More documents surfaced Thursday in the war between TD Bank and a Texas-based investment group cheated by imprisoned attorney Scott Rothstein in his $1.2 billion fraud.
Attorney David Mandel, who represents Coquina Investments LLC, disclosed a new email exchange produced by the bank last week showing its knowledge of so-called lock letters written on bank stationery and intended to reassure prospective Rothstein investors about the safety of their funds.
The emails were circulating among bank employees after Rothstein fled the country to Morocco as his Ponzi scheme collapsed in late 2009.
“The significance of this new evidence is hard to overstate,” wrote Mandel, who is pursuing five motions for sanctions against the bank and its Greenberg Traurig trial attorneys for discovery violations after winning a $67 million jury award in the trial in January.
TD Bank also cut more ties to Greenberg Traurig, which lost at trial to Coquina and later admitted making embarrassing discovery mistakes in the case. A Miami federal jury decided in January that the bank aided and abetted Rothstein’s settlement financing scheme by staging presentations at TD branches for would-be investors and producing lock letters assuring them their money was safe.
On Tuesday, an attorney with McGuireWoods filed a notice of appearance for the bank in the bankruptcy case involving Rothstein’s defunct Fort Lauderdale law firm.
Greenberg was replaced by McQuireWoods in the investor cases by Coquina and another group after Mandel complained to a Miami federal judge about discovery lapses by defense lawyers represented TD Bank. Mandel complained he hadn’t received a copy of a bank anti-money-laundering policy that the defense had previously asserted did not exist. Mandel also said he as denied a copy of a Rothstein customer due diligence form that hid the words “high risk.”
The latest email revelations support Coquina’s claim that Rothstein’s banking activity was known up the chain of command at TD Bank long ago.
The email exchanges among the bank executives came after a Wall Street Journal reporter asked if Frank Spinosa, a TD regional vice president, was complicit in Rothstein’s fraud by releasing funds from restricted accounts.
Rothstein claimed in a deposition he paid Spinosa $50,000. Attorneys for Spinosa, who resigned from the bank, have said their client did nothing wrong.
The emails show even Spinosa’s boss was skeptical. As Rothstein’s fraud unraveled in 2009, Kevin Gillen, president of TD Bank’s Florida operation, Spinosa and a bank spokeswoman sought to shape a response to the reporter’s inquiry.
Spinosa pleaded with Gillen to “help salvage his reputation,” Mandel wrote. Spinosa wanted the bank to issue a statement saying, “Mr. Spinosa denies any complicity or wrongdoing.”
Spinosa wanted to distance himself from the lock letters, arguing: “I did not author those letters. Scott did and you have emails to prove it. I issued those to Scott. I did not comply (sic) to any fraud.”
Gillen responded: “Those letters were provided by you on TD letter head and signed by you. I think that is a statement of fact.”
At trial, TD Bank attorneys denied helping Rothstein’s fraud and argued the lock letters were not false.
Miami attorney Sam Rabin, who represents Spinosa, said the exchange supports his client’s case.
“These e-mails bear out what Frank’s position has been all along. He did not know about the fraud, and the letters he signed were requested and dictated by Scott Rothstein,” Rabin said. He added Spinosa believed the letters to be accurate.
Mandel wrote that Gillen’s response shows the bank was well aware that the defense was untenable.
Mandel said in his notice of new evidence that the emails came from discovery in the related Rothstein civil fraud case, Emess Capital v. TD Bank .
There have been allegations of numerous discovery violations by the investors since the January verdict, and U.S. District Judge Marcia Cooke of Miami has held two hearings on sanctions — one that was closed to the public Tuesday.
The closed hearing concerned 2,600 alerts mentioned in a TD Bank board transcript. How many of the alerts mentioned in court are related to Rothstein remains unclear because the matter remains under seal.
While Cooke was conducting the closed sanctions hearing against TD Bank and its former attorneys, a new lawyer was notifying a Fort Lauderdale bankruptcy judge that he was stepping in on the bank’s behalf in Rothstein Rosenfeldt Adler’s bankruptcy case.
The notice filed by Daniel F. Blanks of the Jacksonville office of McGuireWoods appears to set the stage for phasing out Greenberg Traurig as the bank’s counsel in litigation flowing from ex-lawyer Scott Rothstein’s Ponzi scheme.
Greenberg has not filed a motion to withdraw from the bankruptcy case, and the firm had no comment on its status.
Blanks said Thursday that he could not comment on Greenberg’s status or his entry into the bankruptcy case.
John Genovese of Genovese, Joblove & Battista in Miami, one of the attorneys for the bankruptcy trustee, said he was not aware a McGuireWoods attorney had entered the case.
Greenberg has had a three-year run as counsel for TD Bank.
Cesar Alvarez, Greenberg’s Miami-based executive chairman, and Donna Evans, a Coquina trial attorney who left Greenberg suddenly in March, apologized to Cooke in Miami at a May sanctions hearing.
William Scherer of Scherer & Conrad in Fort Lauderdale said he wonders whether he could have obtained a larger settlement for a third investment group, Razorback Funding, had he known of the undisclosed documents when he negotiated a $170 million settlement with the bank on the eve of trial in March.
John Pacenti can be reached at (305) 347-6638.