Movement of money within Scott Rothstein law firm raises questions
February 12, 2010
Movement of money within Scott Rothstein law firm raises questions
Bankruptcy court filings contain allegations that two of Scott Rothstein's law partners received millions of dollars in loans and immediately repaid much of the money to the firm or to Rothstein himself.
BY JAY WEAVER AND AMY SHERMAN
JWEAVER@MIAMIHERALD.COM
Two senior law partners of convicted Ponzi schemer Scott Rothstein received $18 million in "purported loans" from his Fort Lauderdale firm -- and then almost immediately paid out most of the money to the firm, Rothstein and others, according to allegations in new bankruptcy court filings.
Bankruptcy lawyers sorting through the wreckage of the firm say its co-owner, Stuart Rosenfeldt, and partner Steven Lippman funneled millions from the "loans" to third parties. Among them: name partner Russell Adler, a Broward County nightclub owner who did business with Rothstein and a victim in Rothstein's investment scam.
Rosenfeldt and Lippman engaged in curious and circuitous movement of law firm funds over the past four years through "the systematic trading of checks with [the Rothstein Rosenfeldt Adler firm] and paying third parties with RRA funds," the bankruptcy lawyers said in complaints filed Thursday.
A former federal prosecutor in South Florida said these transactions create a "target-rich environment" for the FBI and the U.S. attorney's office.
"Clearly, movement of funds under these circumstances raises suspicion to a trained observer as to at least the possibility of structuring transactions to launder funds," said former chief assistant U.S. attorney Myles Malman, a white-collar criminal defense lawyer in Fort Lauderdale.
"Who knew what and when will be the key as to any federal charges."
'FRAUDULENT'
Lawyers Charles Lichtman and Paul Singerman, working on behalf of a bankruptcy trustee for the defunct 70-attorney firm, said the partners' transactions were "fraudulent" and are seeking to recoup unpaid loans and other questionable payments made to Rosenfeldt, Lippman and Adler and their wives before Rothstein's $1.2 billion investment scheme imploded in October.
The bankruptcy lawyers have filed a series of lawsuits to recoup a total of $9.4 million in salary, loans, credit card expenses and other payments from Rosenfeldt, of Boca Raton; $6.5 million from Lippman, of Plantation, and $1.2 million from Adler, of Fort Lauderdale.
The latest bankruptcy court papers disclose this detail: Rosenfeldt -- who owned half of the firm, while Rothstein owned the other half -- charged $1 million on his firm-issued American Express card to pay for 72 pieces of jewelry for his wife, Susanne, along with home furnishings, clothes, vacations, restaurant meals, exotic reptiles and "numerous" local hotel room charges.
Rosenfeldt also transferred at least $690,000 in purported loans or salary payments to his wife, on 30 separate occasions.
CHECKS TO ADLER
In addition, Rosenfeldt wrote "numerous" checks to his partner, Adler, in amounts of $1,000 to $5,000 -- describing them as "loans." The firm also made a $475,000 loan to Adler, who bought a New York apartment with his wife in August, just two months before Rothstein's Ponzi scheme unraveled.
Rosenfeldt, Adler and Lippman also received hundreds of thousands of dollars in salary bonuses in 2008.
Then they and their wives immediately turned around and contributed much of the money to the Republican presidential ticket of John McCain and Sarah Palin, court papers show.
The three partners' defense lawyers maintain that Rosenfeldt, Adler and Lippman committed no wrongdoing.
The trio -- along with other firm employees -- are under federal investigation for possible fraud, money laundering, tax evasion and campaign violations as part of the Rothstein racketeering case, according to sources familiar with the probe.
DENIALS
Rosenfeldt's attorney, Bruce Lehr, said Thursday that the allegations in the lawsuit "are going to prove to be overstatements based upon information undoubtedly supplied by the RRA books, which we definitely call into question."
Lippman's attorney, Bruce Zimet, disputed the characterization of the "loans" and said, "There was no money laundering going on at all."
All three partners say they knew nothing about Rothstein's investment racket run out of the Las Olas Boulevard firm.
Rothstein pleaded guilty in late January to five counts of racketeering, fraud and money laundering stemming from his sale of fabricated legal settlements to investors.
Rothstein faces up to 100 years in prison at his May 6 sentencing.
According to the bankruptcy complaints, Rosenfeldt and Lippman typically deposited their RRA loan checks and then quickly turned around and disbursed the money back to the firm or Rothstein for a lesser amount, or to third parties.
Rosenfeldt also used some of his $9 million in loans to write a check for $61,500 to Kendall Sports Bar, which does business as Cafe Iguana in Pembroke Pines. Rothstein had an interest in the establishment with club owner Stephen Caputi.
The firm also loaned Lippman almost $9 million. Like Rosenfeldt, Lippman used the loans to write checks to third parties.
CHECK TO INVESTOR
Among them: one check for $89,000 to Kendall Sports Bar, two checks for $463,000 to Rothstein and four checks totaling $797,000 to the Banyon investment fund, the biggest Rothstein investor.
Lippman also wrote four checks totaling nearly $90,000 to a Rothstein business partner, Albert Peter. Peter is a one-time chief executive officer of Silversea Cruises in Fort Lauderdale.
