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Rothstein bank hit with $60 million clawback suit

By Peter Franceschina
Staff Writer

The trustee for the Scott Rothstein bankruptcy case has filed a clawback suit seeking nearly $60 million from Gibraltar Private Bank & Trust, alleging the bank aided the Fort Lauderdale attorney in running his massive Ponzi scheme.

More than two dozen clawback suits have been filed in the Rothstein Rosenfeldt Adler law firm bankruptcy. Gibraltar also is the target of a civil lawsuit filed by a group of investors that allegedly lost more than $100 million. Rothstein bought roughly a 5 percent interest in the Coral Gables-based bank, which has offices in downtown Fort Lauderdale.

The clawback suit, filed Monday in U.S. Bankruptcy Court, alleges that “from the outset, Rothstein utilized the cooperation of Gibraltar in order to give birth to and to perpetuate the life of his Ponzi scheme.”

“Gibraltar gained actual and/or constructive knowledge of Rothstein’s criminal conduct by monitoring and questioning the high volume, high velocity flow of funds between RRA and/or Rothstein accounts, as well as the substantial, recurring overdrafts which were clearly indicative of money laundering, tax evasion, and other criminal conduct,” the suit alleges.

Thomas Tew, an attorney for the bank, said Gibraltar would contest the suit. Tew said the bankruptcy trustee doesn’t have standing under the law to bring claims that the bank was implicated in the fraud scheme, because Rothstein used his law firm as a criminal enterprise.

“If you’re a crook, you can’t turn around and sue someone else for your wrongdoing,” he said.

Tew also said the clawback claims are a form of “double dipping” because it was money from the investors who are suing Gibraltar in the civil case that Rothstein used to cover millions of dollars in overdrafts at the bank. A judge is now considering a Gibraltar motion to dismiss the bank as a defendant in that case.

John Genovese, an attorney for the bankruptcy trustee, said only the trustee could bring certain claims against Gibraltar. He said the bank has to demonstrate it received the money from Rothstein in good faith and had no knowledge of the fraud.

“We have alleged there are significant badges of fraud that would have put them on notice that Rothstein was engaged in a fraud. These claims could not be asserted in state court,” he said. “We feel fairly certain that given that they failed to follow their own policies and practices, that they can’t demonstrate they acted in good faith.”

Rothstein's $1.4 billion fraud scheme collapsed in the fall of 2009. Rothstein, 48, is still cooperating in the federal investigation and is serving a 50-year prison term in an undisclosed location after helping bring down a reputed Mafia figure.

POSTED IN: Scott Rothstein (116)

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Comments

Well, if it isn't Mr. Tew the legal pot calling Rothstein the legal kettle, black and then defending the honor of their iron maiden mother, Delilah, the bank. Sodomites and pagans each and every one. Where is Sampson when we need him?

Post Scammers like him at WhoScammedYou.com.. Help Warn Others!

What about TD bank?

you must fight the claw with a clawback technique...waa waa wee wahhh....

Banks will get out of it small investors will not. This is America banks are immune due to the fact the government will be taking them over to communize us

What happens if/when Gibraltar loses? Do they have $60mm to pay? I bank at TD Bank and am comfortable that their size is adequate protection, but what about a boutique bank like Gibraltar?

What happens if Gibraltar loses the $60m lawsuit? Do they have $60m?

I don't think they are very big.

John Genovese, an attorney for the bankruptcy trustee, said only the trustee could bring certain claims against Gibraltar. He said the bank has to demonstrate it received the money from Rothstein in good faith and had no knowledge of the fraud.

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