TD Bribery Woes Spread to Florida as New Allegations Surface
As part of a plea deal, a New York man said in February 2022 that he coordinated a $653 million money laundering conspiracy, partly by bribing bank employees with gift cards and other favors to open accounts in the names of shell companies.
In another case, Oscar Nunez-Flores, who worked at a branch in Scotch Plains, New Jersey, since 2020 was charged last October with taking bribes to open debit cards and online accounts in the names of shell companies registered in Florida.
Nunez-Flores masked the real owners of the accounts on documents filed with the bank, according to the government’s complaint charging him with bribery and conspiracy to launder money.
The funds deposited into these Toronto-Dominion accounts included proceeds from the sale of illegal narcotics, prosecutors allege, and the scheme sent millions of dollars from the U.S. to Colombia. Nunez-Flores, who has been discussing a potential plea deal with the government, according to court papers, netted more than $20,000 for his work, prosecutors allege.
A lawyer for Nunez-Flores, whose court documents also indicate he hasn’t yet entered a plea in the case, declined to comment.
As part of the money-laundering investigation, prosecutors have uncovered seemingly unrelated misdeeds: In the other case that hasn’t been previously reported, a former New York-based branch manager pleaded guilty in May to stealing more than $200,000 from an elderly customer and fabricating email messages after the client died.
A lawyer for James Gomes, the former manager, said in an emailed message that her client was “extremely remorseful” and didn’t know about the customer’s death until just before admitting to the charges.
Thumbs Up
Aquino Vargas, the banker in Florida, worked with customers at Toronto-Dominion since 2012, according to the government’s complaint, filed in federal court in New Jersey.
Prosecutors say that, in 2022, Aquino Vargas began helping the Colombian client – identified in court papers only as “Co-Conspirator-1” – by opening dozens of fraudulent accounts on his instructions in the names of “witting and unwitting” people.
Debit cards for those accounts were used to transfer cash from the U.S. to Colombia.
Aquino Vargas was charged with obstructing a grand-jury investigation. A judge in April gave him and the government until to July to negotiate a potential plea, according to filings in the case.
U.S. authorities say that when Toronto-Dominion later blocked some of the cards, Aquino Vargas called the bank’s hotline and vouched for the transactions. A few weeks before opening those accounts, Aquino Vargas discussed getting paid by his alleged Colombian conspirator via WhatsApp for 28 debit cards, seeking $200 per debit card.
“That $200 I’m giving you guys, I’m not doing anymore,” Aquino Vargas wrote, according to prosecutors’ translation of the messages in Spanish. “With other people it’s $500-$800 per account man.”
After he received payment to his personal Toronto-Dominion account through Zelle, prosecutors say Aquino Vargas sent another WhatsApp message to the Colombian: “Gracias,” he said, with a meme of actor Jean-Claude Van Damme giving a thumbs up.
‘Strong Bank’
More than a dozen people who worked with retail clients have been fired for code-of-conduct violations, said the person with knowledge of the matter, asking not to be identified discussing personnel matters.
The lender also has replaced close to 10 senior leaders in compliance and legal roles, including hiring Herbert Mazariegos away from Bank of Montreal to become chief global anti-money-laundering officer.
The U.S. hasn’t charged Toronto-Dominion with any crimes stemming from the cases. Investigations into conduct by financial firms can end with no charges being brought or fines being imposed.
Toronto-Dominion said that Aquino Vargas, Gomes and Nunez-Flores were all terminated by the bank.
Still, the bank has acknowledged surveillance gaps and says it’s cooperating with authorities.
“When front-line staff were in any way complicit in activity, we investigated and took immediate action, coordinating our efforts with the DOJ” on its investigation, said Hodgins, the bank spokesperson. “More broadly, where our program was ineffective, we have held those leaders accountable and are taking action to drive the changes and meet our obligations.”
For Masrani, Toronto-Dominion’s CEO, regaining momentum in the U.S. may be key to his legacy. The 68-year-old executive has continued the bank’s aggressive push across Canada’s southern border during his tenure of almost a decade, and profit from U.S. retail banking almost tripled since he took the reins.
He’s already weathered past scandals during his time as a senior leader.
Masrani, previously the lender’s chief risk officer as well as president and CEO of its U.S. division, became CEO of the entire company a little more than a year after Toronto-Dominion paid more than $50 million to settle U.S. regulators’ claims that its American unit failed to file suspicious activity reports tied to a massive Ponzi scheme for which Scott Rothstein was convicted and sentenced to decades behind bars.
And the bank agreed last year to pay $1.2 billion to settle a lawsuit by investors who claimed Toronto-Dominion aided Allen Stanford’s $7 billion Ponzi scheme more than a decade earlier, while denying wrongdoing. Stanford was also convicted and received a 110-year sentence in 2012.
Issues ‘Unacceptable’
Masrani recently told analysts that Toronto-Dominion’s compliance issues were “unacceptable” and that he hoped Toronto-Dominion would reach a resolution with authorities “as soon as possible.”
He was even more pointed in his remarks to employees in May, when he said he took the situation “very personally.” Masrani had just flown to Hollywood, Florida — the same town where Aquino Vargas is alleged to have run his scheme — to reassure executives. The bank often hosts internal events in the beach town, about 20 miles north of Miami.
“This is going to get tougher before it gets better. More information is going to drip out over the next little while,” he said, according to a transcript of his remarks. “We have the means to fix this and we will.”
Credit: Bloomberg
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