TD Financial institution, considered one of Canada’s greatest 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 abnormal buyers 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 buyers, “to keep away from the distraction and uncertainty” of protracted litigation. In an announcement, TD, as Toronto-Dominion Financial institution is understood, mentioned it denied any wrongdoing or legal responsibility for having offered banking companies to Stanford’s offshore financial institution in Antigua.
The take care of 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 keeping with the Stanford Monetary receiver.
In all, the offers with the 5 banks, which offered companies to Stanford Monetary throughout its twenty years in operation, totaled $1.6 billion. The receiver had been making ready to go to trial with a few of the banks.
The settlement is a serious victory for the court-appointed receiver, Ralph Janvey, who has struggled for years to recuperate 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 belongings 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 legal professionals from Baker Botts had recovered $1.1 billion, with $680 million going to prospects and buyers.
“That is a rare end result for the victims of the Stanford fraud,” Kevin Sadler, a companion at Baker Botts, mentioned in an announcement. “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 Trade Fee and different businesses, and after a information report had targeted on whether or not the returns on the corporate’s C.D.s have been too good to be true.
Federal prosecutors finally charged R. Allen Stanford, the agency’s founder, with engineering a long-running scheme to divert buyers’ cash to spend money on actual property and finance a lavish way of life. Mr. Stanford was convicted in 2012 in a trial in federal court docket 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 very least 3 times as a lot cash from prospects.
Mr. Madoff’s victims additionally included various celebrities and high-profile buyers. In contrast, most of Stanford Monetary’s prospects have been buyers of extra modest means, who purchased the C.D.s after brokers pitched them as secure, high-yielding investments.
Stanford Monetary buyers have needed to wait far longer to get a reimbursement than buyers 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 street to recovering cash for Stanford Monetary’s prospects is a recent reminder of the challenges legal professionals 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 buyers 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 gained various lawsuits to claw again so-called fictitious earnings that have been paid out to buyers 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, considered one of Mr. Madoff’s predominant 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 issues 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 few of the banks within the Stanford Monetary scandal.
“In the event you financial institution a 10-figure Ponzi scheme,” Mr. Sadler mentioned, “then you will have 10-figure accountability.”