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Recent SEC Releases
Monday
Mar022015

SEC Alleges Wings Network Was $23.5 Million Ponzi and Pyramid Scheme

The Securities and Exchange Commission has filed civil fraud charges against two Massachusetts companies operating as Wings Network, alleging that the purported digital and mobile solutions venture was, in reality, a fraudulent Ponzi and pyramid scheme that took in at least $23.5 million from thousands of unsuspecting investors.  Tropikgadget FZE and Tropikgadget Unipessoal LDA (collectively, "Tropikgadget"), along with three principals and twelve promoters, were charged by the Commission with multiple violations of federal securities laws in a complaint filed on February 25, 2015.  The Complaint seeks injunctive relief, disgorgement of ill-gotten gains, pre-judgment interest, and civil monetary penalties. Wings had attracted scrutiny from state and federal regulators around the same time that another Massachusetts company, TelexFree, was accused in April 2014 of operating a massive Ponzi and pyramid scheme. Massachusetts securities regulators accused Wings of operating as a fraudulent pyramid scheme last May in an administrative proceeding.

Background and Allegations

According to the Commission, Tropikgadget FZE and Tropikgadget Unipessoal LDA are UAE and Portuguese entities, respectively, that were formed in November 2013.  Tropikgadget FZE holds the rights to the Wings Network marketing and brand services, which includes the names Wings Network, Wingsnetwork, and Wingsnetwork.com.  Sergio Tanaka served as the President of the board of directors of Wings Network, Carlos Luis da Silveira Barbosa ("Barbosa") was the CEO, and Claudio de Oliveira Pereira Campos ("Campos") was the Director of Operations.  

Beginning in November 2013, Wings Network began operating in the United States by attempting to build a distribution network of associates who were told that Wings Network was in the business of selling games, apps, cloud storage, marketing tools, and a personal page. Indeed, while the company advertised itself using vague claims like the "First Mobile Multilevel" and that it would help members "achieve your dreams and enjoy your life," the Commission alleged that most, if not all, of these amorphous products were never provided to members to sell.  Rather, the Commission claims that the only tools provided to members were designed to help recruit more members.

Wings aggressively courted potential investors through social media, posting several online presentations on popular video sharing site YouTube in January and February 2014.  Additionally, promoters, who were incentivized for recruiting as many new investors as possible, used both traditional face-to-face sales and social media such as Facebook for these recruitment efforts.  Potential investors were required to purchase memberships, which included a $49 membership fee and a choice of three tiers with increasing price points: a $299 "start pack," a $749 "executive pack," and a $1,499 "elite pack."  Each of the "packs" came with a varying amount of "points" that could later be exchanged for compensation, as well as cloud storage and access to a web-based recruiting system with various templates to allow for personalization.  Further, the "packs" did not offer any mechanisms for participants to sell products; rather, each "pack" provided tools to allow participants to recruit new members.  Finally, purchasers of the elite pack were promised $750 per month simply for recruiting new members.

After purchasing a "member pack," participants learned of Wings'  complex multi-level marketing structure that featured eight different bonus plans - only one of which was correlated to the sale of an actual product. Participants were told they could earn "bonuses" based on the number of new members they recruited to join Wings as well as the sale of "packs" to new and existing members.  

Company principals and promoters also made representations to potential investors to convince them of the safety and legitimacy of an investment in Wings.  For example, Barbosa stated in a YouTube video that Wings was in the "pre-screening" process to become a member of the Direct Selling Association ("DSA") - a national trade association of legitimate multi-level marketing companies that abided by a strict code of ethics.  Additionally, promoters and participants claimed to potential members that their initial investments in "member packs" were 100% guaranteed through an insurance policy issued by the fourth-largest insurance company in Brazil. Finally, investors were assured they could request a full refund of their initial investment within fourteen days of signing up.  In total, Wings took in more than $23 million from investors from November 2013 to April 2014.

Despite these claims and the attempts to portray itself as a seller of goods and services, the Commission alleged that Wings derived all of its revenue from fees associated with the sale of Member Packs - a classic Pyramid scheme in which the exponential revenues can be sustained only through the recruitment of additional investors.  Nor was there such a thing as a "pre-screening" process for the DSA nor did Wings ever file a membership application.  Finally, participants' initial investments were not covered by an insurance policy.

Where's the money?

The Massachusetts Securities Division subpoenaed Wings following the collapse of TelexFree in April 2014 after it noticed that the company's sales strategy appeared similar to that used by TelexFree.  The Boston Globe reported that Wings' then-lawyer, D.J. Poyfair, confirmed that Wings had met with the MSD during the first week of May 2014 and that it "intend[ed] to address quickly any problems that it discovers.’’  The MSD filed an administrative complaint against Wings several days later, accusing the company of engaging in the unregistered sale of securities through the operation of a pyramid scheme.

However, according to the Commission's complaint, Wings' idea of quickly addressing any problems that it discovered consisted entirely of transferring millions of dollars to individuals and offshore companies - presumably in an attempt to place the funds outside the jurisdiction and reach of regulators.  For example, the Commission alleged that the following entities received transfers from Wings in the days leading up to the MSD's complaint:

  • Compasswinner LDA - received $8.7 million wire transfer from Tropikgadget on May 8, 2014;
  • Happy SGPS SA - received a $1.18 million wire transfer from Tropikgadget on May 12, 2014; and
  • Paulo Hideki Koga - received 13 transfers totaling $570,750 between November 1, 2013 and May 21, 2014.

A copy of the Commission's Complaint is below.

tropik

Saturday
Feb282015

TelexFree Trustee Files Detailed Financial Reports, Previews Next Steps

As the one-year anniversary approaches of what may likely be the largest Ponzi and pyramid scheme in history based on the sheer amount of victims, the court-appointed bankruptcy has filed the long-awaited disclosures detailing the scheme's assets, liabilities, and financial affairs.  Stephen B. Darr was appointed as trustee over TelexFree, Inc., TelexFree, LLC, and TelexFree Financial, Inc. (collectively, "TelexFree") shortly after state and federal authorities alleged that the purported internet telephony company was nothing more than a massive Ponzi and pyramid scheme that may have defrauded countless victims worldwide out of hundreds of millions of dollars.  On Friday, Darr filed TelexFree's (1) Statement of Financial Affairs; and (2) Schedule of Assets and Liabilities (collectively, the "Filings").  The filings, required by debtors at the onset of a bankruptcy proceeding, are useful in providing a general overview of TelexFree's financial status and what might possibly be available for defrauded victims at a future date.

History

Before delving into a brief analysis of the Filings, a brief history of TelexFree is beneficial for context.  Prior to April 2014, the company purportedly offered a voice over internet protocol (“VoIP”) program and a separate passive income program.  The latter was TelexFree's primary business, and offering annual returns exceeding 200% through the purchase of "advertisement kits" and "VoIP programs" for various investment amounts.  Not surprisingly, these large returns attracted hundreds of thousands of investors worldwide, and participants were handsomely compensated for recruiting new investors – including as much as $100 per participant and eligibility for revenue sharing bonuses.  Ultimately, while the sale of the VoIP program brought in negligible revenue, TelexFree's obligations to its "promoters" quickly skyrocketed to over $1 billion.

In April 2014, after multiple attempts to modify the passive income program both to rectify regulatory deficiencies and to curb increasing obligations, TelexFree quietly filed for bankruptcy in a Nevada bankruptcy court.  While it appeared that TelexFree had hoped to use the bankruptcy proceeding to eliminate its obligations to its "promoters" and extinguish any ensuing liabilities, the filing immediately attracted scrutiny and was followed shortly by enforcement actions filed by the Securities and Exchange Commission (the "Commission") and Massachusetts regulators.  The Commission then moved to transfer the bankruptcy proceeding to Massachusetts, where the company was headquartered and where the Commission had filed its enforcement proceeding.  Despite vehement objections by TelexFree, that effort was ultimately successful, and the appointment of an independent trustee, Mr. Darr, shortly followed.

Following his appointment, Mr. Darr and his team have faced the monumental task of reconstructing TelexFree's voluminous records and attempting to gain an understanding of a massive alleged fraud whose tentacles spanned the globe.  At Mr. Darr's request, the proof of claim deadline was indefinitely postponed pending his efforts, and a recent update by Mr. Darr speculated that any claims process would likely include hundreds of thousands - if not millions - of claimants.  

The Filings - Statement of Financial Affairs

The Statement of Financial Affairs ("Statement") serves to provide the Court, as well as interested parties, a snapshot of the bankruptcy debtor's financial health and recent history preceding the date of the bankruptcy filing (the "Petition Date").  One of the required disclosures is the amount of income earned by the debtor in the two-year period preceding the Petition Date.  Of note, the Statement shows that TelexFree took in over $1 billion during that period:

 

As authorities previously estimated that the sale of TelexFree's VoIP program ultimately brought in no more than $2 million, the vast majority of the over-$1 billion is believed to be comprised of investor contributions.  

Another required disclosure lists the names of all individuals and entities that received transfers of property exceeding $600 in the 90-day period preceding the Petition Date.  This time frame is not arbitrary, but rather derives from the power given to bankruptcy trustees to seek the avoidance of what are called "preferential transfers" made during that period in which the debtor is presumed to be insolvent.  With limited defenses available to recipients, these transfers are typically subject to heightened scrutiny by the bankruptcy trustee.  The Statement lists over 100 of these transfers, including over $1 million in payments to law firms and/or multi-level marketing consultants:

  • Greenberg Traurig - $624,823;
  • Garvey Schubert Barer - $532,503.50;
  • Babener & Associates (self-described multi-level marketing law firm) - $283,000;
  • Lane Powell Attorneys & Counselors - $27,381.70; and 
  • The Sheffield Group - $34,400.

Also of note are numerous payments to Craft Financial Solutions, LLC, an entity owned by former TelexFree CFO Joseph Craft.  As some may recall, authorities recovered nearly $40 million in newly-issued cashier's checks on Craft's person as he attempted to retrieve his belongings from the TelexFree office while authorities were executing a search warrant.  The Statement lists dozens of transfers to CFS totaling over $2 million during the one-year period preceding the bankruptcy (as Craft was an insider), including a $1 million transfer in December 2013.  Craft, who was among those charged with fraud by the Commission, has maintained he was unaware of any fraud being carried out by TelexFree.

The Filings - Schedule of Assets and Liabilities

The Schedule of Assets and Liabilities ("Schedule"), as its title suggests, sets forth information on TelexFree's assets and liabilities.  The Schedule lists over $150 million currently held in a variety of bank accounts belonging to TelexFree, as well as over $15 million in debts currently owed to TelexFree.  In terms of liabilities, no secured claims are listed, but several entities are said to hold unsecured claims with a priority status - including nearly $20 million purportedly owing to the Internal Revenue Service.  Creditors with a secured claim or an unsecured claim with priority status are typically entitled to have their claims paid in full before those creditors with wholly unsecured claims - including fraud victims - may receive distributions.  Ultimately, the bankruptcy court will determine whether to approve or reject any proposed distribution plan offered by the trustee.

The Schedule also includes a 2,000+ page schedule setting forth a partial list of participants in TelexFree, including those who submitted a proof of claim form to the claims consultant retained by Mr. Darr, Kurtzman Carson Consultants ("KCC").  In a recent status report, Mr. Darr disclosed that over 25,000 participants had already filed a  proof of claim form despite the lack of a current claims deadline.  Mr. Darr disclosed that his team had identified nearly 1.9 million participants in TelexFree - a list that, if printed, would fill over 35,000 pages.  Mr. Darr indicated that he intended to request court approval to establish a bar date for the submission of claims, which he hopes may be done through electronic notice to the participants.  For example, postage alone on 1.9 million pieces of U.S. Mail would exceed $750,000.

Those interested in filing a Proof of Claim with KCC may do so here.

What's Next
As alluded to in the Filings, Mr. Darr intends to seek court approval for the establishment of a claims deadline and for certain procedures associated with a claims process including notice to creditors.  In his recent status report, Mr. Darr indicated that this would likely include a "modified proof of claim form uniquely tailored to the circumstances[and] a claims submission process [that] should be" administered electronically.  
It is also likely that "avoidance' actions will be instituted to recover not only preferential transfers made during the time preceding the Petition Date, but also to recover amounts from participants who were fortunate enough to receive more than their principal investment in transfers from TelexFree.  Claims against third parties for their role in the fraud, including law firms and financial institutions, are also possible.  Ultimately, Mr. Darr will seek the greatest possible recovery of assets that can eventually be distributed to victims.
Due to its size, the Schedule is available here.  The Statement is below.  Previous Ponzitracker of TelexFree is here.

Sfa

 

Friday
Feb272015

TD Bank Pays $67 Million Judgment To Rothstein Ponzi Victims

“We are extremely pleased that TD Bank opted – at long last – to comply with the district court’s order.  The judgment has been satisfied in full."

- Nina Stillman Mandel, co-counsel for Coquina Investments

With just hours to spare before the expiration of a deadline imposed by a Florida federal judge, TD Bank has paid the $67 million judgment it owed after a federal jury found it liable for its role in Scott Rothstein's $1.2 billion Ponzi scheme.  Over three years after the jury's verdict, and roughly 5.5 years after Rothstein boarded a plane to Morocco with his scheme on the verge of collapse, a group of Texas investors known as Coquina Investments ("Coquina") finally collected on what was one of the only successful attempts to hold a financial institution liable for its role in a Ponzi scheme.  The payment comes after years of legal wrangling by TD Bank, and featured attempts to both overturn the verdict and to later decrease the underlying owing sum.  Indeed, despite payment of the judgment, the bank is currently contesting several recent court rulings in Coquina's favor.

Rothstein's Scheme

Rothstein touted lucrative returns to investors through the purchases of highly confidential legal settlements purportedly stemming from claims of sexual harassment, whistle-blower, and qui tam actions against large corporations.   According to Rothstein, while the alleged settling defendant had already deposited the settlement funds with Rothstein’s firm, an investor could “purchase” the right to payment of that settlement at a discount.  With the investor sworn to secrecy and enamored by the prospect of an lucrative return, there was a built-in incentive for all parties to remain tight-lipped. Potential investors were assured that their funds would remain safe in a firm trust account held at TD Bank, with some provided "lock letters" authored by bank officials purportedly assuring them that their funds were impervious to ill will or influence.  

As would later emerge in spectacular fashion, Rothstein's alleged secretive settlements were bogus and nothing more than what would later be revealed as the largest Ponzi scheme in Florida history.  Indeed, as he would later confide in authorities as part of one of the most memorable (and effective) post-conviction cooperation campaigns, Rothstein pointed the finger at numerous individuals who he claimed shared blame for the scheme, including Frank Spinosa - the then-regional Vice President of the TD Bank branch in Ft. Lauderdale.  As alleged by Rothstein (and later by both civil and criminal authorities), Spinosa played an integral role in the scheme through a series of actions that included making false representations to investors and authoring "lock letters" that were facially false.

The Suit, Verdict, and Appeal

Coquina, represented by Mandel & Mandel LLP, sued TD Bank in May 2010, alleging the bank was integral toRothstein's fraud and that it shared liability for the losses it caused.  The bank tried several tactics, including claiming not only that it was the bank of Rothstein's firm, Rothstein Rosenfeldt Adler, and thatRothstein defrauded investors, but also that it should have been "obvious" to Coquina that they were purchasing fraudulent investments.  Not buying either argument, a federal jury took several hours to hand down a $67 million verdict finding that the bank "provided substantial assistance to advance the commission of the fraud against Coquina."  It was also later revealed that TD Bank failed to turn over documents in the discovery process, including documentation supporting Coquina's arguments that the bank ignored Rothstein's status as a high-risk client, that might have even supported a larger punitive damage award.  The bank and its counsel were later sanctioned for these mishaps. 

Even following the verdict, TD Bank mounted a vigorous campaign to eradicate the verdict that included the assertion of multiple grounds for reversal.  The Eleventh Circuit Court of Appeals considered and rejected each ground.  The bank then attempted to reduce the size of the amount it owed, contending thatCoquina's status as a creditor in the bankruptcy estate of Rothstein's firm and the payment it had already received as part of the estate's historic plan to return 100% of each investor's losses might serve as the basis to reduce the $67 million judgment.  This argument was rejected by both the trial and appellate court, and on February 11, 2015, U.S. District Judge Marcia G. Cooke gave the bank until February 26th to satisfy the judgment or face the prospect of seeing Coquina collect on the $73.7 supersedeas bond posted by its surety.  

While the bank appealed Judge Cooke's pertinent order, it appears that they chose to heed that order in satisfying the judgment on the day of the deadline.  Indeed, a declaration filed today by Coquina's counsel confirmed that TD Bank had satisfied the judgment and also provided evidence of Coquina's payment of $9.1 million to the RRA bankruptcy estate representing the repayment of an initial distribution to creditors.

Conclusion

Like many facets of Rothstein's larger-than-life persona, Coquina's outcome - and that of the RRA creditors who realized a 100% return on their investment - can only be met with a healthy share of bewilderment and admiration.  The outcome is believed to represent the largest (and one of the only, if not the only) verdict against a financial institution for its role in a Ponzi scheme, and comes as similar suits around the nation fall flat based on a heightened standard that courts rarely find satisfied.  Yet, the Rothstein verdict is not an anomaly, but rather the result of the existence of an (alleged) bad actor whose conduct and voracious appetite to appease a large client ultimately landed a national banking institution in the crosshairs.  Through this verdict and other settlements, including with the RRA bankruptcy trustee, TD Bank's financial exposure alone to Rothstein amounted to over half of one billion dollars.

Previous Ponzitracker coverage of the Rothstein scheme is here.

Wednesday
Feb252015

International Clawbacks Start In ZeekRewards Receivership 

Over two years after the Securities and Exchange Commission allleged that ZeekRewards was operating a massive $600 million Ponzi and pyramid scheme, the court-appointed receiver is now seeking to "claw back" millions of dollars in false profits from citizens of foreign countries that include the British Virgin Islands, Australia, New Zealand, and Norway.  Kenneth D. Bell, the receiver, has filed several lawsuits recently that target the top "net winners" from each of those countries who allegedly each received more than $50,000 in illicit profits from the scheme - profits that, by virtue of the operation of a Ponzi scheme, are not legitimate returns but rather are simply the redistribution of investor funds.  

Clawback Litigation

A "clawback" suit, as it is known in receivership parlance, seeks the return of funds that were transferred to a third party often disguised as the payment of profits or returns.  Under state-specific fraudulent transfer laws patterned after the Uniform Fraudulent Transfer Act, a creditor can seek to avoid a transfer made by a debtor to a third-party under several theories, including that the transfer was made with the intent to hinder, delay, or defraud creditors, or that the debtor did not receive reasonably equivalent value for the transfer.  While a showing of actual fraud is not required and can be demonstrated through other factors, transfers made from a Ponzi scheme are presumptively made with the intent to defraud due to established law that a Ponzi scheme is insolvent from inception as a matter of law.  

 Bell hinted last year that in a quarterly report that he soon intended to initiate clawback suits against foreign net winners who had received at least $1,000 in illicit profits from their investment in ZeekRewards. Bell has pursued domestic net winners that received $1,000 or more, and recently received court approval to pursue those individuals through a class action framework that will provide for a more efficient mechanism to pursue those individuals against whom it might have been cost-prohibitive to pursue individual litigation.  However, the suits brought against the foreign net winners target only those who profited by $50,000 or more from the scheme, and it remains unknown whether Bell will pursue those who realized lower profits.  

Foreign Clawbacks

The recently-filed clawback suits each target citizens of a separate country who received at least $50,000 in profits from their involvement in ZeekRewards.  On December 29, 2014, Bell filed suit against over two dozen Australian investors who allegedly received more than $3 million in false profits.  He then filed suit on January 30, 2015 against five British Virgin Islands investors who allegedly collectively received nearly $3 million in false profits - including one investor who alone was accused of receiving over $2 million in proceeds.  On February 11, 2015, Bell sued three New Zealand affiliates who allegedly received collective profits of nearly $750,000.  Finally, Bell filed a complaint on February 19, 2015, against nearly two dozen Norwegian investors that allegedly collectively received over $1 million in false profits.

Rather than initiate litigation in each of the countries where the net winners reside, Bell is proceeding with the suits in the Western District of North Carolina - where the receivership is being conducted out of and where Zeek was headquartered before its collapse - based on those defendants' contacts with the district through their involvement in (and receipt of funds from) the ZeekRewards program.  However, even if the Receiver is able to obtain judgments against those foreign defendants, additional litigation may be required in those defendants' home countries to enforce and collect on those judgments.  

To date, Zeek victims have received 40% of their approved losses.

The complaints in each of the lawsuits are below.  A special thanks to ASDUpdates for providing the filings.

 

Doc 1

 

 

 

1 - Complaint (1) by jmaglich1

 

 

 

Complaint by jmaglich1

 

 

 

1 - Complaint by jmaglich1

Monday
Feb232015

Deadline Looms For Bank To Pay $67 Million Judgment To Rothstein Victims

Judge, this is like a football game. And the game is over, the crowd has left, and the cleaning crew is working in the stands. In spite of TD's numerous unsportsmanlike conduct penalties, the scoreboard shows that we won 67 to nothing. And despite everything, TD is here today throwing a Hail Mary pass, not acknowledging that there is no time left on the clock. TD Bank's illusory damages game is over. That's what final and unreviewable means.

Having defrauded, lied, and cheated in this very courtroom, we respectfully submit that TD has been afforded enough due process by this Court. It has had a mountain of it. With respect, it is unfair to make Coquina wait any longer.  Guided, as I know it is, always by fairness and decency, I ask the Court to rule that TD's day of reckoning is finally at hand.
- Counsel for Coquina Investments

Over three years after a federal jury handed down a $67 million verdict against TD Bank for its role in Scott Rothstein's $1.2 billion Ponzi scheme, and following numerous efforts by the bank to reduce or otherwise overturn the verdict, a Florida federal judge has denied the bank's latest motion to reduce the judgment and ordered that the bank pay the judgment by February 26.  Coquina Investments, which sued TD Bank for millions of dollars it lost after Rothstein's scheme collapsed in 2009, obtained a ruling from U.S. District Judge Martha Cooke on February 11 denying TD Bank's latest Motion for Partial Relief from Judgment.  If TD Bank fails to pay the judgment on or before February 26, Coquina will be entitled to collect from the $73.7 million supersedeas bond (110% of the $67 million verdict) posted by TD Bank when it originally appealed the $67 million verdict.  It would be rather rare if TD Bank refuses to pay and forces Coquina to collect from Travelers Casualty and Surety Company of America - the surety posting the bond on TD Bank's behalf. 

The Litigation

TD Bank had extensive ties with Rothstein, who promised investors the possibility of significant short-term returns through purported confidential settlements with whistleblowers and sexual harassment victims. To convince investors of the legitimacy of his operation, Rothstein claimed that the amount of the alleged settlements had already been deposited into TD Bank trust accounts administered by Rothstein's law firm and which were subject to strict transfer restrictions.  Investors were provided with "lock letters" by TD Bank vice president Frank Spinosa attesting to the fact that the transfer restrictions were, in fact, in place and that the claimed balance was correct.  However, there were no such transfer restrictions, and Rothstein was able to transfer funds freely.  Additionally, rather than containing the significant balance represented in the "lock letter," many accounts contained nominal $100 balances.  

Coquina invested nearly $38 million with Rothstein based on these representations.  The partnership made several withdrawals during the course of its relationship with Rothstein, and ultimately lost nearly $7 million when the scheme collapsed.  However, despite its losses, Coquina was informed by the court-appointed trustee that it faced claims for the "clawback" of certain withdrawals made before the scheme's collapse.  Coquina ultimately settled with the trustee, paying $12.5 million and agreeing that the trustee could recoup up to $18.6 million if Coquina prevailed in its suit against TD Bank.

At trial, a federal jury found in favor of Coquina on its aiding and abetting and fraudulent misrepresentation claims, and awarded $32 million in compensatory damages and $35 million in punitive damages for a total award of $67 million.  Following the verdict, the trial judge also imposed sanctions against TD Bank and its counsel for the failure to produce relevant evidence that reflected unfavorably on the bank.  

On appeal, TD Bank raised several issues, including the propriety of drawing an adverse inference against Spinosa's invocation of his Fifth Amendment rights during testimony, whether the settlement agreement between Coquina and the trustee was properly admitted into evidence, and whether Coquina's damages claim was proper.  The Eleventh Circuit addressed each contention, and ultimately found each unpersuasive.  The Court also found that the trial court's imposition of sanctions, including accepting as true that TD Bank has actual knowledge of the fraud and that its account-monitoring systems were unreasonable, were consistent with the facts in the record for the significant misconduct alleged by TD Bank.  

TD Bank's Latest Argument

After the Eleventh Circuit Court of Appeals "affirm[ed] [the underlying judgment] in all respects," TD Bank turned its efforts to reducing Coquina's $67 million judgment on the basis that certain sums might constitute a "double recovery" when considering Coquina's status as a creditor in the Rothstein bankruptcy proceeding.  TD Bank's argument revolved around the intricacies of Coquina's settlement with the bankruptcy trustee overseeing the Rothstein estate, which was reached just before the trial on Coquina's claims against TD Bank.  

Under the terms of that settlement, Coquina paid the bankruptcy estate $12.5 million up-front, regardless of the outcome of the TD Bank trial, and also agreed to pay the estate a percentage of any subsequent recovery from TD Bank until that sum reached the total amount Coquina received from Rothstein's scheme (roughly $31 million).  In return, Coquina was granted a release from any further claims it might face from the bankruptcy estate, as well as given an allowed general unsecured claim for payments it made to the estate.

While TD Bank appealed the underlying verdict, Coquina received a $9.1 million payment from the bankruptcy estate as part of the court-approved distribution plan that represented a partial payment on the $12.5 million previously paid by Coquina.  TD Bank then sought to reduce the $67 million judgment on the basis that Coquina stood to receive a "double recovery" and that any settlement damages were "speculative" and "nonexistent."  Coquina revealed that it was required to return the $9.1 million upon any partial or complete satisfaction of its judgment, and TD Bank's motion was denied.

TD Bank then moved for a stay of enforcement of the judgment while Coquina sought to collect on a bond previously posted by TD Bank to satisfy its judgment.  At a hearing before the trial court on February 11, 2015, TD Bank again argued that Coquina's receipt of the $9.1 million from the bankruptcy trustee would result in a "windfall" and warranted a dollar-for-dollar reduction in the judgment.  Counsel for Coquina, David Mandel, summarized the argument as follows:

Judge, they are treating this like it's a newly filed complaint. It's not. We aren't supposed to wait around and see what happens later and see what develops. We had a hard-fought trial. These issues were raised and they lost. It is now time for them to pay the piper.

The jury had the settlement agreement with the trustee in evidence before it, they considered all of the things that TD is arguing now, and they were not persuaded. This Court heard and rejected those same arguments from TD Bank in their post-trial motions. And then what happened? They appealed to the Eleventh Circuit, which heard the defendant's arguments again attacking the damages, and the Eleventh Circuit squarely rejected them. They petitioned for rehearing en banc and lost again, not a single judge even asking for a poll. They keep on making these same arguments again and again and again. It's like they think the Court is a Turkish bazaar where they have to keep asking for a discount. It's not, Judge. It's not.  This has the feel of deja vu all over again.

Following argument, District Judge Marcia Cooke again rejected TD Bank's arguments, but did include an order in her ruling (as requested by Coquina) requiring Coquina to return the $9.1 million to the bankruptcy estate within three days of payment of the judgment (or collecting on the bond, in the case TD Bank refused to pay).  Predictably, TD Bank sought to stay the enforcement of the judgment, but Judge Cooke denied that request as well:

I am going to allow Coquina to collect on the bond. You want to post another bond you can, but I'm going to allow them to collect on the first one. This has been going on for two years.

With the 26th fast approaching, it remains unseen whether TD Bank will pay the judgment or force Coquina to collect on the bond posted on its behalf.  Regardless, it appears that, over five years after the collapse of Rothstein's scheme, one of the only jury verdicts granted against a financial institution and in favor of a defrauded Ponzi scheme victim will come to fruition.  

Coquina's response to TD Bank's "time-sensitive" motion for stay is below: