FL Attorney Charged in Billion Dollar Ponzi scheme

Acting United States Attorney for the Southern District of Florida, Jeffrey Sloman along with Special Agent in Charge, Federal Bureau of Investigation in the Miami Office, John V. Gillies and Special Agent in Charge for the Internal Revenue Service Criminal Investigation Division, Daniel Auer announced the indictment of a Fort Lauderdale, Florida Attorney in a five count criminal information charge.

The counts against the Fort Lauderdale, Attorney Scott Rothstein, 47 include the following:

  • One count of conspiracy to violate the Racketeering Influenced Corrupt Organization statue.
  • One count of conspiracy to commit money laundering.
  • One count of conspiracy to commit mail and wire fraud.
  • Two counts of wire fraud.

Mr. Sloman has also requested in the criminal information request to seize the forfeiture of one billion two hundred million dollars of property owned by Mr. Rothstein. Items included in the list of seizer are twenty four pieces of real property, a number of luxury vehicles, boats, various other vessels, jewelry, business interests and bank accounts to provide a few but not all the items listed in the information request.

Mr. Rothstein appeared before The United States Magistrate Judge, Robin Rosenbaum on December 1st and was ordered to be held pending his trail. Mr. Rothstein based on the counts against him could receive a maximum sentence of one hundred years in federal prison as each count carries a twenty year maximum.

Court documents allege that between 2005 and November 2009 the defendant, Mr. Rothstein participated in racketeering activities which ran through his law firm Rothstein, Rosenfeldt and Adler, P.A.  Rothstein, Rosenfeldt and Adler, P.A according to the filing is the enterprise through which Mr. Rothstein conducted along with other individuals operations to obtain over one billion two million dollars by fraudulent means from investors in phony investments in addition to other scams to defraud. The firm was a front to entice investors to borrow monetary amounts to borrowers who were nonexistent. Mr. Rothstein and his conspirators used promissory notes and short term bridge loan requests to finance business as well as expected pay outs of confidential civil settlement agreements.

Mr. Rothstein and his co-conspirators enticed investors to loan money to clients of Rothstein, Rosenfeldt and Adler, P.A in the form of promissory notes and short term bridge loans. Mr. Rothstein informed those investors that his clients would pay high rates of return in exchange for these loans thus making fraudulent claims to the investors involved.

Mr. Rothstein and his co-conspirators also used settlement agreements in their schemes by enticing investors to invest in civil case settlement funds. Mr. Rothstein made fraudulent states to the investors by representing these settlement agreement ranged in value anywhere from hundred to millions of dollars; that the settlements could be purchased at discounts and that the payments on these settlement investment would be paid over time at full face value. The investors in the settlement agreements were also informed that the funds invested would be held in a trust account. According to court documents these investments did not exist and were merely a Ponzi scheme in which money was paid to existing investors from new investors.

Mr. Rothstein and his co-conspirators managed several different bank accounts in which to exercise their schemes and launder their funds. Accounts were used at TD Bank, N.A., Gibraltar Private Bank and Trust and other banking institutions.

Mr. Rothstein and his co-conspirators created fraudulent bank documents, a fraudulent on-line banking account, fraudulent settlement agreements, and fraudulent promissory notes in order to conduct their scheme and entice investors. The fraudulent documents where used to show investors proof of settlement pay offs and show that funds existed.

Mr. Rothstein and his co-conspirator also defrauded clients of the law firm by filing a civil suit. The civil suit was settled without the client’s knowledge and obligated the clients to pay five hundred thousand dollars to the defendant in the case. Mr. Rothstein made a fraudulent court order and signed it to make it appear to be signed by a United State Federal District Judge. The fraudulent order made it appear that the firm’s client had won the lawsuit and were owed twenty three million in judgment. The order falsely reported that the defendant in the case had wired all his funds to the Cayman Islands and that in order for their client to recover those funds they would need to post bonds. The client wire approximately fifth seven thousand dollars to a trust account controlled by Mr. Rothstein to satisfy the bonds.

Mr. Rothstein and his co-conspirators used the monies obtained through their schemes to benefit them solely. They used the funds to operate the firm, make contribution to the state, federal and local political candidates and donations to public and private charities. They used the funds to give cars, jewelry, boats, cash and bonuses to member of the firm, pay officers for security and gratuities to high ranking police members. They purchase restaurants and other local businesses in which to socialize with politicians and famous sports stars.

Acting United States Attorney Jeffery Sloman stated that Rothstein breached his duty and stole over one billion two million dollars from his clients and investors that trusted him. He spent his client’s hard earned money on a lavish life style filled with Ferraris, yachts and luxurious homes. He sought over the last four years to buy power and influence but instead has bought himself a prison term.

Special Agent in Charge of the Miami Office of the Federal Bureau of Investigation, John Gillies, stated that while Mr. Rothstein appeared charismatic and reputable it was all smoke and mirrors. He stated that the Federal Bureau of Investigation will continue to investigate people who swindle from others no matter if it a billion dollars or less than hundred dollars.

Daniel Auer, Internal Revenue Service Special Agent in Charge stated that they will continue to proceed with the investigation to where ever it leads and bring justice for those who have been victimized.

Attorney Sloman further stated that the charges against the defendant are merely allegations and that the defendant is considered innocent until proven guilty in a court of law. He thanked the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the Department of Justice’s Organized Crime and Racketeering Section and the Securities and Exchange Commission, Miami Regional Office for their efforts in the investigation of this case.

The case will be prosecuted by Assistance United States Attorneys, Paul Schwartz, Jeffrey Kaplan, Lawrence LaVecchio, and Alison Lehr.


bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark bookmark
tabs-top  banner ad


Leave a Reply

You must be logged in to post a comment.