TD Financial institution, one in all Canada’s largest lenders, mentioned Monday that it had agreed to pay $1.2 billion to settle claims arising from an enormous Ponzi scheme involving Stanford Monetary, a scandal that erupted 14 years in the past and value peculiar traders some $7 billion.
The financial institution mentioned it had reached the settlement with the Stanford Monetary receiver, who’s making an attempt to recoup funds for traders, “to keep away from the distraction and uncertainty” of protracted litigation. In a press release, TD, as Toronto-Dominion Financial institution is understood, mentioned it denied any wrongdoing or legal responsibility for having supplied banking companies to Stanford’s offshore financial institution in Antigua.
The cope with TD was bigger than settlements reached with 4 different banks: Trustmark Nationwide, Société Générale, HSBC and Impartial Financial institution, previously Financial institution of Houston, in line with the Stanford Monetary receiver.
In all, the offers with the 5 banks, which supplied companies to Stanford Monetary throughout its 20 years in operation, totaled $1.6 billion. The receiver had been getting ready to go to trial with a number of the banks.
The settlement is a serious victory for the court-appointed receiver, Ralph Janvey, who has struggled for years to get well cash for the 18,000 prospects who invested in high-yielding certificates of deposit issued by Stanford Monetary’s offshore financial institution. The C.D.s ended up largely nugatory as a result of the financial institution didn’t have sufficient property to again them up, and the deposits weren’t assured by any federal financial institution insurance coverage program.
Earlier than the settlement with the banks, Mr. Janvey and attorneys from Baker Botts had recovered $1.1 billion, with $680 million going to prospects and traders.
“That is a rare outcome for the victims of the Stanford fraud,” Kevin Sadler, a associate at Baker Botts, mentioned in a press release. “Given all of the challenges confronted by the receivership since 2009, that is nothing wanting a monumental restoration.”
Stanford Monetary collapsed in February 2009, amid investigations by the Securities and Change Fee and different businesses, and after a information report had centered on whether or not the returns on the corporate’s C.D.s had been too good to be true.
Federal prosecutors in the end charged R. Allen Stanford, the agency’s founder, with engineering a long-running scheme to divert traders’ cash to put money into actual property and finance a lavish life-style. Mr. Stanford was convicted in 2012 in a trial in federal courtroom in Houston, the place Stanford had its U.S. headquarters.
Mr. Stanford, 72, was sentenced to serve 110 years in a federal jail. He’s being held at a U.S. penitentiary in Sumterville, Fla.
The Stanford Ponzi scheme was revealed simply two months after Bernard Madoff had turned himself in to federal authorities in New York for working a Ponzi scheme at his funding agency. The fraud carried out by Mr. Madoff has at all times overshadowed Mr. Stanford’s, partly as a result of Mr. Madoff looted at the least 3 times as a lot cash from prospects.
Mr. Madoff’s victims additionally included a variety of celebrities and high-profile traders. Against this, most of Stanford Monetary’s prospects had been traders of extra modest means, who purchased the C.D.s after brokers pitched them as secure, high-yielding investments.
Stanford Monetary traders have needed to wait far longer to get a refund than traders in Mr. Madoff’s scheme. (Mr. Madoff died in 2021, at 82, whereas serving a 150-year sentence at a jail in Butner, N.C.)
The lengthy highway to recovering cash for Stanford Monetary’s prospects is a recent reminder of the challenges attorneys for the collapsed cryptocurrency firm FTX face as they search to recoup billions in buyer funds that federal prosecutors contend its founder, Sam Bankman-Fried, siphoned away.
Mr. Madoff’s traders have recouped a lot of the cash they invested due to a collection of profitable lawsuits introduced by the receiver of the agency. The receiver, Irving Picard, has received a variety of lawsuits to claw again so-called fictitious income that had been paid out to traders earlier than the rip-off was uncovered.
Buyers in Mr. Madoff’s agency additionally benefited from a 2014 settlement that federal prosecutors in Manhattan reached with JPMorgan Chase, one in all Mr. Madoff’s fundamental banking companions. The deferred prosecution settlement with JPMorgan, the nation’s largest financial institution, returned $1.7 billion for victims. Prosecutors had charged the financial institution with turning a blind eye to a few of what went on at Mr. Madoff’s agency, and for failing to adequately alert regulators in the US about considerations it had along with his operation.
In an e mail, Mr. Sadler mentioned the deal that prosecutors had struck with JPMorgan was a information for the settlement with a number of the banks within the Stanford Monetary scandal.
“Should you financial institution a 10-figure Ponzi scheme,” Mr. Sadler mentioned, “then you could have 10-figure duty.”