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Ponzi Scheme Investigation Turns to Co-Conspirators

Filed under: Dining, Real Estate Developments

Investigators with the U.S. Attorney's Office for the Southern District of Florida, the Federal Bureau of Investigation and the Internal Revenue Service are now focusing on co-conspirators who assisted now-disbarred Florida attorney Scott Rothstein carry out a massive $1.2 billion Ponzi scheme.

Rothstein allegedly ran a Ponzi scheme from 2005 through November 2009. Rothstein is believed to have engaged in a pattern of racketeering activity through his law firm, Rothstein, Rosenfeldt, and Adler, P.A., located in Ft. Lauderdale, FL. Specifically, it is alleged that RRA was the criminal enterprise through which Rothstein and co-conspirators fraudulently obtained approximately $1.2 billion from investors through bogus investment and other schemes.

Rothstein and co-conspirators, who have not yet been identified, 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.

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.

According to the authorities, these expenditures were calculated to enhance Rothstein's reputation and ability to solicit potential investors in the Ponzi scheme, provide an air of legitimacy and credibility to RRA, engender loyalty, and deflect law enforcement scrutiny.

"He spent his clients' money on real estate, cars, yachts, politics and philanthropy, all to create the illusion that he, his law firm, and his schemes were hugely successful," says Acting U.S. Attorney Jeffrey H. Sloman. "Now, the mansions, Ferraris, yachts, the law firm and his friends are gone. He sought to buy power and influence at the expense of his clients, and instead has potentially bought himself a lengthy prison sentence."

The extravagent lifestyle of Scott Rothstein has come to an abrupt halt. The Feds are seeking the forfeiture of $1.2 billion, including 24 pieces of real property, numerous luxury cars, boats, and other vessels, jewelry, sports memorabilia, business interests, bank accounts, and more.

Rothstein has been charged with five criminal charges ranging from racketeering to money laundering, mail and wire fraud. If convicted on all counts, he faces a total maximum sentence of 100 years.

Rothstein, 47, of Fort Lauderdale, FL, made his initial appearance in federal court yesterday before U.S. Magistrate Judge Robin Rosenbaum. He was ordered detained pending trial.

Rothstein's attorney, Marc S. Nurik, didn't return calls seeking comment.

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