PatrickPretty.com

Tag: RRA

  • ‘Before, During And After The Aforesaid Seizure’: Feds Charge Ponzi Schemer Scott Rothstein’s Wife, Her Attorney And Friend With Conspiracy To Obstruct Justice, Launder Money And Tamper With Witness In Alleged Plot To Conceal Assets

    “Those who assist others to conceal assets subject to forfeiture will be fully investigated and prosecuted. Together with the U.S. Attorney’s Office, we will continue to pursue forfeiture of all assets acquired with funds derived from Rothstein’s Ponzi scheme.” — José A. Gonzalez, special agent in charge of the IRS-Criminal Investigations Division, Sept. 6, 2012

    Saying criminal conduct occurred “before, during and after” the seizure of assets linked to Florida Ponzi schemer Scott Rothstein, federal prosecutors today announced that Rothstein’s wife, her attorney and friend have been charged in an alleged bid to conceal more than $1 million in jewelry.

    Two others also were charged.

    “The integrity of our system of justice is based on the truthfulness of every witness that participates in the process,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “When a witness lies under oath or conspires to obstruct justice, the integrity of our system of justice is undermined. The charges filed against these five individuals are proof of our office’s commitment to safeguard and protect the integrity of our legal system. Thanks to the continued dedication and commitment of our law enforcement partners and our prosecutors, these individuals will be brought to justice and the integrity in our system of justice restored.”

    Kimberly Wendell Rothstein, 38; Stacie Weisman, 49; and attorney Scott F. Saidel were charged with with conspiracy to commit money laundering, to obstruct justice and to tamper with a witness, prosecutors said.

    Among the allegations against Kim Rothstein, Weisman and Saidel is that they “sought to have Scott W. Rothstein testify falsely” in a civil proceeding after Scott Rothstein’s corrupt law firm imploded in 2009.

    Meanwhile, Eddy Marin, 50, and Patrick Daoud, 54, were indicted on charges of obstruction of justice and perjury, prosecutors said.

    The Sun Sentinel is reporting that Daoud is a jeweler in Fort Lauderdale, the city in which Scott Rothstein’s epic, $1.4 billion Ponzi fraud collapsed in 2009 and took the Rothstein Rosenfeldt Adler law firm with it. Scott Rothstein was sentenced to 50 years in federal prison.

    From a statement by prosecutors today (italics added):

    According to the charging documents, former Ft. Lauderdale attorney Scott W. Rothstein, who was the Chief Executive Officer and Chairman of the law firm of Rothstein, Rosenfeldt and Adler, P.A. (RRA), used the funds obtained from the operation of a Ponzi scheme to purchase tens of millions of dollars of real estate, vehicles, vessels, business interests, luxury watches, jewelry and sports memorabilia for himself, his wife, Kimberly Rothstein, and others.

    As part of his plea agreement, Scott W. Rothstein agreed to forfeit to the government all assets acquired with funds derived through the aforesaid Ponzi scheme. On November 9, 2009, agents of the Internal Revenue Service, Criminal Investigations, went to the Rothstein residence, where Kimberly Rothstein assisted the agents in retrieving what was believed to be all of the available cash, jewelry and luxury watches which had previously been purchased by Scott W. Rothstein with proceeds derived from the Ponzi scheme.

    In fact, before, during and after the aforesaid seizure by federal agents on November 9, 2009, Kimberly Rothstein, Stacie Weisman, and Scott F. Saidel knowingly took action to conceal certain items of jewelry, valued in excess of one million dollars for the purpose of preventing the government from exercising its authority to take such property into its lawful custody and control. Thereafter, Kimberly Rothstein and Stacie Weisman sold and attempted to sell a portion of this jewelry to and through various persons, including Eddy Marin and Patrick Daoud.

    The charging documents further allege that, in connection with civil proceedings instituted by the Trustee in bankruptcy for RRA, all of the defendants took steps to obstruct justice by concealing the true location of certain items of jewelry in order to prevent its availability for use in those proceedings. It is further alleged that Marin and Daoud committed perjury during depositions in connection with those proceedings, and that Kimberly Rothstein, Stacie Weisman and Scott F. Saidel sought to have Scott W. Rothstein testify falsely in connection with those proceedings.

  • FEDS: Florida Attorney Conspired With Ponzi Schemer Scott Rothstein To Run Electioneering, Check-Kiting And Tax Scams And Prop Up Cash-Gushing Law Firm

    Fort Lauderdale lawyer Steven N. Lippman conspired with now-disbarred attorney, convicted racketeer and Ponzi schemer Scott Rothstein to prop up the Rothstein, Rosenfeldt and Adler (RRA) law firm through electioneering, check-kiting and tax scams, federal prosecutors charged yesterday.

    A 70-attorney firm that employed about 150 staff members, RRA collapsed in the wake of Rothstein’s epic Ponzi caper, which operated from the disgraced firm and was exposed in 2009. The Miami region’s top federal prosecutor yesterday described the scheme as “mind-boggling.”

    “The breadth, scope, and sheer complexity of Rothstein’s $1.2 billion Ponzi scheme is mind-boggling,” said U.S. Attorney Wifredo A. Ferrer. “Its success depended, in no small part, on the complicity of his colleagues and associates, like Steven Lippman. Lippman, an attorney, is now the ninth person to face criminal charges in connection with this scheme. As this investigation continues, I am sure that more will follow.”

    Lippman, 49, of Plantation, now has been charged criminally with conspiracy to violate the Federal Election Campaign Act, to defraud a financial institution and to defraud the United States.

    The Alleged Electioneering Scam

    It was the desire of Rothstein and others to “dramatically increase the stature and political power of RRA on the federal, state, and local level by making substantial political contributions to political candidates,” prosecutors said.

    In line with that, Rothstein enlisted Lippman and others to donate to the 2008 U.S. Presidential campaign of Sen. John McCain “by agreeing that RRA unlawfully would provide them with the funds to make the political contributions,” prosecutors said.

    In one instance, prosecutors said, Lippman made a $67,800 contribution to McCain-Palin Victory 2008 — and received $77,500 back from RRA.

    Then- Alaska Gov. Sarah Palin was McCain’s Vice Presidential running mate on the Republican ticket in 2008. Neither she nor McCain has been accused of wrongdoing.

    But Rothstein, through RRA, was interested in elevating his profile and improving his influence with politicians and political campaigns, prosecutors said.

    The RRA check Lippman received “was fraudulently backdated to reflect that it was issued six days prior to the date of the actual contribution and the memo section of the check stated ‘bonus,” prosecutors said.

    Various donations to GOP causes were “bundled” through the RRA firm — and Rothstein emerged a delegate to the 2008 Republican National Convention. Rothstein, in the midst of operating a colossal Ponzi caper, also was appointed to Florida’s 4th District Judicial Nominating Committee, which has sway “as to which persons should be nominated to be state appellate judges,” prosecutors charged.

    The Alleged Check-Kiting Scam

    With the RRA facing financial pressures in 2006, prosecutors said, Rothstein enlisted Lippman into a check-kiting scheme that involved an account at Lippman’s former law firm. The account at the former firm remained opened because the firm was still winding down its business when Lippman joined RRA in 2005.

    Over time, prosecutors charged, Lippman issued checks from the former firm totaling more than $10.3 million. Those checks — “many” of which were written with insufficient funds in the account — were deposited into RRA accounts.

    Rothstein and Lippman played the “float” on the checks to prop up the RRA firm and to “unlawfully obtain beneficial financing for RRA” by making it appear as though RRA had higher bank balances.

    As was the case with the political donations, Lippman came out ahead by playing ball with Rothstein in the check-kiting scheme, according to the charging document. Although checks from the former Lippman firm routed through RRA totaled more then $10.3 million, Lippman deposited checks from RRA accounts totaling more than $10.6 million into the account of the former firm.

    The Alleged Tax Scam

    Lippman, prosecutors said, “defrauded the IRS by failing to report as income certain expense reimbursements and other reportable income he received from RRA.

    The tax scam, prosecutors said, featured an agreement between Rothstein and Lippman that “Lippman would be paid a base salary and be given an expense account for which he would be fraudulently reimbursed for personal expenditures disguised as deductible business expenses”

    Through the conspiracy, prosecutors charged, Lippman and RRA sought to “avoid paying additional federal income and employment taxes.”

    “In addition,” prosecutors charged, “Lippman was paid from both the operating account and the payroll account of RRA, but would only receive an IRS Form W-2 reflecting the moneys paid to him through the payroll account. Lippman would not report to the Internal Revenue Service the moneys paid to him by RRA for expenses.”

    “The charges against Steven Lippman show our resolve to unravel all the schemes in this complex financial fraud perpetrated by convicted Ponzi schemer Scott Rothstein and his co-conspirators,” said John V. Gillies, special agent in charge of the FBI’s Miami Office.

    The probe in ongoing, Gillies said.

    “It is disappointing that the number of people who chose wrong over right and participated with Rothstein in this massive fraud is at nine and rising,” he said.

    The investigative efforts of the IRS are being led by José A. Gonzalez, special agent in charge of the IRS-Criminal Investigation Unit in Miami.

  • BULLETIN: Feds Say Scott Rothstein IT Associates Created Fake Banking Website; Meanwhile, Attorney Authored Bogus Letter And Another Associate ‘Posed’ As Banker And Plaintiff In Nonexistent Cases

    BULLETIN: Four associates of jailed Ponzi schemer and disbarred attorney Scott Rothstein have been charged criminally by federal prosecutors in Florida with conspiracy to commit wire fraud. The new defendants include an attorney at Rothstein’s defunct Fort Lauderdale law firm, two IT employees of the firm and a Rothstein associate in the nightclub business.

    The charges came in the form of a criminal information, which suggests the defendants are cooperating in the probe and ultimately may plead guilty to avoid the risk of indictment on other charges.

    As has been the case with other Ponzi probes, the details emerging in the Rothstein case read like an impossible work of fiction — but prosecutors say the allegations are true.

    Among the mind-blowing claims:

    • Two IT employees — William Corte, 38, of Plantation, and Curtis Renie, 38, of Ft. Lauderdale — created a bogus web page by copying the legitimate page of TD Bank. “False account balances” were posted on the fraudulent page to make it appear as though Rothstein’s law firm, Rothstein Rosenfeldt and Adler (RRA), had between $300 million and $1.1 billion on deposit at the bank. “[N]o such funds were in the accounts. The false account balances were shown to investors to induce them to invest into the fraudulent investment scheme,” prosecutors said.
    • RRA attorney Howard Kusnick, 58, of Tamarac, wrote a bogus letter that claimed a case had been settled in favor of clients. In reality, prosecutors said, the clients’ funds had been used to prop up the scheme and make Ponzi payments to investors. “[N]o such litigation had been instituted and no such settlement existed,” prosecutors said.
    • Stephen Caputi, 53, of Lauderhill, sometimes posed as a “banker” in meetings with Rothstein clients, and also posed as a “plaintiff” in bogus cases if the need surfaced. Caputi, prosecutors said, posed as a TD Bank employee and handed out false information on account balances to dupes. In a separate meeting with separate dupes, he posed as the the beneficiary of a $10 million settlement agreement to raise “investors’ confidence” in a deal, prosecutors said. Caputi was Rothstein’s partner in a nightclub.

    “The house of cards supporting Scott Rothstein’s elaborate Ponzi scheme continues to crumble,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “As today’s charges confirm, we will follow all leads and continue to bring to justice those who helped Rothstein execute this billion dollar fraud and any other crimes that may have been committed through RAA. The investigation continues.”

     

  • DEVELOPING STORY: Scott Rothstein To Plead Guilty In $1.2 Billion Ponzi Scheme

    BULLETIN: Scott Rothstein, the Fort Lauderdale attorney charged with racketeering last month and disbarred amid allegations he orchestrated a $1.2 billion Ponzi scheme involving bogus legal settlements, is expected to change his plea to guilty.

  • U.S. Attorney: Rothstein Ponzi Money Went To Politicians, Charities; ‘High-Ranking’ Police Officers Received ‘Gratuities’

    ponziblotterIn a criminal information and news release dripping with the word “co-conspirators,” federal prosecutors, the FBI and the IRS said Ponzi proceeds were used to grease wheels in law enforcement and pollute the worlds of business and politics in South Florida.

    Former attorney Scott Rothstein of Fort Lauderdale was arrested for racketeering yesterday. He was arraigned, denied bail and jailed. Residents are waiting for other shoes to drop in what is shaping up to be a scandal of monumental proportions.

    No co-conspirators were named immediately. But even police officers were involved and received “gratuities,” prosecutors said.  Politicians received donations designed to evade campaign-finance laws.

    One crime targeted at clients of Rothstein’s law firm involved $57 million, fraudulent legal documents, forgeries and a claim a lawsuit had been won when it actually had been settled against the interests of the clients, prosecutors said.

    “To perpetuate and conceal the fraud, defendant Rothstein and other co-conspirators created a false federal court order, purportedly signed by a Federal District Court 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.”

    But that was only a single element of a colossal fraud, prosecutors said.

    “Rothstein and other co-conspirators used the funds obtained through the Ponzi scheme for their own benefit,” prosecutors said. “This included, for example, using the money to fund and operate [the Rothstein Rosenfeldt Adler (RRA) law firm], 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,” prosecutors continued. “These expenditures were calculated to enhance defendant 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.”

    Acting U.S. Attorney Jeffrey Sloman of the Southern District of Florida said the crime was epic and had stained the legal profession.

    “Attorneys, like elected officials, hold a special position of trust in our society, and owe a corresponding duty to deal honestly with their clients and to promote their clients’ best interests,” Sloman said. “This attorney breached that duty and stole approximately $1.2 billion from clients and investors. 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.

    “Now, the mansions, Ferraris, yachts, the law firm and his friends are gone,” Sloman said. “[Rothstein] sought to buy power and influence at the expense of his clients, and instead has potentially bought himself a lengthy prison sentence.”

    The New York Times reported that Rothstein, who was disbarred by the Supreme Court of Florida last week, was overheard yesterday giving legal advice to people with whom he shared a holding cell before his arraignment.

    Rothstein, 47, faces up to 100 years in prison if convicted of racketeering and associated crimes such as mail fraud, wire fraud and money-laundering offenses.

    A veteran FBI agent said Rothstein’s world was filled with artificial realities.

    “Scott Rothstein appeared to be a charismatic, reputable attorney one could trust to invest one’s money and make a sizeable profit,” said John V. Gillies, Special Agent in Charge of the Miami Office of the FBI.

    “We now know it was all smoke and mirrors,” Gillies said.

    Daniel W. Auer, IRS Special Agent in Charge, said the investigation is ongoing.

    “We will continue to move forward with this investigation, wherever it leads, and we will bring to justice those who defrauded the American public and members of our community out of their hard-earned money,” Auer said.