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Wednesday, June 09, 2010

Fort Lauderdale Attorney Scott Rothstein of Rothstein Rosenfeldt and Adler, P.A. Sentenced to 50 Years in Billion-Dollar South Florida Ponzi scheme , RICO charges

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office; and Daniel W. Auer, Special Agent in Charge, Internal Revenue Service (IRS), Criminal Investigation Division, announced today’s sentencing of attorney Scott Rothstein, 47, of Fort Lauderdale, in connection with the operation of a $1.2 billion Ponzi scheme through the defunct Ft. Lauderdale law firm Rothstein Rosenfeldt and Adler, P.A (the RAA law firm). Scott Rothstein was born in the Bronx New York, June 10th, 1962, he moved with his parents to South Florida in 1976.

"At age 47, Rothstein will likely live the remainder of his natural life behind bars. In a sense, it is as if Judge Cohn let nature decide whether Rothstein will see life as a free person again. If he lives long enough, he may get the chance. If not, then too bad".

Today’s sentence follows Rothstein’s January 27, 2010 guilty plea to one count of conspiracy to violate the racketeering influenced corrupt organization (RICO) statute (Count 1); one count of conspiracy to commit money laundering (Count 2); one count of conspiracy to commit mail fraud and wire fraud (Count 3); and two counts of wire fraud (Counts 4 and 5).

U.S. District Court Judge James I. Cohn sentenced Rothstein to 50 years in prison, to be followed by three years of supervised release. The court’s sentencing order also incorporated the previously issued preliminary order of forfeiture, which ordered the forfeiture of Rothstein’s interests in real property, vehicles, bank accounts, and investments, among other properties.


According to court records and statements made in court, from around 2005 through November 2009, Rothstein engaged in a pattern of racketeering activity through the RAA law firm, located in Ft. Lauderdale. During his plea, Rothstein specifically admitted that RRA was the criminal enterprise through which he and others fraudulently obtained approximately $1.2 billion from investors through bogus investment and other schemes.
“It is with surprise and sorrow that the attorneys of Rothstein Rosenfeldt Adler have learned that Scott W. Rothstein, the managing partner and CEO of the firm, has, according to assertions of certain investors, allegedly orchestrated a substantial misappropriation of funds from investor accounts,” the complaint said.


To execute this four-year scheme, Rothstein and his co-conspirators used multiple bank accounts at TD Bank, N.A., Gibraltar Private Bank and Trust, and other financial institutions to deposit and launder investors’ money. As well, to perpetuate and conceal the fraud, Rothstein and his co-conspirators created and caused the creation of false bank documents, false on-line bank account information, and false settlement agreements and promissory notes, which were shown to investors as proof that the settlement and loan monies existed. In fact, however, there were no settlement funds or loan clients and the bank accounts only contained “Ponzi” scheme funds.


To perpetuate the Ponzi scheme, defendant Rothstein and other co-conspirators defrauded clients of RRA in a civil suit initiated by RRA on their behalf as plaintiffs. Without the clients’ knowledge, RRA settled the lawsuit in favor of the defendant, thereby obligating the clients to pay $500,000 to the defendant in the civil lawsuit. To conceal the fraud, defendant Rothstein and other co-conspirators created a false federal court order, purportedly signed by a U.S. District Judge, stating that the clients had won the lawsuit and were owed a judgment of approximately $23 million.


The false court order also stated that the defendant in the civil suit had transferred the funds to the Cayman Islands to avoid paying the judgment. Defendant Rothstein and other co-conspirators falsely advised the clients that to recover those funds, the clients were required to post bonds. In this way, defendant Rothstein caused the clients to wire transfer approximately $57 million to a trust account he controlled, purportedly to satisfy the bonds.

According to statements made and documents filed in support of Rothstein’s guilty plea, Rothstein and other co-conspirators used the funds obtained through the Ponzi scheme for their own benefit. This included, for example, using the money to fund and operate RRA, to make contributions to federal, state, and local political candidates, and generous donations to public and private charitable institutions.


” … Rothstein is credited with bundling millions of dollars for GOP presidential candidate John McCain and numerous state and Broward County races through the RAA law firm. For his efforts, he was invited to Gov. Charlie Crist’s wedding. … “

The money was also used to pay for lavish gifts, including exotic cars, jewelry, boats, cash and bonuses to individuals and members of RRA, to hire local police officers to provide security, and to provide gratuities to high ranking members of police agencies. In addition, the money was used to purchase controlling interests in restaurants and other businesses, and to socialize with politicians and sports figures.

"It wasn’t unusual to see the attorney eating at one of his restaurants, such as Bova Prime on Las Olas, with a group of bodyguards. Rothstein spent almost $400,000 a year on off-duty police protection, which he started after a lawyer at the firm was killed".

"The firm was thrust into the public eye in March 2008 when partner Melissa Britt Lewis was strangled inside her Plantation garage and dumped in a canal. Tony Villegas, the estranged husband of the firm’s longtime chief operating officer and Lewis’ best friend, was charged in her murder".


Rothstein later hired bodyguards to protect his colleagues and family. Off-duty police guarded his home, law firm and restaurant around the clock until November 2nd, 2009. Fort Lauderdale police spokesman Frank Sousa said the three details have been “suspended indefinitely.” Rothstein recruited defeated Broward Judges Pedro Dijos and Julio Gonzalez, retired 4th DCA Judge Barry Stone and Palm Beach Circuit Judge William Berger, who resigned from the bench after he was offered the chance to run the firm’s Boca Raton office. Rothstein also hired former Broward Sheriff Ken Jenne shortly after he served a federal prison sentence on corruption charges.


U.S. Attorney Wifredo A. Ferrer stated, “This rags-to-riches-to-jail saga is a humbling reminder of what can happen when greed and ambition run amuck. Rothstein manipulated and abused the trust of all whom he knew—his friends, family, business partners, legal colleagues, political figures, and even charitable organizations—to enhance his reputation, standing, and power in the community. All that he had accomplished crashed and burned when his elaborate Ponzi scheme fell apart. Today’s sentence punishes the defendant for his thievery, and hopefully brings some sense of justice to the victims of this massive fraud.”
“While our investigation continues, this chapter in the Rothstein saga is coming to a close with important lessons for all to learn,” said John V. Gillies, Special Agent in Charge of the FBI Miami Division. “For those that are entrusted with other people's money: do the right thing. For those that entrust people with their money: don't be fooled by the promise of unrealistic returns. The common element for both is greed—don't let it get the best of you.”


“Unfortunately today’s sentencing does not immediately offer complete financial restitution for the victims of South Florida’s largest Ponzi scheme,” said Daniel W. Auer, Special Agent in Charge of the IRS, Criminal Investigation Division. “Victims can rest assured that IRS-CID, together with our law enforcement partners at the U.S. Attorney's Office and the FBI will continue to relentlessly pursue forfeiture proceedings relating to Rothstein’s criminally-derived assets.”


"Those affected by Florida Ponzi schemer Scott Rothstein's machinations got a little justice this week in the form of a total of $5.8 million brought in by an auction of Rothstein's toys at the Broward County Convention Center. The Sun-Sentinel reports there was such a big turnout for the affair that the auction started almost two hours late. Up for sale were Rothstein's luxury cars including a Bugatti, a Lamborghini Murcielago, a '67 Corvette Stingray, a Bentley, a Rolls Royce, a Mercedes McLaren, a Maserati and a pair of Ferraris".


"There were a total of 17 lots and in little over an hour 11 cars, four yachts and two Wave Runners were snapped up by new owners. Rothstein's 87-foot Warren yacht, the Princess Kimberly, went for $2.51 million. The Bugatti, which Rothstein paid $1.5 million for was sold for $858,000. The $5.8 million will be added to the restitution fund for victims of Rothstein's $1.4 billion investment fraud scheme".


Bill Warner Private Investigator, SEX, CRIME, CHEATERS & TERRORISM