TD Bank Settles $1.2 Billion Ponzi Scheme Lawsuit

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

Toronto-Dominion Bank agreed to pay $1.205 billion to a court-appointed trustee, who will in turn repay the scheme’s victims, but denied any wrongdoing, the bank said in a statement Monday

Stanford was sentenced to 110 years in prison in 2012 after pleading guilty to 13 counts of fraud in Houston. Prosecutors charged Stanford with selling billions of dollars worth of fraudulent certificates of deposit managed by Stanford International Bank Ltd., an offshore bank in Antigua, with thousands of victims trapped.

The lawsuit alleged that TD Bank collected these deposits in US and Canadian dollar values ​​and continuously ignored red flags over the years about the Antigua-based bank.

“As has been the case during these proceedings, TD expressly disclaims any liability or wrongdoing with respect to the multi-year Ponzi scheme operated by Stanford and is making no admission related to any Stanford matter as part of the settlement,” the statement said. Canadian-based bank said in a statement.

“TD primarily provided correspondent banking services to Stanford International Bank Limited and claims to have acted correctly at all times,” the bank said.

The settlement announcement comes on the same day the banks were set to face trial in Houston federal court, preventing the trial. In addition, HSBC will pay $40 million and Independent Bank, formerly Bank of Houston, $100 million, the trustee confirmed.

“HSBC is pleased to have resolved this claim, which relates to matters more than a decade old, without admission of any 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 liability or wrongdoing.

Investors claimed five banks — Quality mark (TRMK)TD, Bank of Houston (now Independent Bank Group (IBTX)), HSBC (HBCYF) and Societe Generale Private Banking, or Suisse — knew or should have known of the alleged fraud perpetrated by Stanford, and that they aided and supported the disgraced financier in the 20-year scheme.

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

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

TD said it agreed to settle to “avoid the distraction and uncertainty of pursuing a lengthy legal process.”

Stanford clients were told that the certificates of deposit they purchased averaged 3-4% higher returns than US CDs, and that the bank was safely investing in products such as stocks and bonds. But the money was actually used to fund the Texan tycoon’s lavish lifestyle, which included multiple homes in the Caribbean and the US.

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

— James O’Toole contributed to this report.






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