by Brian Mahany
Scott Rothstein is serving a 50 year prison term for operating the largest Ponzi scheme in Florida history, a massive $1.2 billion fraud. Now that he is effectively serving the rest of his life behind bars, Rothstein says he is setting the record straight and naming names. Is he really setting the record straight or just seeking revenge and trying to take everyone else down? Given his explosive allegations, thats probably something that will take years for juries and lawyers to determine.
Rothstein was head of a 70 lawyer law firm in Southern Florida. His firm seemingly grew overnight and included big ticket clients like Wells Fargo, J C Penny and Citicorp. But Rothstein led a second life, peddling structured settlements based on employment discrimination and whistleblower lawsuits. The settlements were a scam.
After the Ponzi scheme unraveled, Rothstein fled to Monaco which doesn’t have an extradition treaty with the U.S. Later he would voluntarily surrender and return to the U.S.
Now that he has been sentenced, Rothstein claims that banking giant TD Bank assisted him in his Ponzi scheme. The bank, of course, vehemently denies all such allegations. The bank has already been sued by some of Rothstein’s victims.
Rothstein says that the bank provided real letters to accompany phony statements and routinely allowed overdrafts in his firm’s attorney trust account. State law requires any overdraft, even if accidental, to be reported to the state bar. Rothstein says had the bank followed the law, his scam would have been uncovered much earlier.
Did TD Bank go along with the fraud because they were generating huge fees from all the business brought by Rothstein’s law firm? Were they victims themselves of his deceit and lies? Or are they truly innocent of all wrongdoing? It’s likely to take years to unwind the mess. If Rothstein is correct, however, that bank officials failed to report trust account overdrafts and ignored money laundering red flags caused by Rothstein’s massive money movements, the bank may find itself on the hook for hundreds of millions in damages.
As for Rothstein, he won’t be eligible for parole until he is almost 90. Much of the money taken in the scheme was used to finance his lavish lifestyle. The court appointed receiver in the case found he had 4 Ferraris, 1 Bentley, 1 Rolls Royce and 3 Lamborghinis plus a Boeing 727 jet.
Prosecutors sought 40 years and Rothstein himself asked for 30. The judge wasn’t buying it, however. Notwithstanding his apparent remorse and cooperation, the court gave him 5o years.
Prior to surrendering to authorities he wrote,
“Sorry for letting you all down. 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.”
Rothstein betrayed his family, clients and his law partners. The complicity of TD Bank in his crimes remains to be seen.
If you are the victim of a fraud or Ponzi scheme, give us a call. Even if the fraudster has spent all the proceeds of his crime on fast cars and a lavish lifestyle, its often possible to pursue others who have facilitated the fraud. Brokerage firms, insurance companies, banks and even law firms are often liable for the misdeeds of another if they covered up or overlooked the warning signs.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine. Services available in most states.