TD Bank reaches $1.2 billion settlement in Ponzi scheme lawsuit

Toronto-Dominion Bank (TD Bank) agreed to pay $1.205 billion to settle a lawsuit alleging its involvement in an infamous $7 billion Ponzi scheme orchestrated by disgraced financier Allen Stanford over a decade ago but denied any wrongdoing.

TD Bank will forward the money to a court-appointed receiver who in turn will pay the victims of the scheme.

Stanford was sentenced to 110 years in prison in 2012 after being found guilty on 13 counts of fraud-related charges in Houston.

The charges stemmed from selling billions of dollars in fraudulent certificates of deposit administered by Stanford International Bank Ltd., an offshore bank in Antigua.

The lawsuit claimed TD Bank collected these deposits in US and Canadian dollar values and continuously ignored red flags about the Antigua-based bank over the years.

According to TD Bank, it expressly denies any liability or wrongdoing concerning the multi-year Ponzi scheme operated by Stanford and makes no admission in connection to any Stanford matter as part of the settlement.

TD Bank added that it provided primarily correspondent banking services to Stanford International Bank Limited and maintains that it acted properly at all times.

The settlement announcement comes the same day the banks were scheduled for trial in Houston federal court, averting the trial. Additionally, HSBC will pay $40 million, and Independent Bank, formerly Bank of Houston, will pay $100 million, the receivership’s counsel confirmed.

Investors alleged that five banks: Trustmark, TD, Bank of Houston (now Independent Bank Group), HSBC, and Societe Generale Private Banking, or Suisse, aided and abetted Stanford in the 20-year scheme as they knew or should have known about the alleged fraud he perpetrated.

Societe Generale reached a settlement of $157 million and Trustmark agreed to pay $100 million earlier this year.

The latest settlement brings the total recoveries amount to more than $1.6 billion.