award to investors fleeced by now-disbarred attorney Scott Rothstein.

Rejecting arguments that a federal district judge shouldn’t have let a former Toronto-Dominion bank executive testify at a civil damages trial (he took the Fifth a total of 193 times) and made other errors, the 11th U.S. Circuit Court of Appeals in its written opinion (PDF) upheld not only the jury verdict and damages award but a post-trial award under Federal Rule of Civil Procedure 37(b) sanctioning the bank and its counsel for discovery violations.

Coquina Investments was the only victim among those swindled of some $1.2 billion by the former managing partner of a South Florida law firm to take TD Bank to trial. The Texas-based group contended bank officials should have reacted to red flags instead of assuring investors in “lock letters” that their money was safe when it wasn’t, according to the Daily Business Review (sub. req.) and Reuters.

After the verdict, the bank settled with some other investors. It also changed legal counsel and is now represented by lawyer’s from the Miami office of McDermott Will & Emery and McGuireWoods, which is based in Richmond, Virginia.

Rothstein is serving a 50-year federal prison term, as a series of prosecutions continues against nearly two dozen people accused of wrongdoing in connection with Rothstein, the Rothstein Rosenfeldt Adler law firm and Rothstein’s family, friends and associates.

At last report, a former Broward County sheriff’s lieutenant was sentenced earlier this month to five years for serving as Rothstein’s muscle, at one point arranging for an underling to falsely arrest the ex-wife of a lawyer allied with Rothstein who was seeking an advantage in a child-custody fight.

The ex, Marcy Romeo, was strip-searched and held for about 18 hours after being taken into custody on trumped-up drug charges, the Sun Sentinel reported.

They utilized my autistic son’s medication to pull this off,” said Romeo to the judge before David Benjamin, 48, was sentenced and handcuffed. “I don’t understand how educated men can abuse their powers so grossly.”

Her former husband, Douglas Bates, has been disbarred and was also sentenced to five years, for wire fraud conspiracy. Benjamin pleaded guilty earlier this year in a civil rights conspiracy case.

See also:

ABAJournal.com: “Federal Jury Says TD Bank Must Pay $67M to Investors Swindled by Ex-Attorney Scott Rothstein”

ABAJournal.com: “Federal Judge Sanctions Law Firm and Client re Withheld Docs, Finds TD Bank Knew of Rothstein Fraud”

ABAJournal.com: “TD Bank to pay $52.5M to settle regulatory complaints related to ex-attorney Rothstein’s $1.2B fraud”

ABAJournal.com: “3 new pleas linked to ex-law firm chief serving 50 years in $1.2B swindle; 20th conviction now looms”

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