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November 24, 2009
U.S. Moves to Confiscate a Fortune in Ponzi Case
By DAMIEN CAVE
MIAMI — Scott Rothstein, the Fort Lauderdale lawyer accused of a $1 billion Ponzi scheme, certainly spread the money around. On Monday, federal authorities filed court documents seeking to seize his 87-foot yacht, more than a dozen properties and 20 luxury cars, including a 2009 Bugatti Veyron that sells for $1.5 million.
The court filing showed as well that he had stakes in dozens of companies, $12 million in Moroccan banks and about $80,000 in American Express gift cards, all of which the government also wants, for the benefit of any defrauded investors.
While Mr. Rothstein, 47, has not yet been charged with a crime, the authorities made clear in the documents that they believed he had used money obtained though fraud to live extravagantly and cover payroll at his law firm, Rothstein Rosenfeldt Adler.
“The details of all this are obviously coming from Scott Rothstein,” said William Scherer, a lawyer for about 35 Rothstein investors who filed a $100 million lawsuit last week. “He’s clearly singing like a bird.”
Marc Nurik, Mr. Rothstein’s lawyer, denied that his client was cooperating with the authorities. Mr. Nurik said Mr. Rothstein had returned from Morocco, to which he fled in October as his business of selling allegedly fake legal settlements to investors collapsed, and was waiting to respond to the accusations in court.
“His intentions are to try and straighten this situation out,” Mr. Nurik said. “How he does that remains to be seen.”
In a video posted this month by Bob Norman, a local blogger, Mr. Rothstein can be heard telling friends at a restaurant that “people make mistakes.” He also says repeatedly, “I’m going to do the right thing,” though he does not answer when asked how he plans to do so.
Fraud experts said Mr. Rothstein’s actions, especially the investments in other businesses, seemed to fit a pattern that began with Charles Ponzi in 1919. Ponzi was among the first to use new investors to pay back the old, and when his scheme was running smoothly, he bought banks in Boston and a macaroni factory to add legitimacy to what he hoped would be a never-ending scam.
“A certain portion of Ponzi schemers are self-delusional,” said Mitchell Zuckoff, a journalism professor at Boston University who wrote “Ponzi’s Scheme: The True Story of a Financial Legend.” “They think they can keep it going indefinitely, as long as they remain high up on the hog.”
Questions about Mr. Rothstein’s money have long swirled here. In Monday’s filing, the authorities said he had taken in hundreds of millions of dollars from investors over at least four years, relying partly on co-conspirators who created documents of legal settlements that never existed and were sold to wealthy clients.
Now investigators are trying to track down whatever might be left. Holy Cross Hospital in Fort Lauderdale said last week that it would return a $1 million gift from Mr. Rothstein’s foundation. More than $160,000 in political donations are also being sought by investigators, part of a giveback from prominent leaders including Gov. Charlie Crist.
Mr. Scherer, the lawyer for some Rothstein investors, said: “It’s the imprimatur of wealth obviously, and all the charitable contributions and all, that were making true believers out of people, I assume. It’s the big con.”
http://www.nytimes.com/2009/11/24/us...l?ref=business
A 'fortune' indeed. Madoff has somewhere between $50-70 billion unaccounted for. Do the math. This has FIRE written all over it....:p:rolleyes::p
The court filing showed as well that he had stakes in dozens of companies, $12 million in Moroccan banks and about $80,000 in American Express gift cards, all of which the government also wants, for the benefit of any defrauded investors.
While Mr. Rothstein, 47, has not yet been charged with a crime, the authorities made clear in the documents that they believed he had used money obtained though fraud to live extravagantly and cover payroll at his law firm, Rothstein Rosenfeldt Adler.
“The details of all this are obviously coming from Scott Rothstein,” said William Scherer, a lawyer for about 35 Rothstein investors who filed a $100 million lawsuit last week. “He’s clearly singing like a bird.”
Marc Nurik, Mr. Rothstein’s lawyer, denied that his client was cooperating with the authorities. Mr. Nurik said Mr. Rothstein had returned from Morocco, to which he fled in October as his business of selling allegedly fake legal settlements to investors collapsed, and was waiting to respond to the accusations in court.
“His intentions are to try and straighten this situation out,” Mr. Nurik said. “How he does that remains to be seen.”
In a video posted this month by Bob Norman, a local blogger, Mr. Rothstein can be heard telling friends at a restaurant that “people make mistakes.” He also says repeatedly, “I’m going to do the right thing,” though he does not answer when asked how he plans to do so.
Fraud experts said Mr. Rothstein’s actions, especially the investments in other businesses, seemed to fit a pattern that began with Charles Ponzi in 1919. Ponzi was among the first to use new investors to pay back the old, and when his scheme was running smoothly, he bought banks in Boston and a macaroni factory to add legitimacy to what he hoped would be a never-ending scam.
“A certain portion of Ponzi schemers are self-delusional,” said Mitchell Zuckoff, a journalism professor at Boston University who wrote “Ponzi’s Scheme: The True Story of a Financial Legend.” “They think they can keep it going indefinitely, as long as they remain high up on the hog.”
Questions about Mr. Rothstein’s money have long swirled here. In Monday’s filing, the authorities said he had taken in hundreds of millions of dollars from investors over at least four years, relying partly on co-conspirators who created documents of legal settlements that never existed and were sold to wealthy clients.
Now investigators are trying to track down whatever might be left. Holy Cross Hospital in Fort Lauderdale said last week that it would return a $1 million gift from Mr. Rothstein’s foundation. More than $160,000 in political donations are also being sought by investigators, part of a giveback from prominent leaders including Gov. Charlie Crist.
Mr. Scherer, the lawyer for some Rothstein investors, said: “It’s the imprimatur of wealth obviously, and all the charitable contributions and all, that were making true believers out of people, I assume. It’s the big con.”
http://www.nytimes.com/2009/11/24/us...l?ref=business
A 'fortune' indeed. Madoff has somewhere between $50-70 billion unaccounted for. Do the math. This has FIRE written all over it....:p:rolleyes::p