Bank Of Bermuda Settles Cash 4 Titles Ponzi Scheme

by Jason Gorringe, Tax-News.com, London

10 July 2001

According to a press release issued yesterday, the Bank of Bermuda has settled the so-called 'Cash 4 Titles' litigation. Although the bank denies liability for losses under the Cash 4 Titles Ponzi scheme, which is estimated to have cost victims up to $300m, the settlement requires the bank to pay up to 50 per cent of "actual losses" suffered by participants in the Cash 4 Titles scheme.

There were two actions against the bank: one a class suit brought in Florida on behalf of the investors in the scheme; and one brought in Illinois by the receiver to the failed scheme. The settlement, which covers both actions, has been given preliminary by the Florida court, which will approve it finally in a hearing on 12th October.

The total payment by the Bank, including all court approved fees and expenses, is not to exceed $67.5 million. Bank of Bermuda CEO and President Henry B. Smith commented: "This is a significant and positive step forward, which we believe is in the best interest of the Bank and its shareholders.

"While we continue to deny guilt or liability in this matter, the settlement allows us to limit the disruption, expense and uncertainty that major litigation always involves."

The Bank of Bermuda reported net income of $31.7 million for the first quarter of 2001, up 2.8 per cent from $30.8 million reported in the same quarter last year. It's not clear at this stage whether the Bank has insurance cover against the costs and damages of such court actions. The Bank's shares closed unchanged at $50 on the Bermuda Stock Exchange yesterday on miniscule volume.

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