The trial may be over but the legal war continues unabated between TD Bank and Coquina Investments. The Texas firm that recently won a $67 million verdict for TD Bank’s complicity with a customer in perpetrating a massive fraud recently released e-mails that allegedly implicate the bank’s Florida president.
In a blunt response filed in a Miami federal court last week, TD Bank says the newly disclosed e-mails indicating Kevin Gillen, its Florida president, knew a high-level bank colleague colluded with fraudster Scott Rothstein were “innocuous.” It accuses Coquina of making a “sweeping factual inference” in suggesting Gillen was implicated in liability for Rothstein’s $1.2 fraud scheme.
The bank also denied allegations it concealed the e-mails from Coquina at trial. It explained that the e-mails were marked as “privileged” and exempt from discovery, and accused Coquina of improperly releasing the e-mails in its court filing of June 14. It argues that because its inside counsel was copied on the e-mails, it had “reasonable basis for asserting privilege.”
Coquina’s landmark jury verdict against TD Bank in January is the first to hold a bank liable for “aiding and abetting fraud.” Rothstein used his accounts at TD and Miami-based Gibraltar Bank to run a three-year Ponzi scheme that sold false shares in sexual harassment legal settlements to deep-pocketed individual and corporate victims. The new e-mails mark the first time a TD Bank executive at Gillen’s level has been accused of wrongdoing in the Rothstein case.
Gillen learned of phony ‘lock letters’ from bank counsel, bank says
The new e-mails record a rapid back-and-forth conversation between Gillen and bank regional vice president Frank Spinosa. The two discuss the sham “lock letters” Spinosa issued to Rothstein victims on bank letterhead. Spinosa, who emerged in trial testimony as a key player in Rothstein’s fraud, used the letters to convince fraud “investors” their funds were safe in restricted accounts at TD Bank.
The e-mails between Gillen and Spinosa were exchanged on November 4, 2009, or five days after the fraud scheme fell to pieces and Rothstein boarded a charter jet to Morocco. Adding insult to injury, Morocco is a country that TD Bank deemed as a “high risk” country in its money-laundering control guides.
After a Wall Street Journal reporter attempted to contact Spinosa for comment on a story reporting he helped Rothstein’s fraud, Spinosa e-mailed Gillen, asking the bank to issue a response that “Mr. Spinosa denies any complicity or wrong doing.”
Gillen told Spinosa in an e-mail, “The problem is that you did in fact author, sign and issue these letters,” adding later, “Frank, Those letters were provided by you on TD letter head and signed by you. I think that is a statement of fact.”
Coquina said in its June 14 court filing that Gillen’s knowledge of the letters at this early stage “amounts to an admission of liability at the highest levels” of the bank. TD Bank says it never denied Spinosa provided the letters, “which is all that Gillen said in his e-mail.” It states Gillen learned of the letters’ details in a meeting with the bank’s counsel, Richard Berman, on November 2, two days before Spinosa e-mailed his pleas for help in responding to the reporter.
Bank argues e-mails add ‘nothing new’
The bank says Coquina made an unfounded leap by suggesting Gillen must have known Spinosa was using the letters to further Rothstein’s fraud simply because he knew the letters existed.
“Knowledge that Spinosa signed and issued the letters proves nothing about truthfulness or falsity of the letters,” says the bank in its response, filed by TD Bank’s lead attorney, Robert Plotkin, of McGuire Woods, in Washington, DC. “Coquina’s suggestion to the contrary is a complete non sequitur.”
“It is hardly surprising that an officer of a public company would refuse to comment on the Rothstein fraud, when the company’s internal investigation had just begun… [and] when the company expected litigation,” he continued. “No fair-minded reader of this e-mail chain could infer, from his prudent refusal to comment, that Gillen knew that Spinosa had knowingly participated in or assisted a massive Ponzi scheme.”
TD Bank says Gillen was truthful at trial
The bank also refutes Coquina’s accusations that the e-mails contradict Gillen’s testimony at trial. Gillen testified on November 15, 2011, and said he received a call from Spinosa over the Halloween weekend in 2009. He testified Spinosa attempted to describe the lock letters by phone. Gillen said he had a family crisis at the time, and could not follow what Spinosa was trying to tell him.
“It was a letter that I didn’t really understand, didn’t make a lot of sense to me,” Gillen testified. Coquina argued this testimony conflicted with Gillen’s knowledge of the lock letters has depicted in his e-mails with Spinosa.
TD Bank says Gillen had already been briefed on the letters by bank counsel, Berman, when he sent the e-mails. “[Gillen’s] deposition and trial testimony concerned his knowledge and actions on October 31, when he first learned of the Rothstein fraud,” Plotkin’s response states. “The e-mails reflect Gillen’s knowledge and actions on November 4, after the bank’s counsel had initiated an investigation, reviewed the letters, and discussed the matter with Gillen.”
Possible sanctions ruling by federal judge against bank, lawyers pending
The bank’s response comes as presiding US District Judge Marcia G. Cooke is weighing possible sanctions against TD Bank and its prior lawyers, Greenberg Traurig, for tampering with evidence before and during the trial. Coquina has filed five motions for sanctions in the case.
The bank has appealed the January jury verdict to the 11th US Circuit Court of Appeals, in Atlanta.