Florida Lawyer Charged In Running $1 Billion Ponzi Scheme

Rothstein shown in autographed photo with Florida Gov. Charlie Crist. Rothstein helped raise over $600,000 for Crist's campaign. Crist attended Rothstein’s wedding at the Versace mansion Rothstein purchased. Rothstein attended Crist’s 52nd birthday party in 2008. Rothstein also contributed $200,000 to the Florida Democratic Party and held a fundraiser for Alex Sink, a Democrat running for governor.

A Florida lawyer who was arrested today and turned over to the FBI, pleaded not guilty to running a Ponzi scheme that bilked investors out of more than $1 billion. 

Several hours after his arrest, lawyer Scott Rothstein – the once high-flying attorney who courted politicians and celebrities, pleaded not guilty in federal court to five counts, including racketeering conspiracy, money laundering conspiracy and wire fraud.  Court documents put the maximum prison term for convictions on all counts at 100 years.

U.S. Magistrate Robin Rosenbaum ordered Rothstein to be held without bail, noting he wired $16 million to a bank account in Morocco and then flew there on a chartered a jet carrying $500,0000 in cash late October trip before returning back home to Florida.  a chartered jet that Rothstein had wired some $16 million to a bank account in Morocco and flew on a chartered jet there in late October before returning to Florida.

“At least at some point, Mr. Rothstein intended to flee,” Rosenbaum said.

Rothstein has been disbarred by the Florida Supreme Court and was founding partner of Rothstein Rosenfeldt Adler, now defunct.

Rothstein’s law firm grew from seven lawyers in 2002 to more than 70 when it failed.  They had offices in Boca Raton, West Palm Beach, Miami, Tallahassee, New York and, recently, Caracas, Venezuela.

Roger Stone, a veteran Republican political consultant involved in Presidential campaigns for Nixon, Reagan and both Bush’s, and also involved in bringing down New York Gov. Elliot Spitzer talked about his relationship with Rothstein.

Stone said he was a former business partner with Rothstein in RRA Consulting LLC, a company set up to provide public affairs assistance but never generated any clients.  says Rothstein was dysfuntional and he was shocked to find that investors trusted the guy with their money.

Stone, editor and publisher of STONEzone.com, says:

While Rothstein Rosenfeldt Adler is certainly a highly capable law firm of talented and professional individuals, there was never any evidence that the firm generated the kind of revenue that Rothstein was spending on real-estate, exotic cars, wrist-watches, charitable contributions, political contributions, jewelry, watercraft, designer clothing and multiple luxury homes in Fort Lauderdale and New York City.

Rothstein’s spending became so profligate that one year ago I retained Adam Mangino, a former DEA Agent, to investigate and determine the source of Rothstein’s new found wealth. While Mangino could not determine the source of Rothstein’s wild spending, he did advise me that the money was not Rothstein’s.

I asked Rothstein to dissolve RRA Consulting LLC a year ago and his sponsorship of the STONEzone ended July 29th of this year. I am not an investor in any of his schemes and can’t believe anyone in their right-mind would entrust him with investor money.

Over time Rothstein’s wild spending and outrageous behavior in public coupled with his dysfunctional habit of not returning phone calls, text messages or emails from his law partners, colleagues, business associates, and members of Broward County’s power elite, ultimately bought him down. His yelling at the top of his lungs in restaurants, threatening reporters, and garish $300 hand painted neck-ties, coupled with ADD so severe he never finished a martini, a cigar, a thought, or a sentence, never mind a transaction, did not endear him to those in business or political circles.

I feel very badly for Stuart Rosenfeldt, a founding partner at RRA who served as my deputy in the 1976 Reagan Presidential campaign. Rosenfeldt is an honest and highly capable lawyer who, although a partner in RRA, was not privy to the financial records of the law firm and was not involved in Rothstein’s business activities. Neither law firm name partner Russell Adler nor Stuart Rosenfeldt were signatories on the RRA Trust Account.

Used to spending big dollars to ensure that his name and picture appeared in vanity magazines and charity programs, for the first time in his life, Scott Rothstein has gotten publicity he hasn’t paid for.

Rothstein’s Ponzi scheme was set up under the guise that he won lucrative settlements in workplace discrimination and whistle-blower lawsuits, but no such settlements existed. Prosecutors say he promised massive returns on investments in the legal settlements which would pay out over time.  He used money from new investors to pay older ones.

Marc Nurik, attorney for Rothstein told reporters after his not guilty plea that his client was “going to try to do the right thing” for his investors.

“My client wishes to see that legitimate investors get paid their money back,” said Nurik, but didn’t offer suggestions how this might be done. 

Earlier this year, Bernie Madoff was handed a 150-year jail sentence for operating a $50 billion Ponzi scheme.

Federal prosecutors have already seized some of Rothstein’s assets, including an 87-foot yacht, 20 luxury cars (including two 2010 Lamborghini Murcielagos each worth about $400,000 each, and two Rolls-Royce Phantom 5′s)and his share of the Miami Beach mansion formerly owned by fashion designer Gianni Versace. Prosecutors are also going after 21 homes and other properties linked to Rothstein.

Several investors have already filed lawsuits seeking their money back, including one case demanding more than $100 million in damages.

Related posts:

1. Florida Lawyer Pleads Guilty to $1.2 Billion Ponzi Scheme
2. Prominent Lawyer Pleads Guilty to $400M Fraud
3. Convicted $65 Billion Con Artist Is Dying Of Cancer
4. Disbarred Lawyer Gets 5 Years In Federal Prison
5. Minneapolis Lawyer Faces 20 Years For Stealing From Clients

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