Security

TD Bank to pay $1.2B in Ponzi scheme lawsuit

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February 28, 2023

TD Bank will pay $1.2 billion as part of a lawsuit to compensate victims of a Ponzi scheme from more than 10 years ago.

In 2012, Allen Stanford was sentenced to 110 years in prison for 13 counts of fraud after he sold billions of dollars in fraudulent certificates of deposit, which were held in an offshore bank in Antigua. The lawsuit claimed TD Bank collected the deposits and ignored red flags about Stanford's operation, according to a report by CNN.

In the scheme, Stanford told clients they would receive a rate of return 3-4% higher than U.S. certificates of deposits, and that his bank, Stanford International Bank Ltd., would invest the money responsibly. Instead, Stanford spent the money on multiple homes in the U.S. and the Caribbean.

TD for its part denies any liability, but will pay the money to a court appointed receiver who will pay victims.

"As has been the case throughout these proceedings, TD expressly denies any liability or wrongdoing with respect to the multi-year Ponzi scheme operated by Stanford and makes no admission in connection to any Stanford matter as part of the settlement," the bank said in a statement. "TD provided primarily correspondent banking services to Stanford International Bank Limited and maintains that it acted properly at all times."

Other banks will also have to pay up, including HSBC and Independent Bank. They will pay $40 million and $100 million respectively for their alleged roles in the scheme.

"Given all the challenges faced by the receivership since 2009, this is nothing short of a monumental recovery," Kevin Sadler, lead counsel for the receiver, said in a statement.