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Banking and Finance

Banker Tied to Rothstein's Massive Ponzi Scheme Will Plead Guilty

 Just before his trial was scheduled to begin next month, a former TD Bank vice president will plead guilty to a wire fraud conspiracy charge related to his relationship with convicted Ponzi schemer Scott Rothstein. Frank Spinosa, 54, is scheduled to plead guilty to a single count of wire fraud conspiracy on October 8, 2015. Spinosa had been scheduled to stand trial next month, where he could have been sentenced to dozens of years in prison if convicted on all charges. Instead, Spinosa faces a maximum five year sentence for wire fraud conspiracy.

Rothstein's relationship with Spinosa began after he opened over 20 attorney trust accounts and law firm operating accounts in late 2007 at TD Bank and another bank later acquired by TD Bank. Spinosa was Rothstein's point of contact beginning in 2008, and communicated often with Rothstein regarding the accounts and various documents that were provided to investors. As Spinosa's compensation was tied to the size and volume of accounts he managed, the fact that Rothstein's accounts were among TD Bank's largest accounts in South Florida meant increased compensation and bonuses for Spinosa.

Spinosa was implicated in the massive scheme by Rothstein himself, who claimed during a 2011 deposition that he had recruited Spinosa to assist in the preparation of false "lock letters" used to show investors that their investments were safe and that Rothstein could not remove funds from the account holdings the funds. According to the Securities and Exchange Commission, which filed civil fraud charges against Spinosa last year, Spinosa also made oral assurances to at least two investors that certain trust accounts at TD Bank holding investor funds contained hundreds of millions of dollars when in reality the "locked" accounts typically held less than $100. In one instance during August 2009, months before the scheme eventually collapsed, Spinosa participated in a conference call with Rothstein and an investor in which he told the investor that an account had a balance of $22 million when, in reality, the account had a balance of less than $100. The investor subsequently made four more investments with Rothstein in the ensuing months.

Spinosa is the last remaining defendant to not be sentenced, and his sentencing will mark the culmination of an extraordinary series of prosecutions that ultimately put over two dozen individuals in prison for their role in Rothstein's fraud. With no remaining prosecutions on the horizon, it is widely believed that Rothstein will press his sentencing judge for a reduction in his 50-year term based on his extensive cooperation. Ponzitracker recently covered this issue in depth here

Other Ponzitracker coverage of the Rothstein scandal is here.

 For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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