3-Month TD Bank Trial in $4.5B Stanford Ponzi Scheme Closes
A written judgment from the court is expected in a few months.
In closing arguments at the Ontario Superior Court this week, lawyers for the court-appointed joint liquidators of Stanford International Bank (SIB) alleged negligence and “knowing assistance” by TD in providing a correspondent banking account that Stanford used to perpetuate fraud.
TD’s lawyers said the bank did not know about the fraud, and that damages should be limited to the estimated $5 million in profit from its relationship with SIB.
Stanford is serving a 110-year prison term in the United States after being convicted in 2012 of running a $7.2 billion Ponzi scheme.
Correspondent banking is the business of providing services to offshore financial institutions. The joint liquidators are Grant Thornton in the British Virgin Islands and the Cayman Islands.
The plaintiffs alleged that TD was aware of possible risks of providing the services and that the bank was “willfully blind, reckless and, at a bare minimum, negligent.”
They argued that even after reports of Stanford’s conduct came to light, TD did not terminate the services.
TD said media reports about Stanford were not easily accessible and that a U.S. government warning about criminal activity in Antigua’s financial sector mentioned by the plaintiffs did not explicitly mention Stanford.
TD estimated reasonably possible losses from legal and regulatory actions including the Stanford litigation of as much as C$1.4 billion ($1.13 billion) as of Jan. 31.
Provisions related to legal action will be taken when a loss becomes probable and an amount can be reliably estimated, it said in its 2020 annual report.
The joint liquidators are also seeking $510 million from Societe Generale SA, after a Swiss court ordered the bank to surrender $150 million deposited by Stanford. ($1 = 1.2397 Canadian dollars)
(Reporting By Nichola Saminather Editing by Marguerita Choy)
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