Scott Rothstein - TD Bank Wins One

TD Bank just won a victory before Judge Marra in federal district court. Judge Marra ruled TD Bank has the right to have a jury trial conducted in the district court, not the bankruptcy court, because it did not consent to a bankruptcy court jury trial.

The only question is if they want to go before a jury ... and I don't only mean TD Bank. The elephant in the room throughout the whole Scott Rothstein bankruptcy is that Berger Singerman insiders, including Paul Singerman, partnered with Rothstein to buy Gibraltar Bank, arguably a bank more important to Rothstein's schemes then TD Bank.

Clearly, Berger Singerman insiders are presumed to have inside knowledge of Rothstein's scheme — through due dilligence and similar efforts used in evaluating their Gibraltar investment and their partner, Rothstein, who they were investing with.

At the time of the purchase all the warning signs were in place, including the many internal complaints about Rothstein's accounts. Rothstein has already testified that the key reason for his investing in Gibraltar Bank was to block all internal investigations of his accounts.

The conflict problem — so the public was informed and it was dutifully reported — was "solved" by hiring another law firm to sue Gibraltar. The problem then disappeared from public view, as "solved."

But, the conflict problem was never solved because Gibraltar played a central role in the Ponzi scheme. Berger Singerman had retained such a degree of control over the bankruptcy estate that Paul Singerman negotiated the sweetheart Gibraltar bankruptcy settlement that immunizes Gibraltar from other claims by Rothstein's victims — and protects Berger Singerman insiders' investment in Gibraltar.

The ploy of hiring another firm to give the appearance of a "solved" conflict, worked very well indeed.

TD Bank's "Best Defense" - What Happened To The In Pari Delicto Defense ... It Worked In The Madoff Case?

It is so far very strange that the issue of "in pari delicto" has not yet hit any headlines in this case (See my previous post on this subject). Remember, that well settled defense theory says, in essence, that if two parties work together on a scheme, then one of those schemers (in this case the bankruptcy estate) cannot sue third parties on behalf of innocent victims.

To make the in pari delicto concept clearer: picture two muggers assaulting a victim. One of the muggers sues another alleged accomplice to the mugging to compensate the victim. The sued alleged accomplice raises the in pari delicto defense claiming an accomplice cannot sue him to compensate the victim.

This very important defense issue, a few days ago, became the subject of an appeal in the Second Circuit in the Bernie Madoff bankruptcy case. The appeal came after two Madoff bankruptcy trustee lawsuits against financial institutions were thrown out based on the in pari delicto defense. Those cases parallel the Scott Rothstein case against TD Bank.

Everyone following the Scott Rothstein bankruptcy case should recognize what is really happening:

Berger Singerman is making many quick "pennies on the dollar" settlements. Those paltry settlements all have buried clauses that immunize the targets from victim lawsuits — the real "carrot" to settle. A large part of those paltry settlements then  go to Berger Singerman for legal fees — and Berger Singerman is thereby able to protect themselves (and friends) from many embarrassing questions and potential civil claims, including aiding and abetting and civil RICO claims, regarding Gibraltar.