FinCEN Fines TD Bank for Failing to Report Nearly $1 Billion in Suspicious Transactions Related to Florida Ponzi Scheme


The Financial Crimes Enforcement Network (FinCEN) today announced the assessment of a $37.5 million civil money penalty against TD Bank, N.A. for failure to file suspicious activity reports related to the massive Ponzi scheme orchestrated by Florida attorney Scott Rothstein. The Office of the Comptroller of the Currency also announced the assessment of a concurrent $37.5 million penalty against the Bank for related violations. Additionally, the Securities and Exchange Commission has assessed a separate $15 million penalty against the Bank for related securities violations.

From April 2008 through September 2009, the Bank willfully violated the Bank Secrecy Act’s reporting requirements by failing to detect and adequately report suspicious activities in a timely manner. During that period, Rothstein orchestrated a major Ponzi scheme by fraudently inducing victims to invest in purported settlements involving whistleblower and sexual harassment lawsuits. Thousands of transactions flowed through his multiple law firm accounts at TD Bank which included transactions related to Rothstein’s Ponzi scheme. While the Rothstein law firm’s accounts alerted in TD Bank’s anti-money laundering surveillance software for suspicious activity, TD Bank employees failed to recognize the suspicious activity and file SARs in a timely manner. On January 27, 2010, Rothstein pleaded guilty to a racketeering conspiracy in the United States District Court for the Southern District of Florida and is currently serving a 50-year prison sentence.

In 2011, the Bank conducted a review of the Rothstein transactions. Based on the results of the review it filed five late suspicious activity reports, totaling an estimated $900 million in aggregate suspicious transaction activity occurring between April 2008 and October 2009. A lack of adequate training for both the anti-money laundering and business staff contributed to the failure to recognize this suspicious activity.

“In the face of repeated alerts on Mr. Rothstein’s accounts by the Bank’s anti-money laundering surveillance software over an 18 month period, the Bank did not do enough to prevent the pain and financial suffering of innocent investors,” FinCEN Director Jennifer Shasky Calvery stated. “Financial institutions must do a better job of protecting our financial system and citizens from such harm. It is not acceptable to have a poorly resourced and trained staff overseeing such a critical function.”

FinCEN press release link: click here