A former TD Bank vice president was sentenced to serve thirty months in federal prison for his role in Scott Rothstein's $1.2 billion Ponzi scheme. Frank Spinosa, 54, faced up to five years after previously pleading guilty to a single count of wire fraud conspiracy. While prosecutors sought a 37-month sentence, U.S. District Judge Beth Bloom cited Spinosa's rough upbringing and the death of his first child as factors warranting a slight downward departure from that recommendation. With the sentence, Spinosa becomes the 29th person sent to prison for their role in Rothstein's massive fraud. Rothstein is currently serving a 50-year sentence at an undisclosed location due to his inclusion in the witness protection program.
Spinosa became involved with Rothstein when the former attorney opened over 20 attorney trust accounts and law firm operating accounts in late 2007 at TD Bank and another bank TD Bank later acquired. 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 was ordered to report to federal prison no later than February 18, 2016.
Other Ponzitracker coverage of the Rothstein scandal is here.