TD Bank Settles Ponzi Scheme Lawsuit for $1.2 Billion The suit accused the bank of ignoring red flags for years.
By Steve Huff •
In 2012, Allen Stanford was convicted of 13 fraud-related charges in Houston and was sentenced to 110 years in prison. But the case — a Ponzi scheme that saw Stanford selling billions of dollars worth of fraudulent certificates of deposit through his offshore bank Stanford International Bank Ltd. — wasn't over. It ended this week when TD Bank agreed to shell out $1.2 billion in settling a lawsuit that alleged it collected millions in Canadian and American currency while ignoring evidence something fishy was going on with Stanford's bank in Antigua.
CNN quoted from a TD Bank statement, which said in part that it "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's statement said it "provided primarily correspondent banking services to Stanford International Bank Limited and maintains that it acted properly at all times."
The settlement averted a trial that was slated to begin Monday in Houston. TD settled for the most significant amount, but Independent and HSBC banks were tapped for $100 million and $40 million, respectively. CNN reports that in addition to TD, HSBC, and Independent, investors believed Trustmark and Societe Generale Private Banking should have been aware of Stanford's alleged scheme, and lack of action on their part amounted to playing a role in perpetrating the scam over two decades.
Trustmark and Societe Generale settled their parts of the case for a combined $257 million earlier in 2023.
Stanford allegedly ran what amounted to a classic Ponzi scheme. While telling customers that their certificates of deposit were bringing 3 to 4% higher returns than the U.S. national average and promising reliable investment schemes, Allen Stanford was lining his pockets with their money, reportedly owning several homes in the U.S. and the Caribbean.
