Fla. Lawyer's Alleged Ponzi Scheme Busted

Feds Seize More than $18M of High-Flyer Scott Rothstein's Property; Allege Scheme Using Fake Legal Settlements

(AP)  Federal prosecutors accused a high-profile South Florida attorney of concocting a Ponzi scheme that lured millions of dollars from investors with promises of big payoffs from legal settlements that never existed, according to court documents.

The civil complaint filed Monday, seeking forfeiture of eight pieces of property owned by lawyer Scott Rothstein, marks the first time prosecutors have leveled fraud allegations at him - even though criminal charges have yet to be announced. It was filed the same day FBI and Internal Revenue Service agents seized luxury cars, boats, bank accounts and other possessions of the once high-flying Rothstein. The forfeiture complaint put the value of the real estate at more than $18 million.

In the complaint, prosecutors claim that Rothstein operated the Ponzi scheme since 2005 using his law firm, Rothstein Rosenfeldt Adler. Investors were promised fat profits of 20 percent or more by paying lump sums to people who had won legal settlements that would supposedly pay out larger amounts over a longer period.

It was all a lie, the complaint contends. Like all Ponzi schemes, new investor money was used to pay earlier investors to keep up an illusion of success, backed up by false documents showing bank accounts containing fictional large sums.

"The investigation has established that no such settlement agreements had ever existed and the entire investment scheme was a fraud," prosecutors said in the complaint. "The scheme involved hundreds of millions of dollars."

Rothstein's attorney did not respond to two phone messages seeking comment. The lawsuit mentions "others" involved in the scheme, but no one else is named.

The eight properties should be forfeited as ill-gotten gains of the scheme, prosecutors said.

Earlier Monday, FBI and IRS agents spent much of the day taking inventory at Rothstein's $6.4 million home - one of those that would be forfeited - where several of his luxury cars and boats were kept. Assets are typically seized in fraud investigations so they may later be sold to repay wronged investors.

The seizure warrants, described by a federal law enforcement official on condition of anonymity because of the ongoing investigation, are sealed in federal court. News photographers captured images of Rothstein's Ferrari being towed away by agents, and several were posted outside his ritzy home for much of the day.

One bank used by the law firm, Gibraltar Private Bank & Trust, issued a statement saying a deal involving a Rothstein company was put on hold. The Rothstein entity, Bahia Property Management LLC, had purchased 5 percent of Gibraltar, but the deal will be frozen pending the outcome of the investigation.

Three of Rothstein's boats were seized, according to Alayna Gossan, spokeswoman for National Liquidators - the same company that is handling the auction of disgraced financier Bernard Madoff's yacht and two other boats. Gossan said Rothsteins' boats seized on behalf of the IRS include an 87-foot Warren yacht, a 33-foot Aqua Riva and a Sundancer vessel, Gossan said.

Broward Circuit Judge Jeffrey Streitfeld said he expects "multiple claims from multiple lawyers" representing investors claiming huge losses. One of those attorneys, William Scherer, said he expects a substantial amount of Rothstein's assets will be recovered eventually.

[jntlw]

The GOP can't claim the Democrats are the ones lining their pockets any more now can they? GOP are just a corrupt as any other party - so stop pontificating and show some humility!

[Mortarman-29]

Why isnt the Social Security Ponzi Scheme busted?

[inketolstoy]

Because it is a scheme the victims are required to keep paying into. Imagine what Madoff could have done if he had the power of the IRS behind him?

[AOCGUY]

Carl Hiaasen in the Miami Herald reported today that Rothstein had raised over $600K for Charlie Crist's gubenatorial campaign and has already contributed about $80K to his senatorial campaign. Charlie's opponent, Right Wing darling Marco Rubio, isn't clean either having had fundraisers for his campaign hosted by Alan Mendelsohn who was recently indicted on 32 counts for peddling access to legislators.

[askagain]

The greed of some people is unbelievable. Three boats were seized. It is one thing to earn your money honest;y and with hard work, it is another thing to swindle people. How many people like this guy are out there? Perhaps some stimulus money can be used to build more prisons to house guys like this. As far as political affiliation, both political parties have their share of dishonest and corrupt politicians and supporters. You don't have to look very hard to find them.

[stn_sage]

OMG! So, Mr. Rothstein is a pal of Rudy Giuliani, huh?

Well...I can't say I'm surprised! Rudy doesn't seem to have any friends who AREN'T crooks! His ex-pedophile priest buddy, the man he nominated for head of Homeland Defense-Bernie Kerik, assorted lawyer crook friends, Wall St investment crooks, and now a Ponzi scheme buddy...just what he was lacking!

Maybe, Mr. Rothstein can get Rudy to come to court and give him character reference testimony? THAT, ought to help him tremendously!!

[pws54]

Don't forget his good ole buddy Dubya. After 911, Giuliani said, "Thank God George Bush is our President". What an A$$ Kisser!

[dontknowitall]

DOCTORS,LAWYERS AND THIEVES, Madoff,Rothstein,Goldberg,Fineberg and Iceberg.

[fer60us]

Here is a puzzle, what all these last names have in common? I will leave it up to you to get your own conclusions.

[bubbadubba]

A Repubulican and in 2005 when Bush and the Republicans controlled everything.
I am shocked!
LOL