THE FUTURE MODEL FOR RECOVERY AGAINST BANKS WHO FACILITATE PONZI SCHEMES

FROM THE - JOURNALS of Monte Friesner – Criminal & Intelligence Analyst and Consulaire for WANTED SA

~Contributed & Written by Kenneth Rijock ~

WILL THE ROTHSTEIN CASE BE THE FUTURE MODEL FOR RECOVERY AGAINST BANKS WHO FACILITATE PONZI SCHEMES ?

If the Bankruptcy Judge accepts the Trustee's proposals, in the Rothstein, Rosenfeldt  Chapter XI proceeding, it appears that creditors will be paid 100% of their proven claims. That's pretty good for a Ponzi scheme, is it not ? The problem is, much if it is coming out of the pockets of the bank who was too busy basking in its association with a prominent, free-spending law firm to see the forest for the trees.

TD Bank, which has already paid out a fortune to victims of Rothstein's complex Ponzi scheme, will be paying out additional sums that, when added to funds recovered by the Trustee in claw back suits*,  will be sufficient to pay all creditors one hundred per cent, more or less. The bank's employees allegedly:

(1) Falsified documents, which misled investors.

(2) Impersonated investors and senior bank officers, all to deceive prospective investors.

(3) Used the bank's prestige to convince investors that the Ponzi scheme had the support of a major bank.

If this case becomes the model for recovery, look for banks where the Ponzi schemers deposited their  money to become the primary targets for huge demands by Bankruptcy Trustees. This means that the banks must identify any potential Ponzi scheme very early on, lest they later become the principal funding source for repaying the victims. I cannot stress enough the importance of identification of any possible Ponzi scheme, especially amongst the bank's most affluent clients. Do not be mesmerised by successful bank clients who  move large balances through the bank; are there any Red Flags, indicators of potential Ponzi scheme activity ? Check on client activity now, and check often, and avoid financial grief, and massive and continuing reputation damage, later.

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*Suits seeking to recover funds paid out to investors as "profits," but in reality were merely

funds contributed by other victims, and paid to earlier investors.