An obscure banker who helped Fort Lauderdale lawyer Scott Rothstein fleece a group of wealthy investors plans to plead guilty to a single fraud charge rather than risk trial next week in Miami federal court.
Frank Spinosa — fired as regional vice president of TD Bank where Rothstein held his law firm’s trust accounts — will be the last of 29 defendants convicted for their parts in Rothstein’s $1.2 billion Ponzi scheme.
Spinosa’s role in the notorious racket, which collapsed six years ago when Rothstein faced the wrath of his investors and federal authorities, is detailed in a new charging document filed on Monday. When he pleads guilty on Oct. 8, Spinosa will face up to five years in prison on the wire-fraud conspiracy charge — far less than he might have received had he been convicted on various offenses at trial.
His defense attorney, Sam Rabin, who confirmed the plea agreement with prosecutors, declined to comment on Tuesday.
Spinosa, 54, used his executive banking position to help Rothstein convince his investors that their money would be safe at the TD Bank branch in Fort Lauderdale, according to prosecutors. In October 2009, Spinosa collaborated with Rothstein to craft a fictional “lock letter” guaranteeing that disbursements from their trust accounts could only be made to the lawyer’s investors.
It was all a lie, prosecutors say. Rothstein treated his investors’ accounts like his own piggy bank.
Here’s how Rothstein, with Spinosa’s help on the financial side, pulled off the con, according to prosecutors.
Rothstein sold fabricated legal settlements involving sexual harassment, discrimination and whistle-blower cases to the Fort Lauderdale-based group of investors. They would front lump-sum amounts at a discount to pay off the purported plaintiffs in exchange for receiving the full proceeds of the confidential settlements over a period of time.
Rothstein not only falsified the legal settlements to hoodwink investors. He also used new investors’ funds to pay off previous investors in a classic Ponzi scheme, running their money through the TD Bank branch to make the settlements seem solvent.
“While Spinosa and Rothstein did not discuss the fraudulent nature of the confidential settlements, they did agree to the preparation of the false and fraudulent ‘Lock Letter’ and the making of false statements to investors,” according to the new charging document.
“The funds held in the account at TD Bank for which Spinosa had signed the ‘Lock Letter’ were then distributed at the direction of Rothstein for his own benefit or to further his fraudulent scheme.”
Rothstein gorged himself on the stolen millions, scooping up waterfront properties in Fort Lauderdale, a fleet of luxury cars, jewelry and watches. After his Ponzi scheme unraveled, he flew to Morocco with $16 million in late October 2009, but returned to confess to his crimes and cooperate with the FBI, IRS and U.S. attorney’s office.
Rothstein was sentenced to 50 years in prison in a sprawling racketeering case brought by a trio of prosecutors: Jeffrey Kaplan, Paul Schwartz and Lawrence LaVecchio.
Spinosa’s punishment will be substantially lighter, but his former bank has lost hundreds of millions of dollars in legal battles with Rothstein’s investors.