A federal jury in Florida has put the TD Bank, the U.S. arm of the TD Financial Group, on the hook for $67 million (US) over the role it played in a $1.2 billion Ponzi scheme.

The jury deliberated for only four hours on Wednesday, before delivering its verdict to award Coquina Investments, a group of Texas-based investors, $32 million in compensatory damages and $35 million in punitive damages.

Coquina’s lawyer David Mandel had asked for $32 million in compensatory damages and $140 million in punitive damages.

The verdict is viewed as possibly breaking new ground, holding a banking institution responsible for its role in a Ponzi scheme.

Efforts to sue third-parties including banks in the Bernard Madoff case were tossed out.

The TD case involves now-disbarred lawyer Scott Rothstein, who was chairman and CEO of Rothstein Rosenfeldt Adler, a now-bankrupt law firm in Fort Lauderdale.

Rothstein, 49, is serving a 50-year prison sentence after pleading guilty to running a massive scam that imploded in 2009. He is cooperating extensively with federal prosecutors, and more people are expected to face criminal charges.

Seven of his employees and associates have been criminally charged. Five pleaded guilty, and two are awaiting trial.

“The jury sent exactly the right message to TD Bank,” Mandel said in a telephone interview Thursday from Miami. “This bank was integral to the fraud and it could not have succeeded without their active participation in the Ponzi scheme. They were really Rothstein’s partner in crime.”

Rothstein told investors including those with Coquina that they were buying stakes in settlements of lawsuits, mostly harassment and whistleblower cases against high-profile defendants.

These bogus settlements would be paid out over a period of time, so plaintiffs would sell their rights to the full settlement — to investors — in exchange for an immediate lump sum payment of a lesser amount.

Investors would receive huge returns for advancing the money, in some cases 50 per cent in a few months. The bank’s lawyers argued the investors were blinded by money and the prospect of high returns.

The Palm Beach Daily Business Review described the trial as riveting, with seasoned litigators facing off against each other, and the jurors tasked to “side with either an unscrupulous bank or money-hungry investors.”

TD Bank spokeswoman Rebecca Acevedo said the bank is disappointed with the jury’s decision and is weighing all its options including an appeal.

“We still maintain that we were Rothstein Rosenfeldt Adler’s bank and that it was Scott Rothstein who defrauded investors,” Acevedo said in a statement. “We will continue to defend the bank against claims of wrongdoing.”

According to Coquina’s complaint and testimony in court, Rothstein used the TD Bank to provide bank records, account balances, verifications, often arranging meetings in the conference room of a branch.

Frank Spinosa, the bank’s regional vice-president, met with Coquina investors in person and had telephone conversations with them, which “contributed to this aura of legitimacy,” the complaint said.

Spinosa was called to testify, but asserted his Fifth Amendment right not to incriminate himself at least 160 times. The bank said he has not been an employee for two years.

Bank officials vouched for Rothstein and confirmed millions were held by TD Bank for investors.

Mandel said the bank failed to act when unusual activity in Rothstein’s accounts triggered money-laundering alerts in the bank’s internal system, a couple of hundred that were ignored.

During the trial, Mandel said bank officers in 2008 were concerned about the “fast and furious” activity. It was decided that the bank would ask Spinosa to question Rothstein. “It’s like having the fox guarding the henhouse,” Mandel said.

Conspirators in Rothstein’s scheme allegedly posed as TD Bank employees, and one of Rothstein’s associates devised a fake TD Bank website on which fake account balances were posted for investors.

The complaint said Spinosa also provided “lock letters” that characterized accounts as “‘irrevocably locked” and “completely secure.”

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The TD Bank is still facing other lawsuits in this Rothstein matter with another trial scheduled to begin in March.

Mandel said he believes this jury verdict sends a message to TD Bank, and “I think it also emboldens the other plaintiffs who have claims.”

With files from Bloomberg and Associated Press

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