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Bankruptcy attorneys seek $18 million in payments from three Scott Rothstein law partners

By Peter Franceschina
Sun Sentinel

Three of Scott Rothstein’s former law partners must surrender nearly $18 million in salary, loans and other benefits they pocketed but didn’t legitimately earn, attorneys presiding over the liquidation of Rothstein’s bankrupt law firm demanded in lawsuits filed Thursday.

The millions in allegedly ill-gotten funds were used to purchase jewelry, a New York apartment, and country club memberships, and also to funnel big donations to politicians and political causes, the lawsuits filed in federal bankruptcy court claim.

Attorneys for the targets of the lawsuits – Stuart Rosenfeldt, Russell Adler and Steve Lippman countered that their clients were entitled to every cent they received from the now-defunct Fort Lauderdale law firm, and that they had known nothing of Rothstein’s $1.2 billion Ponzi scheme, which led to Rothstein’s guilty plea to five federal felony counts last month.

“I’m sure as the facts are brought to light, it will be made clear that Stuart did not knowingly take any money wrongfully,” said Bruce Lehr, Rosenfeldt’s lawyer. “There is nothing wrong with Stuart taking a distribution he thought was clean and then contributing to candidates pursuant to his political affiliations and beliefs.”

In their criminal case against Rothstein, federal prosecutors portrayed the Rothstein Rosenfeldt Adler law firm as a racketeering enterprise used to funnel cash into charitable donations and illegal political contributions, as well as to pay for the finer things in life. They also accused Rothstein of violating state and federal campaign laws by paying “bonuses” to his law firm employees, who in turn gave the money as political contributions.

None of Rothstein’s former coworkers have been charged by federal prosecutors with criminal acts. The government has made clear, however, that it is investigating unidentified “co-conspirators.”

According to the lawsuits, the trio of Rothstein partners were grossly overpaid, and received tens of millions of dollars in loans to boot.

Rosenfeldt ran up $1 million on a law firm credit card and bought dozens of pieces of jewelry; Lippman used law firm money for furniture, country club fees, clothing and sports tickets; and Adler bought a $450,000 Manhattan apartment last summer with firm money, according to the suits.

Together, Rosenfeldt, Lippman and Adler and their wives made almost $2.3 million in federal, state and local political contributions from 2007 through 2009, election records show. The biggest beneficiaries were Sen. John McCain’s Republican presidential campaign, at $700,000, and the Republican Party of Florida, at more than $500,000.

Bruce Zimet, who represents Lippman, said Lippman is not a target of the investigation and is willing to cooperate with federal investigators because he has nothing to hide. Zimet also said Lippman earned all the payments he received from the law firm.

Adler's attorney, Fred Haddad, said, “They can make all the allegations they want, let them try to prove it. I don't think Russ has done a single thing wrong.”

The lawsuits say the three partners should not have been paid more than $300,000 a year, yet Rosenfeldt was paid $8.8 million since 2006; Lippman was paid $4.3 million since 2006; and Adler was paid $1.4 million since 2007.

Some of payments to the trio, the lawsuits say, coincide with the political donations they or their wives made. The lawsuits also describe how money was moved around in bank accounts by “engaging in the systematic trading of checks” with the law firm and making payments to third parties.

“For example, and demonstrating it was part of a scheme to funnel cash out of RRA to use for political contributions and not to pay legitimate earned income, on May 19, 2008, Rosenfeldt, Russell Adler (“Adler”) and Steven Lippman (“Lippman”) each received an alleged bonus of $140,000 from RRA,” the suits say.

“On May 28, 2008 Rosenfeldt made a donation of $140,000 to the John McCain presidential campaign. Also on May 28, 2008, Lippman and his wife Marcy, made payments to the same campaign of $65,000 and $60,000 respectively. On June 12, 2008, Adler contributed $80,000 to the McCain campaign and his wife Katie likewise contributed $39,200.”

Rosenfeldt used firm money to pay for 72 pieces of jewelry, furniture, hotel expenses, vacations, personal travel, exotic reptiles, home repairs, athletic club charges, clothing and groceries, according to the suit.

Both Rosenfeldt and Lippman were given nearly $9 million in loans; Rosenfeldt still owes $458,000 of that and Lippman owes $2.5 million, according to the suits, and Adler has $180,00 in unpaid loans.

Rothstein, 47, pleaded guilty last month to five federal charges of racketeering, money laundering and fraud and faces up to 100 years in prison at his May 6 sentencing. Federal prosecutors and FBI and IRS agents are still conducting a sweeping investigation of the Ponzi scheme.


Database specialist Dana Williams contributed to this report.

Peter Franceschina can be reached at pfranceschina@sunsentinel.com or 954-459-2255.

POSTED IN: Scott Rothstein (109)

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Comments

Let's see how far this runs...it be nice if the law was applied equally to all citizens!

What an A-hole. He's going to sit there and say he didn't know what was going on!, Ha! what an ffn-joke! Throw him in prison too.

When are they going to back those Crooked FLPD Cops return the $394,000 in stolen cash they received?

Is the City even vetting someone to replace Adderley? Why not his contact is up in March. Don't tell me the City is considereing renewing his contract!!

Are the police going to return all the stolen $$$$ they received?

REPUBLICANS ARE A BUNCH OF CROOKED CHEATING THIEVES, LOCK THEM ALL UP! THIS IS STANDARD OPERATIONS FOR THE GOP!

DOES THE LEGAL TERM FOR ROTHSTEIN'S PARTNERS . . .
"WILFULL BLINDNESS" SOUND CORRECT?
AN INJUSTICE TO ONE IS AN INJUSTICE TO ALL.

The Feds need to nail Lippman. They need to ask him who owned the jets he flew on to sporting events and where the money came from for his country club memberships. He gets away with a lot in BCC, but hopefully not with the Feds.

I have been through the process; the Feds try you in the media even if you are most innocent. They bully the lesser players because they know they have less resources and influence to defend themselves. They sacrifice the rights of good citizens to help them cut corners in the investigating the bigger players. I know the Lippmans, they are good people, productive citizens and among the more ethical people I know. Anything they want to know I am sure Steve Lippman will gladly tell them.The Feds dont want to hear it unless it helps them convict someone; the more innocent you are The less they want to hear it. Let this one play out before you judge them and for decency sake remember what the media said about them before there was any proof.

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