Embattled Fort Lauderdale lawyer Scott Rothstein: ‘Rumors of my demise have been greatly exaggerated
Amy Sherman/Jay Weaver - Miami Herald Staff Writers
November 9, 2009
The Palm Beach Post News
http://www.palmbeachpost.com/news/content/state/epaper/2009/11/09/1109rothstein.html
FORT LAUDERDALE — Fort Lauderdale lawyer Scott Rothstein, who returned from a trip to Morocco last week to face a federal fraud investigation, said he was in good spirits Sunday.

“I am sitting here smoking cigars with Marc,” Rothstein said in a brief interview Sunday afternoon with The Miami Herald, referring to his attorney Marc Nurik. “Rumors of my demise have been greatly exaggerated. I’m doing pretty good.”

Rothstein, 47, has been accused by investors in an alleged Ponzi scheme of stealing hundreds of millions of dollars and by his law partners of crippling their firm, Rothstein Rosenfeldt Adler.

Federal authorities began questioning Rothstein upon his return from Morocco on Tuesday and based their search warrant to raid the law firm Wednesday in part on what he and his defense lawyer had told them, according to sources familiar with the probe.

Nurik, however, said news accounts stating that authorities were talking with Rothstein are false - despite last week’s repeated meetings and telephone calls involving Rothstein, his lawyer, FBI agents, IRS agents and federal prosecutors as reported by sources familiar with the probe.

“All this nonsense that he is somehow hanging out with the government - he is free,” Nurik said. “I don’t know where all this stuff is coming from.”

Rothstein, who is cooperating with investigators, is under federal surveillance at an undisclosed South Florida location.

Authorities could arrest him with evidence collected so far, the sources said, but they are trying to build a conspiracy case around Rothstein and possibly others who participated in his alleged investment scam under the mantle of his law firm.

UNDER PRESSURE

Rothstein said Sunday he could not disclose his whereabouts because otherwise “Marc will break my head.” Rothstein then handed the telephone to his lawyer, Nurik, who said that, in fact, they had not been smoking cigars.

“He is under a lot of pressure,” said Nurik, who had worked at Rothstein’s law firm but stepped down to represent him. “I don’t want anybody to think he is having a good time.”

During the brief interview with Nurik, Rothstein could be heard heartily laughing in the background.

Nurik would not disclose Rothstein’s whereabouts - a Florida location that Nurik said he - not federal authorities - chose.

“I have him hidden,” Nurik said. “I’m not going to tell anybody where, including the government. I don’t know where people are coming up with this stuff. I have been discussing his case with the government as any defense counsel would under these circumstances.

“I have been in contact with the government,” Nurik said. “My client is at an undisclosed location of my choosing and he is talking to no one but me. He hasn’t even met with his family.”

Nurik declined to discuss the case, but added that Rothstein wanted to say goodbye.

“I’m doing really good,” Rothstein said. “Marc is a great lawyer, a great friend. We will speak when the time is right.”

Meanwhile, a receiver appointed last week by a judge to examine the law firm’s finances will be back in court Monday for an update.

On Friday, Broward Circuit Judge Jeffrey Streitfeld gave Toronto Dominion Bank - where Rothstein kept dozens of his investors’ accounts - until noon Monday to turn over financial records related to him and his law firm. Streitfeld will hold a hearing one hour later with the receiver, retired Miami-Dade Circuit Judge Herbert Stettin.

Attorney Bill Scherer said he would file a motion Monday to intervene on behalf of investors who claim Rothstein bilked them of at least $98 million by selling them fabricated employment-discrimination settlements and then stealing their money. Those investors will assert they are creditors and should be allowed to block Rothstein’s law firm from collecting any recovered money - including its donations to charities and political candidates.

“I want it to be held to give us a chance to prove it’s our money,” Scherer said.

Scherer said he would also file a lawsuit Monday against Rothstein for fraudulent transfers concerning real estate and other businesses that he set up as Delaware corporations. He will also file claims for Rothstein’s cars, homes “and anything we can get our hands on.”

Rothstein and some his law associates created at least 30 shell corporations, in Florida and Delaware, and used some of them to move assets, court records show.

On Aug. 10, for example, Rothstein transferred his four Castilla Isle properties to four separate companies based in Delaware, though the companies shared the Fort Lauderdale address of his law firm, 401 E. Las Olas Blvd.
The same day, three other properties were transferred from Florida-based companies to Delaware companies - all with the firm’s address.

Delaware is known as a state with business-friendly laws that help companies shield assets from creditors and conceal the identities of corporate officers.

Federal investigators are scrutinizing Rothstein’s sale of legal settlements at a discount through a tool known as “structured settlements.” Rothstein is accused of asking investors to front reduced payouts to plaintiffs and then collect the difference from the full payout later. Authorities suspect the lawsuits were fiction, and investors are preparing to sue him.

UNRAVELED

The life of the high-profile lawyer who donated lavishly to charitable causes and politicians including Gov. Charlie Crist began to unravel in late October, when investors did not receive expected payouts and contacted federal officials. But for months the IRS had already been looking at Rothstein’s investment empire, including offshore bank accounts, sources familiar with the case said.

By then, Rothstein had taken off for Morocco, only to cut short his trip to face the federal investigation.

The prosecutors poring over the Rothstein evidence are Lawrence D. LaVecchio, Paul F. Schwartz and Jeffrey N. Kaplan. They have decades of experience investigating public corruption, white-collar fraud and organized crime.

They are preparing a massive fraud case against Rothstein, zeroing in on his settlement investments, sources said. But they are also examining allegations of theft from his law firm and client trust accounts.

Others said to be under scrutiny, according to sources familiar with the case: Rothstein’s legal advisor, David Boden, and his uncle, Bill Brock, who traveled with Rothstein to Morocco. They did not return calls seeking comment.

Last week, Streitfeld removed Rothstein as CEO of his law firm, which is now attempting to pick up the pieces.

Feds raid office of politically connected lawyer as firm shuts down
Asad Ba-Yunus
November 6, 2009
Examiner.com
http://www.examiner.com/x-12930-Broward-County-Law-and-Politics-Examiner~y2009m11d6-Feds-raid-office-of-politically-connected-lawyer-as-firm-shuts-down
Less than a week after a major Fort Lauderdale-based law firm shut its doors due to a financial scandal, federal agents raided the law firm’s offices on Wednesday evening. The law firm of Rothstein Rosenfelt Adler (RRA), and it’s CEO Scott Rothstein, have been embroiled in a mix of allegations including that he used the firm to defraud the firm’s investors out of over $400 million. Rothstein himself is a major contributor, largely to Republican officials, but also to a few Democrats.

News of this major story first began to leak out on Friday, just as Rothstein left the U.S. for a weekend trip to Morocco. On Monday morning, the firm filed a lawsuit in Broward County Circuit Court seeking to close the firm and place it into receivership. The firm’s pleadings, filed by former U.S. Attorney Kendall Coffey, accused Rothstein, the firm’s CEO, of scamming the firm’s investors by convincing them to invest in fake structured settlements in civil rights cases, promising huge returns. According to firm partner, Stuart Rosenfelt, Rothstein had complete and sole control over the finances of the firm, while he himself handled the law practice.

Rothstein used the firm’s financial success to his political advantage. Having donated large sums of money to major Republicans, including the Republican Party itself, Florida Governor Charlie Crist, and Broward Sheriff Al Lamberti, Jr., Rothstein’s office had photos of him with Crist, Lamberti, former New York City Mayor Rudy Guiliani (R), Senator John McCain (R-AZ), California’s Governor, Arnold Schwarzenegger (R) and Senator Joseph Liberman (I-CT), among others. Rothstein apparently had donated to the Florida Democratic party in the past, as well as to Florida’s Chief Financial Officer, Alex Sink (D), currently running for Governor.

Governor Crist has already acknowledged his ties to Rothstein, which he described as not-so-close, and has called on the legislature for stricter anti-corruption laws. On Tuesday, Crist’s campaign also returned $9,600 directly contributed by Rothstein for his Senate campaign. Other candidates and officials did the same.

On Tuesday, Broward Circuit Judge Jeffery Streitfeld appointed Miami-Dade senior Circuit Judge Herbert Stettin as Receiver, giving him complete physical and financial control of the firm. Judge Stettin is expected to hire accountants and others to evaluate the status of the firm and how it should be dissolved in relation to the claims made by swindled investors. Rothstein also returned to the U.S. to face federal investigators on Tuesday.

On Wednesday, Federal agents from the FBI and IRS executed a search warrant RRA’s offices from 7:45pm to 3:15am the next morning, with the full cooperation of Stuart Rosenfelt, who provided access to Rothstein’s private sanctuary office. The agents seized 44 boxes of materials, and are probing Rothstein’s real estate dealings as well.

Coffey opened the RRA offices to the media on Thursday, providing a detailed look into the reclusive, inner sanctuary from where Rothstein ran the firm’s finances and his financial scheme. Protected by microphones and video cameras all around the RRA offices, as well as a unique and dedicated controlled-access entry system just into Rothstein’s own executive office, Rothstein himself prevented even his law firms own staff from easy access to their CEO. He even had his own secret elevator that took him straight to a special section of the parking Garage dedicated just for his use. His office was full of photographs of himself with various political figures and sports celebrities. Rothstein had also hired off-duty Fort Lauderdale police officers to provide security in his offices and elsewhere, including his two multi-million dollar homes and the Bova chain of restaurants, of which he was a partner.

Rothstein returns after contemplating suicide, partner says
Prominent Fort Lauderdale lawer Scott Rothstein no longer with Rothstein, Rosenfeldt and Adler law firm: Retired Miami-Dade judge appointed as financial overseer of the 150-employee firm that its attorneys say only has $500,000 in its operating accounts
Jon Burstein/Paula McMahon/Brittany Wallman
November 3, 2009
South Florida Sun Sentinel
http://www.sun-sentinel.com/news/broward/fort-lauderdale/sfl-rothstein-law-firm-b110109,0,4262229.story
FORT LAUDERDALE - Attorney Scott Rothstein returned to Fort Lauderdale on Tuesday after contemplating suicide amid mounting allegations that he misappropriated hundreds of millions of dollars from an investment business he covertly ran out of his law office.

Stuart Rosenfeldt, the president of the Rothstein, Rosenfeldt and Adler law firm, said he was told that Rothstein met with federal prosecutors after his chartered plane landed at Fort Lauderdale Executive Airport.

Rothstein’s arrival came four days after he sent a desperate text message to his law firm’s five partners indicating they wouldn’t see him again.

“Sorry for letting you all down,” he wrote. “I am a fool. I thought I could fix it but got trapped by my ego and refusal to fail and now all I have accomplished is hurting the people I love. Please take care of yourselves and please protect Kimmie (Rothstein’s wife). She knew nothing. Neither did she nor any of you deserve what I did. I hope God allows me to see you on the other side. Love, Scott.”

For much of Tuesday afternoon, speculation ran rampant over where Rothstein would show up. Within 30 minutes of his plane touching down, Fort Lauderdale police officers, some wearing bulletproof vests, surrounded every entrance of the downtown tower housing the law firm. Rothstein did not appear.

Nor did he show up at a late-afternoon court hearing in which a retired Miami-Dade judge was appointed as the financial overseer of the 150-employee law firm that its attorneys say only has $500,000 in its operating accounts. That’s barely enough to cover the next paychecks of staff and clerical employees. Many of the firm’s remaining attorneys have agreed to waive their salaries for now.

“We’ve been learning more by the hour, and by the hour, it’s getting worse,” said Kendall Coffey, the former U.S. attorney who is representing the law firm. The law firm filed suit against Rothstein on Monday, accusing him of misappropriating money from an investment business he ran out of his private office.

Within the past year, Rothstein has had a meteoric rise in South Florida’s political, business and nonprofit worlds, spending millions during a recession that forced other local law firms to make cutbacks.

For the first time on Tuesday, more details began to emerge about just how much money was sunk into Rothstein’s investment business, which guaranteed a minimum of 20 percent investment returns in as little as three months.

Banyan Income Fund, a Fort Lauderdale-based hedge fund, invested at least $300 million with Rothstein, according to sources with knowledge of the firm’s business.

Fort Lauderdale attorney William Scherer confirmed he is representing clients who lost $72.5 million. Miami attorney Mark Raymond said he has spoken to a group of New York investors who are out $36 million.

In addition, the first investor lawsuit was filed Tuesday against Rothstein, Rosenfeldt and Adler by an Aventura company that says it lost more than $3 million.

“We have very little sense (of what’s happening) other than clearly something has gone very wrong,” said attorney Alexandra Sanchez, who is representing FDS Investments USA LLC.

Investors over the weekend began raising questions about what happened to their money. Rothstein’s whereabouts during those tumultuous days remained a mystery, and even his attorney said he didn’t know where in the world his client was.

Rothstein’s law partners all got the Oct. 31 text message, and Rosenfeldt talked to Rothstein, urging him to “choose life.”

Rothstein said he had three options–kill himself, live life “on the lam as a fugitive” or go to prison and risk being killed there because he has made enemies, Rosenfeldt said.

Rothstein returned about 12:50 p.m. Tuesday, landing in a chartered jet at Fort Lauderdale Executive Airport. Flight tracking records show that about the time Rothstein arrived at the airport, a chartered Gulfstream V jet from Casablanca, Morocco, touched down. The same jet flew from Fort Lauderdale to Casablanca on Oct. 27.

Rothstein’s attorney, Marc Nurik, could not be reached to comment Tuesday night. Nurik had vowed that Rothstein “would straighten this thing out” once he returned.

Fort Lauderdale police surrounded the office tower housing Rothstein’s law firm after receiving a call that lawyers there had “some concerns about their safety,” said Sgt. Frank Sousa, a Fort Lauderdale police spokesman.

“Better safe than sorry,” said Rosenfeldt about his firm’s call to police.

A few hours later, Streitfeld named retired Miami-Dade Circuit Judge Herbert Stettin to be the firm’s receiver, responsible for approving the firm’s day-to-day financial decisions. Rosenfeldt will be responsible for the firm’s legal decisions.

The ruling freezes Rothstein out of the firm.

“He has twice chosen not to appear (in court), he has in my opinion, for now, relinquished his authority,” Streitfeld said.

Or as Coffey later said, “He is O-U-T, out of the picture.”