By Peter Franceschina
Staff Writer

Two New York hedge funds that invested with Ponzi schemer Scott Rothstein are fighting back in the largest fraud suit ever filed in Broward circuit court.

The suit was brought in the fall of 2009 by a group of Rothstein investors, headed by wealthy Fort Lauderdale entrepreneur Doug Von Allmen, that alleges losses of more than $100 million. The suit has been amended three times and is more than a thousand pages long.

The hedge funds, Platinum Partners Arbitrage Fund and Centurion Structured Growth, are related and named as defendants. They are already contesting some of the settlement agreements a trustee for Rothstein’s bankrupt law firm, Rothstein Rosenfeldt Adler, has reached in federal clawback suits. They also are suing one of Rothstein’s banks, TD Bank, and Rothstein’s largest feeder, Fort Lauderdale businessman George Levin.

Last week, Platinum Partners filed a counterclaim in the state case, alleging that the funds lost more than $20 million investing with Rothstein. The counterclaim alleges that Von Allmen and the group of investors have overstated their losses because they did not account for returns received from Rothstein.

Fort Lauderdale attorney Bill Scherer, who represents the investors, said Von Allmen had no idea Rothstein was running a Ponzi scheme and put money in until the very end.
While the investors are seeking $280 million in damages, they have overstated their loses by $120 million, according to the counterclaim. Scherer said the investors he represents lost roughly $165 million.

“The damages are higher than at,” he said.

Platinum and Centurion assert that allegations that they solicited investments for Rothstein are false, and that instead Von Allmen played that role just before the $1.4 billion fraud scheme imploded.

“By thus joining Rothstein's conspiracy, it is Von Allmen and those who conspired with him who have rendered themselves liable under Florida law to all victims of Rothstein's scheme, including the Fund Defendants and those Plaintiffs who did not join in Von Allmen's conspiracy,” the counterclaim alleges.

Scherer denied that.

“They essentially took the allegations that we have made against them for aiding and abetting the Rothstein Ponzi and flipped it around, and said our victims did what we accused them of doing,” he said. “The only problem is, they got back all of their money, all but $20 million out of R440 million. That is a pretty good return.”

The high-stakes litigation involves dozens of plaintiffs and defendants. Boxes and boxes of documents in the case are stored at the clerk of court’s office. More than 78 volumes of pleadings have already been created.

Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to racketeering, money laundering and fraud.

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CNBC's "American Greed" will feature Ponzi schemer Scott Rothstein on Feb. 23 at 10 p.m. The "American Greed" crew appears to have gotten some previously unseen footage of Rothstein, who pulled off the largest fraud in South Florida history.

Those featured in the preview include Fort Lauderdale attorney Jeffrey Sonn, Rothstein's defense attorney Marc Nurik and Sun-Sentinel reporter Peter Franceschina.

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By Peter Franceschina
Staff Writer

Russell Adler, one of Ponzi schemer Scott Rothstein’s former law partners, owes more than $200,000 to the IRS and has little in the way of assets, yet he has agreed to pay $350,000 to the estate of his bankrupt law firm.

The last-minute settlement in a clawback suit was reached Wednesday night and announced Thursday in U.S. Bankruptcy Court. If Adler fails to pay the money within 2 1/2 years, a judgment for $500,000 will be entered against him.

The bankruptcy attorneys marshaling assets for the now-defunct Rothstein Rosenfeldt Adler law firm agreed to the settlement, in part, because there is little likelihood Adler would be able to pay a hefty judgment, according to court documents filed Thursday that outline Adler’s financial condition.

“Critical to determining [the] settlement was a detailed analysis of the Adlers’ current financial condition, which based upon mediation related financial disclosures revealed that the Adlers have no existing bank, securities or other accounts upon which to execute, no equity in their home, leased vehicles and no other liquid non-exempt assets that could be used to satisfy any potential judgment,” bankruptcy attorney Chuck Lichtman wrote in a motion asking a judge to approve the settlement.

“Further, it appears as if the Adlers may be subject to an IRS notice of lien or other action in an approximate amount of $234,000 and Mr. Adler could be facing other types of exposure in potential Florida Bar or criminal proceedings.”

The proposed settlement comes ahead of a trial on the clawback suit that was scheduled for Feb. 14. Adler has said he knew nothing about Rothstein’s massive $1.4 billion investment fraud scheme, and he admitted no wrongdoing in the settlement.

"I did nothing wrong and was eager to go to trial and be vindicated. The settlement was purely a business decision that will put this case behind us and let me focus on my family, my future and the pursuit of justice for my clients,” Adler said Thursday in a statement.

The $350,000 will go toward paying back the creditors of Rothstein’s law firm, which has been in bankruptcy since his fraud scheme imploded in the fall of 2009. To pay the money, Adler agreed to give up half of the legal fees he earns from cases he is handling that originated with his former law firm, and 15 percent of the fees from new cases. He also agreed to surrender a $90,000 retirement account.

The bankruptcy attorneys were seeking $1.2 million from Adler, alleging he was overpaid and received loans from the law firm that were not repaid.

The clawback suit alleged Adler and his wife used $475,000 of that money to buy a Manhattan co-op apartment. Adler surrendered the apartment to the federal government as part of the criminal forfeiture proceedings against Rothstein.

Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to federal charges last year.

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By Peter Franceschina
Staff Writer

The Republican Party of Florida has agreed to cough up $75,000 in contributions from Ponzi schemer Scott Rothstein, to settle a clawback lawsuit filed by bankruptcy attorneys.

Rothstein, who ran a $1.4 billion investment fraud scheme from 2005 until the fall of 2009 and rained dollars down on politicos, gave roughly $237,000 to the state party through multiple contributions.

After Rothstein’s fraud came to light, the Republican party returned $90,000 to the federal government, which went into a restitution fund for the fraudster’s victims.

The attorneys marshaling assets for Rothstein’s bankrupt law firm Rothstein Rosenfeldt Adler filed a clawback suit against the Republican party in November in an effort to reclaim the contributions. The state party answered the suit by denying it had any responsibility to return the contributions.

But the bankruptcy attorneys and party officials began negotiating behind the scenes, and on Dec. 12 the party’s board of directors voted to approve the $75,000 settlement, according to the proposed agreement filed late Tuesday in U.S. Bankruptcy Court in Fort Lauderdale.

Both sides said the settlement will save legal costs and avoid a protracted court battle. The agreement still must be approved by the judge overseeing the bankruptcy case.

It also looks like the bankruptcy attorneys will be bringing another chunk of change into the estate – they have reached a proposed $700,000 settlement with a New York company, Utica Advisors, that invested late in the Ponzi scheme.

Utica Advisors invested $1.8 million with Rothstein in July 2009 and was to be repaid $2.6 million over three months, but received only $2.3 million before the fraud’s collapse, according to court documents. The $700,000 settlement also must be approved by the judge.

Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to committing the massive fraud.

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By Peter Franceschina
Staff Writer

The former bodyguard for Ponzi schemer Scott Rothstein’s wife, Kim, has been hit with a $300,000 clawback suit alleging law firm money went to purchase a Victoria Park condo.

The bankruptcy suit against bodyguard Joe “Meaty” Alu – a former Plantation police officer – alleges that $301,000 was used to purchase the $430,000 condo on NE 5th Court in May 2009, “a mere five months before the Ponzi Scheme was revealed and subsequently exploded.”

In the aftermath of the revelations surrounding Scott Rothstein’s $1.4 billion investment fraud scheme in the fall of 2009, Alu was a constant presence at the side of Kim Rothstein.

He chauffeured her around in a black Cadillac Escalade and stood guard outside the gated Rothstein compound on Isla Bahia, even as Scott Rothstein dropped out of sight and was secretly cooperating with federal prosecutors. He was thrust into the media limelight, with his bulging, tattooed arms and his sometimes pithy quotes.

And he defended Scott Rothstein, who hired him in September 2008 to protect his wife.

"I don't abandon my friends because they make mistakes,” Alu told the Sun Sentinel earlier this year. "Or I'd have no friends left. He never did anything to hurt me, ever. ... I'm sorry some people led Scott astray to do some bad things. I don't think it's Scott's fault."

Alu said Friday that he has been making monthly mortgage payments, which are being held in escrow by his attorney. He said he is a victim of a dispute between the bankruptcy attorneys and federal prosecutors over Rothstein's assets.

"I don’t care who I pay the money to. They can fight among themselves over the money. I just want to get out of this mess," he said.

He was still working as a Plantation police officer in 2008 when Rothstein hired him to guard his wife, and Alu retired from the force that fall, after a 21-year career. He told the Sun Sentinel he had known Scott Rothstein for 20 years, after they met in Plantation when Rothstein had an office there and represented the police union.

More than two dozen clawback suits have been filed in the bankruptcy case, seeking tens of millions of dollars. The suit against Alu was filed on Thursday.

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.

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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.

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Whatever secrets Ponzi schemer Scott Rothstein's chief operating officer held, the federal government likely knows them now.

Debra Villegas, who was at Rothstein's side for 17 years, has provided extensive cooperation in hopes of getting her 10-year prison sentence reduced for her role in the largest financial fraud in South Florida history, said her attorney at a Friday court hearing.

Villegas has met with federal authorities 13 times for a total of 35 hours, answering their questions, said defense attorney Robert Stickney. In addition, she has participated in six phone conferences with authorities and spent 24 hours reviewing about 15,000 e-mails, pulling aside 60 that she said were important.

The revelations about Villegas' cooperation came as her attorney asked a federal magistrate to appoint him as her counsel because she no longer has the money to pay him.

Villegas testified she is on unemployment, which is set to run out later this month.

U.S. Magistrate Robin Rosenbaum found Villegas couldn't afford an attorney, but if she received a court-appointed attorney, it wouldn't be Stickney.

In response, Stickney withdrew the request for Villegas to receive a court-appointed counsel and announced that he would represent her for free.

Villegas, 43, has remained free since her October sentencing so she can continue cooperating with the government. She admitted to forging signatures on phony legal settlements that Rothstein used to draw investors into his Ponzi scheme.

Villegas is the only other person besides Rothstein charged in the fraud so far. Rothstein is serving a 50-year prison sentence after pleading guilty to five charges stemming from the scheme.

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The former chief operating officer of Ponzi schemer Scott Rothstein's law firm is now asking for a court-appointed attorney.

Debra Villegas, who was at Rothstein's side for 17 years, has submitted paperwork to U.S. District Judge William Zloch indicating that she can no longer afford legal representation. She has been represented by private criminal defense attorney Robert Stickney.

Villegas, 43, was sentenced last month to 10 years in federal prison after admitting she forged signatures on phony legal settlements that Rothstein used to lure investors.

Villegas, a mother of four, has remained free since her sentencing as she continues to cooperate with FBI and IRS agents investigating Rothstein's $1.4 billion Ponzi scheme--the largest financial fraud in South Florida history.

She is set to start serving her prison time on June 24.

Stickney wrote in court documents filed Sunday that Villegas needs to have continued legal representation because she anticipates federal prosecutors will file paperwork to have her sentence reduced.

So far Villegas is the only one of Rothstein's cohorts who has been charged in the Ponzi scheme. Rothstein is serving a 50-year prison sentence after pleading guilty to five charges related to the fraud.

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A Miami Beach man with alleged Mafia ties was sentenced Wednesday morning to four years in federal prison after he got caught up in a government sting set in motion by Ponzi schemer Scott Rothstein.

Wine seller Roberto Settineri's arrest in March had been hailed by U.S. and Italian authorities as a blow to a violent Sicilian mob family. Italian authorities described him as a conduit between the Santa Maria di Gesu crime family and the Gambino crime family in New York.

Settineri, 42, had been on the radar of authorities for months with the FBI getting their big break when Rothstein began cooperating in November 2009, immediately after his massive investment fraud was discovered. Rothstein had known Settineri through the restaurant at the Versace Mansion and used that connection to initiate contact with Settineri.

Rothstein covertly recorded conversations with Settineri and two other men, asking them to destroy documents and help launder money. Settineri's co-defendants--Enrique Ros and Daniel Dromerhauser--both took plea deals in the case, each getting house arrest.

While federal authorities and the Italian National Police held a press conference in March hailing Settineri's arrest as a major development, Settineri has not been charged with any other crimes. Italian authorities have not filed paperwork seeking his extradition. Settineri's attorney, Jeffrey Weiner, said he has heard no indication that his client will be charged there.

Settineri, a U.S. citizen born in Italy, did not speak during the brief sentencing hearing before U.S. District Judge James I. Cohn. Watching the proceedings were his parents, his ex-wife and his current wife.

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The man charged with killing one of Scott Rothstein’s law partners remains incompetent to stand trial, a judge ruled Tuesday.

Tony Villegas, the ex-husband of Rothstein’s chief operating officer, Debra Villegas, has been charged with the March 5, 2008, murder of Melissa Britt Lewis, his former wife’s best friend.

Villegas, 47, was first declared unfit to proceed in May and transferred to a state mental health facility. Two mental health experts testified Tuesday he is still incompetent because he gets so emotional he couldn't adequately assist his attorneys if he went to trial.

Broward Circuit Judge William Haury ordered Villegas be transferred back to a state hospital.

Under Florida law, a criminal defendant is deemed incompetent to proceed if a judge determines the defendant lacks the ability to assist in his or her defense or lacks a basic understanding of the court proceedings. The state has five years to restore a defendant's competency or the case must be dropped.

Villegas, a train conductor, was arrested a week after Lewis' body was found dumped in a Plantation canal. She had been strangled.

Court documents indicate DNA taken from Lewis' jacket is a 1 in 30 billion match with Villegas. The jacket had been found in her abandoned Cadillac SUV hours after she was reported missing.

Tuesday's court hearing offered no major surprises. While two forensic psychologists testified he was incompetent, a third said he was competent.

Prosecutor Al Ribas argued that the only reason Villegas is currently incompetent to proceed is that he refuses to take medication while he is housed at the Broward County Jail. The mental health experts indicated Tuesday that if he is on his medication, he could be fit for trial.

Villegas could face the death penalty if he's convicted of first-degree murder.

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One of Ponzi schemer Scott Rothstein's former law partners faces questioning this morning by attorneys picking through the wreckage of Rothstein's $1.4 billion investment fraud.

Russell Adler -- one of the named partners of the Rothstein Rosenfeldt Adler law firm -- is being sued by the firm's bankruptcy trustee for about $1.2 million in payments and loans he received. Part of that money was used to pay for a New York City apartment that Adler forfeited earlier this month to the federal government.

When Rothstein's other named partner -- Stuart Rosenfeldt -- sat for bankruptcy attorneys' questions in July, he invoked his Fifth Amendment right against self-incrimination more than 700 times.

UPDATE:10:30 a.m.

Adler began testifying at about 9:45 a.m. with veteran criminal defense attorney Fred Haddad by his side.

He appears relaxed, often leaning back in his chair. So far he has been questioned about his legal background prior to joining RRA.

Adler said that when Rothstein, a friend from Nova Southeastern University law school, offered him a job, he insisted Rothstein put his name on the law firm's door.

"And look where it's gotten me," he said.

Adler said Rothstein promised him 20 percent equity in the law firm if he met certain performance goals. He met those goals, but Rothstein never delivered on his promise, Adler said.

UPDATE 1 P.M.

A theme that emerged from Adler's answers this morning: He trusted Rothstein and he had no idea Rothstein was selling the structured legal settlements that lured investors into handing him millions.

"I never knew anyone was investing with Scott," Adler said.

Adler said that while he was listed as the firm's vice-president and as a shareholder, those titles were largely ceremonial and he never saw the firm's financial records.

Unlike Rosenfeldt, Adler did not invoke his Fifth Amendment right against self-incrimination once.

Adler seemingly came into the deposition relaxed, but he became increasingly irritated with some of the questions posed to him by Charles Lichtman, one of the attorneys representing the bankruptcy trustee. He repeatedly accused Lichtman of trying to make the deposition "a memory game"--asking questions that he believed documents obtained by the bankruptcy attorneys have already answered.

When Adler attempted to ask Lichtman a question, Lichtman responded, "Excuse me, I'm asking the questions" and told Adler to stop giving speeches.

Adler countered that Lichtman "should start trying to ask better questions."

The back-and-forth escalated to the point that Haddad, who sat silent for almost the entire morning session, threatened to walk out with his client. The confrontation quickly subsided.

The deposition will continue this afternoon.

Check with the This Just In blog for updates.

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By Jon Burstein

One of Scott Rothstein’s cousins has been hit with a bankruptcy clawback lawsuit accusing her of pocketing more than $620,000 as her relative ran South Florida’s largest financial fraud ever.

Rothstein paid off the mortgage on Robin Kempner’s Pompano Beach home, as well as employing her at his law firm—Rothstein Rosenfeldt Adler, according to the lawsuit filed Monday. The firm was paying her $100,000 annually.

“The (bankruptcy) trustee challenges the reasonableness of the payments made to Kempner as salary for 2008 and 2009,” according to the lawsuit. “The amounts are challenged as being overpayments of compensation for the two-year period subject to this lawsuit because they were unreasonable and improper.”

“Kempner and Rothstein regularly exchanged e-mail, not just on business issues, but also of a very personal nature where they mutually addressed each other with ‘love’ and in which, Kempner referred to Rothstein as ‘Little Scott,’” wrote Charles Lichtman, one of the attorneys representing bankruptcy trustee Herbert Stettin.

Kempner is the second of Rothstein’s relatives to face a clawback lawsuit as attorneys try to recover money he stole in his massive Ponzi scheme. Kim Rothstein, Scott Rothstein’s wife, has been sued by Stettin, and was set to be deposed last week until attorneys indicated that she may be reaching a settlement.

Rothstein was sentenced in June to 50 years in prison after pleading guilty to five federal charges.

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By Peter Franceschina
Sun Sentinel

The clawback suits continue to roll out in the Scott Rothstein Ponzi scheme bankruptcy.

The latest was filed Friday and seeks to collect $8.7 million from Albert Peter, Rothstein’s partner in what was to be a European cruise line venture called Jewel River Cruises based in Switzerland.

The suit also names Peter’s wife, Iris, and Tatiana Yoel as defendants. The suit alleges that Rothstein, at Peter’s request, paid Yoel $400,000 for “unknown reasons.”

The suit says that Rothstein and Peter became close friends several years ago when Peter hired Rothstein to do legal work for a cruise line he operated in South Florida.

Peter allegedly invested roughly $2.1 million in Rothstein’s fraudulent investment scheme and made a $1.5 million profit, and was paid another $403,000 in salary. The suit also seeks to collect $4.3 million that Rothstein paid from his law firm, Rothstein Rosenfeldt Adler, to support Jewel River.

Neither Peter nor Yoel could immediately be reached for comment Friday. The suit provides some insight into the close relationship between Rothstein – now serving 50 years in prison for his $1.4 billion fraud – and Peter:

“The strength of the personal relationship between Rothstein and Peter is established by certain facts,” the suit says, “including that: (a) the Peters regularly socialized with Rothstein and his wife, Kimberly Rothstein (‘Kim’); (b) Peter and Rothstein spoke frequently about personal matters and they socialized together regularly for drinks and cigars, independent of their spouses; (c) the Peters discussed purchasing a home next door to the Rothsteins; (d) Rothstein became Peter’s personal legal counsel; (e) Rothstein ‘employed’ and pad at least $403,845.00 to Peter for unknown reasons, using RRA funds; (f) Rothstein went into business with Peter by forming Jewel River Cruise Lines, US, LLC, Jewel GmbH and Jewel Holdings; (g) Rothstein used his relationship with Mark and Robin Levinson, to enable Peter to buy jewelry from Levinson Jewelers at a discount; (h) Rothstein shared private matters with Peter, such as sensitive health situations involving himself and Kim; (i) Peter and Rothstein regularly, often times daily, exchanged e-mail not just on business issues, but also of a very personal nature where they mutually addressed each other with great fondness including referring to each other as ‘brothers;’ and (j) Rothstein often provided Peter with ‘men favors’ by supplying false ‘alibis’ for Mrs. Peter, providing cover for Peter’s personal time spent with Yoel.”

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By Peter Franceschina
Sun Sentinel

Federal sentencing guidelines for Ponzi schemer Scott Rothstein’s right-hand woman, Debra Villegas, call for more than 10 years in prison.

Villegas, 43, pleaded guilty to a single count of money laundering conspiracy in June. While the felony carries a maximum sentence of 10 years in prison, a pre-sentence report completed by federal probation officials set out recommended guidelines that call for more than 10 years, according to a court document filed over the weekend.

Villegas’ attorney, Robert Stickney, filed objections to the pre-sentence report on Saturday. He did not spell out the exact number of years in prison that are being recommended to the judge in the report, but he wrote that it was more than 10 years. He declined to be more specific in an interivew Monday.

Federal probations officials apparently reached their recommended sentence by considering a number of aggravating factors, including that Villegas was part of a sophisticated money laundering operation. Villegas rose from being a paralegal for Rothstein to being his chief operating officer during his $1.4 billion investment fraud.

Villegas, who remains free on bond, is scheduled for sentencing Oct. 8 before U.S. District Judge William Zloch. Stickney wrote in his objections that the sentence is capped at 10 years by law, regardless of the guidelines, and suggested that Villegas deserves a break on her prison time because of her cooperation with federal agents and prosecutors.

Stickney said the judge has the discretion to reduce a potential 10-year sentence. "He can award her a departure downward from the statutory maximum to reward her for acceptance of responsibility," he said.

A spokeswoman for the U.S. Attorney's Office in Miami said any response from prosecutors would come in the form of a court filing. Prosecutors can choose to oppose or support Stickney's argument for a break on Villegas' sentence.

Rothstein, 48, pleaded guilty to racketeering, money laundering and fraud and is currently serving a 50-year prison term in an undisclosed location.

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By Peter Franceschina and Jon Burstein
Sun Sentinel

Eight of Ponzi schemer Scott Rothstein’s investment groups were hit with bankruptcy clawback suits Friday seeking repayment of $23.4 million.

The investment groups put $26.5 million in during what turned out to be the waning days Rothstein’s $1.4 billion investment fraud scheme, before it imploded last fall. The investment groups were supposed to receive $37.8 million over a period of several months in return, according to the suits.

Because the Ponzi collapsed, they only received $23.2 million. The extra $200,000 being sought by the bankruptcy trustee includes interest payments Rothstein made to a few of the investment groups. The trustee made demands on the investment groups to return the money, but the suits say they refused.

Here is a breakdown of the investment groups and the numbers, according to the suits:

Caro Group LLC
Put in: $5,330,000
Clawback demands: $2,980,000

Exito Investment Group LLC
Put in: $2,310,000
Clawback demands: $1,674,000

Marmarser Investment LLC
Put in: $1,210,000
Clawback demands: $1,115,000

MTG Holdings LLC
Put in: $1,000,000
Clawback demands: $350,000

New Miami Group LLC
Put in: $1,320,000
Clawback demands: $600,000

Pirulin Group LLC
Put in: $2,650,000
Clawback demands: $1,125,000

OPMonies 2 LLC
Put in: $1,375,000
Clawback demands: $875,000

Wak Boys LLC
Put in: $11,380,000
Clawback demands: $14,690,571

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By Peter Franceschina
Sun Sentinel

More than two dozen clients of Ponzi schemer Scott Rothstein’s bankrupt law firm – including former football star Warren Sapp – are entitled to get some of their money back as part of Rothstein’s criminal case.

U.S. District Judge James Cohn ruled Wednesday that the law firm clients are entitled to priority repayments in the criminal forfeiture process.

The clients were not investors in Rothstein’s $1.4 billion investment fraud scheme and their money was being held in Rothstein Rosenfeldt Adler law firm trust accounts when the Fort Lauderdale firm imploded last November.

About 25 clients, who were represented free of charge by former RRA attorneys, will receive roughly $780,000, according to the judge’s order.

“We felt if any folks deserved justice, it was these clients and other clients like these. We are very pleased with the result. Judge Cohn worked really hard on this,” said former RRA attorney Seth Lehrman, who represented a group of 34 clients.

The judge’s decision was based on a theory of fraud law that takes into consideration how much money was in the account when it was seized by federal prosecutors, and whether the money of particular clients had already been stolen. Nine of Lehrman’s clients did not have any cash left in the account, Cohn determined.

Some of the clients won’t get all of their money back, but close to it, Lehrman said. For instance, Sapp had $101,000 in RRA accounts and is entitled to receive nearly $83,000.

“Our clients and other clients of RRA were innocent folks and had no contact or relationship with Rothstein. These clients’ money were held in escrow, and that is a sacred trust,” Lehrman said. "Some clients are getting every penny, and some folks are getting what I consider is a very nominal discount."

That's not the case for car dealership magnate Ed Morse and his family, who were represented by their own attorneys. The Morses had deposited more than $36 million in RRA accounts, but Rothstein stole virtually all of that, leaving roughly $32,000, Cohn determined.

The Morses and other RRA clients will still have an opportunity to be repaid some of their money through the restitution process, set to get underway next week, and through the law firm’s bankruptcy case.

Rothstein, 48, is serving a 50-year prison term after pleading guilty to racketeering, money laundering and fraud.

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FORT LAUDERDALE The co-owner of a Pembroke Pines private security firm was sentenced Tuesday to 10 months of house arrest in a case based on fraudster Scott Rothstein’s work as a government informant.

Daniel Dromerhauser, 39, and two other men were arrested in an FBI sting starring Rothstein, who claimed he needed documents destroyed before they landed in the hands of a federal grand jury.

Dromerhauser, who ran Five Star Executive Protection & Investigation, began cooperating with federal authorities immediately after his March arrest.

He pleaded guilty in June to a single count of conspiracy to obstruct justice and agreed to testify against co-defendant Roberto Settineri. Federal authorities have said Settineri acted as a key intermediary between a crime family in Sicily and the Gambino crime family in New York.

Settineri is expected to plead guilty Wednesday to a charge resulting from the undercover investigation. Dromerhauser’s business partner, Enrique Ros, is scheduled to be sentenced Friday on an obstruction charge.

Dromerhauser, of Miami, had faced up to 16 months in federal prison under the recommended sentencing guidelines, but federal prosecutors said he deserved a lesser punishment because of his cooperation.

U.S. District Judge James I. Cohn also sentenced Dromerhauser to two years of supervised release and ordered him to perform 500 hours of community service.

After the $1.4 billion Ponzi scheme publicly came to light in November, Rothstein, 48, spent a month outside of jail working as a government informant. He pleaded guilty to five felony charges and was sentenced to 50 years in prison. Federal authorities have refused to say where he is being held.

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By Jon Burstein

A reputed Sicilian Mafioso is set to plead guilty to a single criminal charge in a case built around Ponzi schemer Scott Rothstein’s work as a government informant.

Roberto Settineri’s plea scheduled for Aug. 25 will make him the third person convicted in an investigation resulting from Rothstein’s cooperation with federal authorities. Rothstein began working as an informant in November after his $1.4 billion investment fraud publicly came to light.

Rothstein convinced Settineri that he needed help laundering money and destroying potentially damaging evidence, according to federal court documents. Rothstein recorded at least 18 conversations he had with Settineri and the two other men arrested in the case.

Settineri, of Miami Beach, had been on federal investigators’ radar long before Rothstein agreed to go undercover. Authorities both in the United States and Italy have alleged Settineri, 42, was a key intermediary between a crime family in Sicily and the Gambino crime family in New York City.

Settineri’s attorney, Jeffrey Weiner, said Monday he’s not aware of his client facing any charges in Italy and there’s been no paperwork filed indicating that Italy is going to seek extradition.

Next week’s guilty plea in Fort Lauderdale federal court will be to a charge less serious than the nine initially leveled against Settineri by a grand jury, Weiner said. He declined to discuss the specific charge.

Weiner said Settineri’s sentence “will be more in line to what my client agreed to do as opposed to what the government was looking to sting him for.”

Settineri’s two co-defendants—the co-owners of a Pembroke Pines private security firm—have already taken plea deals and are set to be sentenced next week. Enrique Ros, 34, and Daniel Dromerhauser, 39, each pleaded guilty to a single count of obstruction of justice, facing around a year in prison under the recommended federal sentencing guidelines.

Rothstein, 48, spent a month outside jail working as an informant until his Dec. 1 arrest for his Ponzi scheme. He pleaded guilty to five felony charges and was sentenced to 50 years in prison. Federal authorities have refused to divulge his current whereabouts.

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By Peter Franceschina
Sun Sentinel

Ponzi schemer Scott Rothstein’s right-hand woman won’t learn her punishment until at least October, after a federal judge on Friday pushed back her sentencing date that had been scheduled for next week.

Debra Villegas continues to “diligently” assist in the federal investigation of the $1.4 billion investment fraud scheme, according to a court filling this week by her attorney, Robert Stickney.

Villegas, 43, worked with Rothstein for 17 years, rising to become his chief operating officer in his downtown Fort Lauderdale law firm. She pleaded guilty in June to a single count of money laundering conspiracy, the only other person to be charged in the case so far. The charge is punishable by up to 10 years in prison, but Villegas likely will get a lighter sentence for her cooperation.

She remains free on a $250,000 bond while she works with FBI and IRS agents.

“Debra Villegas’ cooperation relates to an ongoing federal criminal investigation. She has worked diligently to assist the government and her cooperation continues,” Stickney wrote in his motion to continue the sentencing.

“Villegas has proactively moved to streamline the enormous amount of data that is in her possession, analyze it, and provide the results to the government’s case agents. Debra Villegas is better able to assist the government while she remains on bond with unlimited access to computer files and bank documents associated with this case.”

U.S. District Judge William Zloch set her new sentencing date for Oct. 8. Stickney cited several reasons for asking for the delay. He did not get her pre-sentence investigation report from the federal probation office until July 29, and Villegas’ probation officer was out of the office for two weeks, according to Stickney’s motion.

Rothstein, 48, was sentenced to 50 years in prison in June after pleading guilty to racketeering, money laundering and fraud.

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A list of Ponzi schemer Scott Rothstein’s victims will not become public after a judge ordered Tuesday that the court document be sealed.

U.S. District Judge James I. Cohn’s ruling came after the U.S. Attorney’s Office asked that the list of 259 people or corporate entities be kept out of the public court file. Those victims are entitled to $279 million in restitution, according to federal authorities.

Federal prosecutors argued against releasing the list, saying that it would cause the victims “severe embarrassment and mental distress, impacting not only their privacy but their dignity as well.”

“Publicizing the names of victims of financial fraud provides a roadmap to future fraudsters of individuals who are most vulnerable to their schemes, and thus seriously compromises their financial safety,” wrote Assistant U.S. Attorney Jeffrey Kaplan.

Cohn agreed with prosecutors, ordering the names be kept under seal unless he’s provided a compelling reason for their release.

The restitution proceedings in Rothstein’s criminal case are part of a web of court actions attempting to recover money lost in the $1.4 billion Ponzi scheme, the largest financial fraud in South Florida history. Rothstein, 48, a disbarred attorney, is serving a 50-year prison sentence after pleading guilty to racketeering, money laundering and fraud.

Rothstein told investors they were buying big-dollar legal settlements in sexual harassment and whistleblower cases, but the settlements never existed.

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By Peter Franceschina
Sun Sentinel

The attorneys handling Ponzi schemer Scott Rothstein’s bankrupt law firm filed a clawback suit Wednesday against the Republican Party of Florida, seeking the return of nearly a quarter-million dollars.

The civil suit filed in U.S. Bankruptcy Court seeks the return of $237,000 in contributions made by Rothstein in the four years before his massive $1.4 billion investment fraud scheme imploded last fall.

It is the latest in a series of clawback suits seeking millions of dollars. The bankruptcy lawyers in recent months have sent out demand letters to various politicians, political organizations and campaigns seeking the return of contributions from Rothstein, his law firm Rothstein Rosenfeldt Adler and his law partners.

Some of those politicians and campaigns have turned the Rothstein-related contributions over to the federal government or to charities.

Katie Gordon Betta, spokeswoman for the Republican Party of Florida, said that is what her party did, returning $145,000 last fall.

"On November 18, 2009, the RPOF voluntarily returned $90,000 from Rothstein, Rosenfeld and Adler, $40,000 from Scott Rothstein and $5,000 from [a Rothstein company] from our state account and an additional $10,000 from Scott Rothstein from our federal account to the U.S. Marshals Service to ensure that the victims of these crimes are properly compensated,” Betta said in a statement. “The law firm Rothstein, Rosenfeld and Adler is currently attempting a double recovery of these funds.”

Rothstein made the $237,000 in contributions to the party between August 2006 and June 2009, according to the suit.

"These donations did not relate to the operation of RRA or confer any benefit upon, or provide value to, RRA," the suit alleges. "The trustee has made demand upon the defendant for repayment of the transfers. The defendant has failed and refused to make such repayment."

Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to racketeering, money laundering and fraud.

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By Peter Franceschina
Sun Sentinel

The largest group of plaintiffs suing Ponzi schemer Scott Rothstein and his alleged co-conspirators filed an amended complaint Monday, adding more allegations and bringing the suit to more than 2,200 pages.

Additional plaintiffs who were allegedly defrauded in Rothstein’s $1.4 billion investment scheme were added to the civil suit, as well as additional claims of wrongdoing.

As with anything Rothstein related, the numbers are huge: The suit has now been amended three times and contains more than 2,100 acts of alleged wrongdoing against individual defendants, laid out in nearly 15,000 paragraphs. The amended suit, considered the lengthiest in Broward County history, added roughly 700 pages to the second version filed in April.

Some of the new allegations center on Gibraltar Private Bank & Trust, which Rothstein bought into for $5 million when it was taken private last fall. The bank has denied any wrongdoing or knowledge of Rothstein’s fraud scheme.

Gibraltar said in a statement Monday: “Gibraltar is sympathetic to victims who have lost money in the Rothstein Ponzi scheme. However, the investors filing this complaint were not clients of Gibraltar, and the bank had no dealings with them.

“Despite more than 2,200 pages of speculation, innuendo and inaccuracies, the bottom line is the bank had no knowledge Mr. Rothstein was defrauding anyone.

“It’s understandable that these investors in Mr. Rothstein’s Ponzi scheme are looking for ways to recoup lost money. What is not understandable is attempting to blame Gibraltar for Mr. Rothstein’s misdeeds. The bank is perceived by these investors and their attorneys as a ‘deep pocket,’ making it a target for those trying to recoup their losses.”

The suit alleges that Gibraltar executives routinely covered up for Rothstein’s overdrafts, sometimes in the hundreds of thousands of dollars, and that the Ponzi scheme could not have flourished without their help.

Rothstein had a close relationship with some of the bank executives and used his influence, and large deposits, to get his way, the suit says. The suit cites several Rothstein e-mails to bank executives – reproduced here as they appear in the complaint, except for expletives – as evidence of Rothstein’s influence.

In a September 2006 e-mail to a former bank executive, John Harris, Rothstein tells Harris he is tired of being questioned about his overdrafts, according to the suit:

“If they are going to start putting pressure on us again every time the account is od from the previous nights pod they can kiss my firm, my consulting group, albert, ovi, ovi’s dad, roger, the Bahamas deal and all the rest that goes with me goodbye…I will not be pushed or pressured by the idiot’s in credit ever again. Not for one second. And you can tell them if they screw around with me I will be sure to tell every other one of their clients that I represent and that I am close to exactly what they are doing…that includes the levinsons and some other tasty accounts … I am running a law firm and I have way too much on my plate each day to worry about morons in credit who think I am evil incarnate and who have no clue how business is actually done. . . . You and lisa are great and I do not want anything to effect our relationship but after all I have done and what I have clearly proved I can do I will not put up with even the slightest level of [bull----] from them. You can tell them that they should be very wary of testing me at this stage of our relationship.”

Nov. 13, 2006, Rothstein to Harris: “Gotta love it … …and tell them to [f---] off… …not interested in their heat… …if they want my friends as clients they just need to deal with it when things get a bit dicey… …”

Nov. 17, 2006, Rothstein to Harris and another executive: “Johnny boy…..we need to establish a protocol with the folks in the gables regarding my accounts. Neither you nor I nor Lisa nor Irene needs the pressure they apply. … It sends a message that, in all candor, I find repulsive. They cannot be my “best buds” when we are cranking, and then forget my name when we have a blip on the screen…..even if it is a major blip. They need to chill. They can not be my “best buds” when I am doing all I can to refer the bank business and then forget my name when they fell like forgetting what I am trying to do for my business and their business. I bank with you because we treat each other with respect and because we understand the true meaning of what it is to be partners in something amazing.”

Rothstein continued, making reference to his firm’s contributions in the 2006 election cycle: “My firm was instrumental in getting the governor elected. My firm was instrumental in getting 38 other elected officials in Washington and other states elected this cycle. Our client list grows every day. And candidly, I am just getting warmed up…….and they can either hang on and enjoy the ride or I will find someone who will. I can not operate thinking that when the [s---] hits the fan, they will cut and run. Charlie crist shows up here…..I call you. I have a client that I think I can sway to change banks, I call you. I have a deal that I think I can steer your way…..ie. the Blandin deal that we tried to put together, I insist on you. The Bahamas deal….you. I think you can benefit from being in with my boys, you are in. We hit a bump, I always do what I say I am going to do. You do the same. But your superiors or the decision makers do not see it the same way. And candidly, their nonsense and total lack of respect is growing tiresome. Tell them to back off. They are either on the team and want my firm or they do not. There is no in between in this type of business relationship.”

Feb, 14, 2007, Rothstein to Harris: “I can not be bothered by them on a daily basis. I do not care if they are watching. They can watch all they want…..that is their prerogative. If they want our business, they have to deal with it right now. If they do not want our business, commerce bank has just flown its senior guy down from new jersey and they just sent us 30 litigation files and wants our accounts. …..overdrafts and all … The bottom line is that business that is as politically connected as we are is a hot commodity right now….new governor and all…..new appointments and all…..and the presidential election just around the corner with roger running mccain.”

March 11, 2009, Rothstein to Harris: “I do not believe that I am being treated as valued customer by gibraltar and candidly, it has grown tiresome. . . . i also intend to meet with stu and david boden in the morning to discuss ending my banking relationship with gibraltar.”

Rothstein, 48, was sentenced to 50 years in prison in June on five felony counts, including racketeering, money laundering and fraud. So far, only his chief operating officer, Debra Villegas, has been implicated in the ongoing federal investigation.

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The wife of Ponzi schemer Scott Rothstein’s former law partner Stuart Rosenfeldt gave sworn testimony earlier this month that she was unaware of her husband’s financial dealings.

Suzanne Rosenfeldt said she never saw 2008 tax documents that showed her husband pulled down $29.5 million in income and didn’t know some political contributions had been made in her name. She said she didn’t even know where her husband did his banking, according to court documents.

She did acknowledge she thought that it was bizarre that Rothstein gave her husband a Ferrari as a gift.

Suzanne Rosenfeldt sat down July 7 with attorneys handling the massive bankruptcy case resulting from the fallout of Rothstein’s $1.4 billion Ponzi scheme. She gave a three-hour deposition, oftentimes declining to answer questions, citing marital privilege.

The trustee for the bankrupt Rothstein Rosenfeldt Adler law firm is suing the couple, alleging Stuart Rosenfeldt received more than $9 million in compensation he wasn’t entitled to, including $1 million in credit card charges covered by the law firm.

Suzanne Rosenfeldt defended her husband, saying he did not launder money for the Ponzi scheme.

“I don’t believe it now and it never occurred to me then, never occurred to me,” she said.

She said she thought the law firm was successful.

When bankruptcy attorney Charles Lichtman asked her if she felt her husband had been truthful with her about his finances, Suzanne Rosenfeldt answered: “There’s certainly a lot I didn’t know.”

Lichtman further pressed her on if she intentionally ignored her husband’s newfound wealth.

“Was that willful on your part that you just turned your head the other way, that you have the use of a firm American Express card, have this big Mercedes, have this boat…all at about the same time?” Lichtman asked.

Suzanne Rosenfeldt responded: “I don’t know what to say. I don’t know what to say.”

“I think you just did,” Lichtman said.

When Stuart Rosenfeldt sat down for his deposition this month, he invoked his Fifth Amendment right against self-incrimination more than 700 times, according to a transcript. He didn’t respond to any questions related to Rothstein’s Ponzi scheme.

Rothstein was sentenced last month to 50 years in prison for the largest financial fraud in South Florida history.

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A Miami-Dade County financial adviser has reached a $6.03 million settlement with attorneys handling the bankruptcy of Scott Rothstein's massive Ponzi scheme.

Michael Szafranski, 32, invested tens of millions of dollars with Rothstein at the same time he was supposed to be "verifying" that the legal settlements Rothstein was selling to investors were legitimate, according to court documents. The settlement agreements never existed.

When questioned by attorneys sifting through the wreckage of Rothstein's $1.4 billion fraud scheme, Szafranski invoked his Fifth Amendment right against self-incrimination more than 1,000 times.

The bankruptcy attorneys had sued Szafranski for $32.8 million in payments he and his investment companies received from Rothstein.

In a settlement agreement filed this week in U.S. Bankruptcy Court, Szafranski agreed to pay $4.7 million within two days of a judge approving the deal with the rest of the money being paid out over a two-year span.

The $6.03 million represents about 86 percent of Szafranski's total assets, according to court records.

Rothstein was sentenced last month to 50 years in federal prison for running the largest fraud scheme in South Florida history.

In addition to Szafranski, former Rothstein law partner Steven Lippman reached a $700,000 settlement with attorneys representing bankruptcy trustee Herbert Stettin, according to court documents filed Thursday.

The $700,000 constitutes "a large percentage of the Lippmans' non-exempt net worth," wrote Charles Lichtman, one of the attorneys working for Stettin.

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Fort Lauderdale police internal affairs investigators have completed their investigation of two officers who were accused of misconduct in connection with their work for Scott Rothstein.

http://www.sun-sentinel.com/news/broward/fl-scott-rothstein-police-details-20100715,0,4482951.story

Here is the list of all 49 officers who worked off-duty details for Scott Rothstein at his home, law firm or Bova Prime restaurant:

Sgt. Larry Abrams, Officer Collis Atkinson, Officer Robert Bolden, Officer Rafael Bouyett, Sgt. Jeffrey Brull, Officer Christopher Clemons, Officer Lauren Collins, Maj. Raul Diaz, Capt. Karen Dietrich, Lt. Robert Dietrich, Officer Avery Figueras, Sgt. Michael Florenco, Officer John Franco, Officer Michael Freely, Lt. Glenn Galt, Officer Deanna Garcia-Lemieux, Capt. Reginald Gillis, Officer John Graul, Sgt. Steven Greenlaw, Sgt. Mary Gushwa, Lee Hancock, Maj. Russell Hanstein, Sgt. Patrick Hart, Officer Ryan Ijames, Officer Dwight Isaac, Officer Jeffery Jenkins, Officer Marc Johnson, Officer Paul Johnson, Capt. Janice Jordan, Officer Jeffrey Knapp, Officer Jose Lopez, Officer Robert Macku, Detective Joel Maney (now retired), Sgt. Timothy McCarthy, Officer Matthew Moceri, Officer Grant Moule, Officer John Rendo, Officer William Rippy, Officer Rolando Rivera, Officer Henri Saint-Jean, Officer Reynaldo Santo Jr., Sgt. Kevin Shults, Sgt. Michael Siekierski, Officer Jay Smith, Sgt. Frank Sousa, Sgt. William Stewart, Sgt. Dana Swisher, Sgt. Jerry Williams, Officer Christopher Wilson.

They were paid $45 an hour, according to city records. Detail coordinators Greenlaw and Garcia-Lemieux received an additional $5 per hour, the investigators found.

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By Peter Franceschina
Sun Sentinel

Ponzi schemer Scott Rothstein's former law partner Stuart Rosenfeldt is under oath today in a bankruptcy deposition. Updates will be at the top of the blog; the set-up piece is below.

3:30 p.m.

Rosenfeldt declined to answer questions about a series of e-mails that Rothstein sent out in the fall of 2006 complaining to his firm's lawyers that they were not bringing in enough business or cash. "I want all of us to be very rich," Rothstein wrote.

But Rosenfeldt said he never studied his firm's books or knew how much the firm was making. "It was money issues -- Scott's job," he said.

He also testified he wasn't curious about how he could be paid so highly. "It seemed fair to me," he said.

Then he started taking the Fifth when it came to specifics of his salary.

"You got all this money because you turned a blind eye to all the things Scott was doing in the firm, right?"

Rosenfeldt didn't answer.

2 p.m.

Rosenfeldt is now declining to answer questions about his compensation from his law firm, including the $6 million he was paid in 2008. He also wouldn't answer questions about a $3.9 million check he was given.

His defense attorney, Bruce Lehr, said Rosenfeldt's pay is part of the federal investigation. "I have information that is part of the U.S. Attorney's investigation," Lehr said.

Rosenfeldt also won't answer questions about loans from the law firm or payments that he made to others. Lehr said both of those areas are also under investigation.

Bankruptcy attorney Chuck Lichtman asked if he was paid such high sums so that he would let Rothstein run the law firm with no oversight. Rosenfeldt didn't answer.

12:45 p.m.

Rosenfeldt's monthly credit charges covered by his law firm rose steadily over the months. By mid-2009, he was charging upwards of $85,000 a month for everything from jewelry to clothes to Colorado vacations. He won't answer any questions about the charges. He just utters one word, "Fifth."

11:45 a.m.

With the questioning on the credit card charges, Rosenfeldt has now invoked the Fifth Amendment hundreds of times since the depo began. A small smile crept onto his face twice when asked about purchases at a reptile store. When asked if a particular jewelry purchase was for "someone other than your wife," Rosenfeldt again refused to answer.

11 a.m.

Rosenfeldt is back to not answering questions put to him about his salary and what his criminal defense attorney called his "extravagant" lifestyle. His defense attorney said his pay and lifestyle are under investigation by federal prosecutors.

Rosenfeldt appears a bit nervous. His hands are often clasped in front of him, his interlaced fingers wiggling. At one point he chewed on a fingernail. He's now not answering any questions about $1 million in charges on a law firm American Express card. He is sipping from a bottle of Lipton iced tea.

Rothstein authorized Rosenfeldt to charge $35,000 a month on the card beginning in April 2007, according to a Rothstein e-mail, but Rosenfeldt wouldn't answer any questions about that. His voice is monotone as he repeatedly declines to answer questions about the credit charges.

"I would love to discuss it," he has said several times, but he says he's following his attorney's advice.

10 a.m.

The questioning has moved off campaign finance and Rosenfeldt is now answering some questions. He testified he never looked at his law firm's books.

"Scott ran the firm, made all the decisions," he said. "If you hired me to manage your firm it's pretty much guaranteed your firm would go bankrupt."

9:30 a.m.

Rosenfeldt is being questioned about his campaign contributions. He has asserted his Fifth Amendment right against self-incrimination more than 50 times. He is flanked by three attorneys.

"Pursuant to my lawyer's advice I have to assert my Fifth Amendment rights," Rosenfeldt keeps repeating.

Earlier entry:

Ponzi schemer Scott Rothstein’s former law partner Stuart Rosenfeldt is scheduled to face some tough questioning Friday morning during a bankruptcy deposition.

If the deposition goes like some of the others involving the people closest to Rothstein, there may be some fireworks. The depo is scheduled to get underway at 9 a.m., but they typically start a few minutes late. This blog will be updated periodically through the day.

Rosenfeldt, 55, a Boca Raton resident, was the troubled face of the Rothstein Rosenfeldt Adler law firm in the weeks after its implosion in early November. Then he deliberately faded from the media limelight.

He could have quite a story to tell, if he doesn’t take the Fifth. Rosenfeldt has maintained that he, too, was a victim of his partner and didn’t know about the fraud scheme.

He founded the now-bankrupt law firm with his close friend in 2002. He was a first-hand witness to the wild juggernaut that followed as Rothstein climbed in legal, business, charitable and political circles.

Rosenfeldt can expect extensive questions about how the downtown Fort Lauderdale law firm operated during the $1.4 billion fraud scheme. No doubt Rothstein’s extravagant lifestyle – and the enormous sums Rosenfeldt was paid as a 50-percent partner – will also be front and center.

Bankruptcy attorney Chuck Lichtman has shown he can be relentless if need be. The bankruptcy attorneys are going to want to know about every penny Rosenfeldt spent, as well as the nearly $500,000 in political contributions he and his wife made, which bankruptcy lawyers allege were funneled through the law firm.

They also will likely ask him about the Ferrari that Rothstein gave him.

"It was a gift," Rosenfeldt told the Sun Sentinel last November. "He liked generous displays."

In terms of compensation, Rosenfeldt was well paid, according to the clawback suit filed against him. The numbers: $600,000 in 2006; $1.2 million in 2007; $6 million in 2008; and $946,000 in 2009.

The IRS has given one indication of how well Rosenfeldt was paid – the agency filed a $10.5 million tax lien against Rosenfeldt for the 2008 tax year.

Rosenfeldt also had access to a law firm American Express card, on which he racked up $1 million in charges going back to 2006, according to the clawback suit.

The suit indicates the tenor of the questions Rosenfeldt faces on the credit charges: “Examples of Rosenfeldt’s personal expenses paid by RRA that personally benefitted Rosenfeldt and Susanne Rosenfeldt include: 72 pieces of jewelry purchased from J.R. Dunn Jewelers, numerous local hotel room charges, furniture for their home, vacations and personal travel, exotic reptiles, home repairs, athletic club charges, men’s and women’s clothing, groceries, charitable contributions, personal meals, general household items and other items.”

(This is a snapshot of a collage that hung in Rothstein's office. The plaque read,"Two Guys and a Law Firm Does a Great Pair of Wacky Bosses Make!")

Rosenfeldt was working toward a settlement of the clawback suit, which is one reason his depo has not yet been taken. But those negotiations broke down; Lichtman accused Rosenfeldt of negotiating in bad faith, but Rosenfeldt’s bankruptcy lawyer, Luis Salazar, denied that.

Interestingly, Rosenfeldt’s criminal defense attorney, Bruce Lehr, filed an appearance this week in the clawback suit. That will give him a seat at the deposition table. Lehr did not want to comment Thursday on Rosenfeldt’s potential criminal exposure.

“He has done his best from day one to cooperate with the bankruptcy trustee to the best of his ability,” Lehr said.

Rosenfeldt may be well represented. Two other attorneys filed appearances this week, Mitchell Fuerst, and Shawn Birken, a former RRA lawyer who is now partners with Rosenfeldt.

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By Peter Franceschina
Sun Sentinel

The Florida Bar has cleared 22 former attorneys who worked at the Rothstein Rosenfeldt Adler law firm of any wrongdoing during the time Ponzi schemer Scott Rothstein was running a massive $1.4 billion fraud scheme.

The Bar recently sent out letters notifying the cleared attorneys that a grievance committee found no probable cause of any wrongdoing.

Fourteen other attorneys – including name partners Stuart Rosenfeldt and Russell Adler – remain under investigation, according to Bar spokeswoman Karen Kirksey. The cases involving those 14 attorneys have not yet been heard by the grievance committee.

The Bar is investigating whether any of the firm’s top lawyers were involved in any trust account irregularities at the firm. Rothstein, 48, ran his fraud scheme using the now-bankrupt firm’s trust accounts. Bankruptcy records show hundreds of millions of dollars flowing in and out of those accounts.

According to the Bar, the cleared lawyers are:

Steven L. Abrams
Shawn L. Birken
Harold S. Bofshever
Robert C. Buschel
Sara Coen-Giovanelli
Mark S. Fistos
Scott A. Goldstein
Julio E. Gonzalez Jr.
Frank Herrera
Steven R. Jaffe
Christina M. Kitterman
Seth Michael Lehrman
Arthur C. Neiwirth
Steven H. Osber
John Michael Ross
Adam J. Steinberg
Richard B. Storfer
Osvaldo F. Torres
Matthew D. Weissing
Johnny Williams Jr.
Tami R. Wolfe
Blandin J. Wright

The attorneys who have not yet had their cases heard, according to the Bar, are:

Russell Adler
William J. Berger
David J. Boden
Gary M. Farmer Jr.
Denis A. Kleinfeld
Carl H. Linder
Steven N. Lippman
Marc S. Nurik
Michael A. Pancier
Carlos J. Reyes
Stuart A. Rosenfeldt
Grant J. Smith
Barry J. Stone
Les Stracher

The Sun Sentinel obtained a copy of a Bar letter sent last week to one of the cleared attorneys. It is titled, "Notice of no probable cause and letter of advice to accused."

The letter says the attorney held himself out as a "partner" at Rosthstein Rosenfeldt Adler when only Rothstein and Rosenfeldt held equity in the firm (they were 50 percent partners), but the Bar acknowledged that the practice is customary around the country.

The Bar apparently heard the cases first involving attorneys who were considered "partners," and those who have not had their cases heard yet were considered "shareholders."

It appears the Bar is also looking at whether some of the RRA attorneys were involved in campaign finance violations. Federal prosecutos alleged in their criminal charges against Rothstein that employees of the firm violated state and federal election law by being reimbursed for political contributions.

"The Bar also became aware of allegations that lawyers at RRA may have engaged in actions that constituted violations of campaign finance law," the letter says. "It was alleged that lawyers at RRA were instructed to make political campaign contributions that were then reimbursed to the lawyer from funds at RRA."

The lawyer who received the clearance letter "denied having knowledge of any trust account irregularities before the news accounts of Mr. Rothstein fleeing the United States and thereafter being prosecuted criminally. You denied that you were ever reimbursed for making campaign contributions or that you were ever asked to do so," according to the letter.

The letter goes on to caution the attorney about proper trust account procedures and to observe standards of professional conduct.

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By Peter Franceschina
Sun Sentinel

Perhaps Kim Rothstein is looking for mementos of those idyllic days before her husband turned super crook.

Or maybe she feels she shouldn’t have to forfeit her property to compensate the investors Scott Rothstein swindled.

But the hard-shopping, jewelry-collecting Kim Rothstein wants some of her baubles back from the federal government.

Not all 304 pieces – the watches, necklaces and earrings – that federal agents say they seized last fall, just the ones that Scott Rothstein gave her as their romance bloomed.

She is just the latest entrant in the court battles raging over Scott Rothstein’s assets. One of Kim Rothstein’s attorneys filed a claim Friday in her husband’s criminal case, asserting her right to certain pieces of jewelry.

Dozens of claims from innocent clients of the Rothstein Rosenfeldt Adler law firm who lost money and bilked investors who allege they lost tens of millions of dollars have been filed in Scott Rothstein’s criminal case. They are jockeying for a percentage of the cash that will result from the sale of Scott Rothstein’s supercars, luxury yachts and multimillion dollar homes.

Kim Rothstein’s attorney, who could not be reached for immediate comment Monday afternoon, did not specify which pieces of jewelry


Stephan Maloman / Maloman Photographers


she wants back. The key to what she might have a shot at collecting depends on when Scott Rothstein gave her the gift – before or after he embarked on his massive $1.4 billion Ponzi scheme.

“Beginning as early as approximately 2004, and continuing until in or about 2005, but prior to committing the criminal acts for which he now stands convicted and sentenced, defendant Rothstein gave petitioner certain items of jewelry and other gifts based on their personal friendship and relationship,” Kim Rothstein’s claim says.

Under the law, Kim Rothstein is “the sole owner of the items she received as gifts from defendant prior to the criminal acts for which he stands convicted” and her “legal interest in those items is superior to that of defendant Rothstein and the United States,” the claim says.

Attorneys representing the trustee for the bankrupt Rothstein Rosenfeldt Adler law firm have filed a $1.1 million clawback suit against Kim Rothstein, alleging her lavish lifestyle, spending sprees and political contributions were funded through Ponzi money that ran through the firm.

“Mrs. Rothstein spent over $880,000 of RRA money on handbags, shoes, clothing, plastic surgery treatments and other such personal dalliances,” bankruptcy lawyers wrote in an earlier court filing.

In a deposition earlier this year, Kim Rothstein testified that she shopped so hard she couldn’t remember specifics about her spending. She liked expensive Jimmy Choo shoes, Louis Vuitton handbags, Gucci accessories and evening dresses by Zola Keller. She could drop nearly $5,000 buying several pairs of shoes from a chic Los Angeles boutique online.

Bankruptcy lawyer Chuck Lichtman said Monday that forensic accounting shows that virtually all of Scott Rothstein’s jewelry purchases were made with money from his law firm accounts.

“We’re incensed that Kim Rothstein thinks she should have an entitlement to this jewelry and we are going to do everything in our powers to protect the creditors’ interests in this jewelry,” he said. “We take this matter very, very seriously.”

In the end, all of the claims filed against Scott Rothstein’s assets in the forfeiture case might be moot. Federal prosecutors have said they will seek to have all of them dismissed by the judge. Prosecutors recently revealed investors lost $426 million.

If prosecutors succeed in holding onto Scott Rothstein’s forfeited assets, they will have to go through a painstaking process of determining who the legitimate victims are, and who doesn’t have “clean hands,” before the restitution is distributed. The judge hopes to have that done by the end of August.

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Here is the full text of Scott Rothstein's apology at his June 9 sentencing:

SCOTT ROTHSTEIN: To those that I stole money from, to the members and employees of our RRA family who were hurt by what I did, to the clients of RRA who lost money, trusted me, to those in the community that I hurt by my actions, to my fellow lawyers who I brought shame to, to our profession, to the judiciary and the court system that I disrespected and abused, to the charities that I hurt, to my family, I am truly and deeply sorry for what I have done. I don't expect your forgiveness. I don't.

I do promise you that no matter what happens here today, that I will continue to do everything within my power to undo the harm, the terrible harm, that I have caused. I'm ashamed and embarrassed.

Thank you.

Plus, here is his 12-page sentencing letter to U.S. District Judge James I. Cohn.

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By Peter Franceschina
Sun Sentinel

Former Scott Rothstein law partner Stuart Rosenfeldt was supposed to sit for a bankruptcy deposition Monday but he was a no-show, after hiring an attorney to defend him against a $9.5 million clawback lawsuit.

The fight over when Rosenfeldt will answer a string of questions about all things Rothstein and the huge sums of money he was paid spilled over into a federal courtroom Wednesday afternoon.

Rosenfeldt’s new attorney, Luis Salazar, already had another deposition scheduled for Monday and asked to postpone Rosenfeldt’s deposition to July 8. Attorney Chuck Lichtman, who represents the trustee for the bankrupt Rothstein Rosenfeldt Adler law firm, wanted Rosenfeldt in a depo room no later than June 22.

“We want his deposition and we want it as quickly as possible,” Lichtman told U.S. Bankruptcy Judge Raymond Ray. “Everyone in the RRA arena who is a target has wanted to push off their deposition.”

Salazar, hired June 2, argued that he needed to get up to speed on the case and needed time to review documents with Rosenfeldt and his wife, Suzanne, who also was supposed to have her deposition taken Monday.

“It is not our intention to delay these proceedings in any way,” Salazar told the judge.

Ray told Salazar that Stuart Rosenfeldt should not need much time to review documents, because he already knows that the bankruptcy lawyers are alleging in their clawback suit that Rosenfeldt received $8 million in compensation that he was not entitled to, $1 million in credit card payments from the law firm and $450,000 in law firm loans.

“He knows what they are after,” the judge told Salazar.

Ray ordered that the Rosenfeldts must sit for their depositions by July 2. Salazar indicated to the judge he was going to file a motion for a protective order. While Salazar was not specific, other former RRA employees have filed motions for protective orders to keep the media out of their depositions. Ray has generally ruled that the depositions are open to the press.

The Rosenfeldts have spent more than $100,000 to reconstruct their financial history for the bankruptcy attorneys, according to court documents. The fight over the Rosenfeldt depositions comes after settlement talks between Stuart Rosenfeldt – representing himself and his wife – and the bankruptcy lawyers broke down law month.

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By Peter Franceschina
Sun Sentinel

Restaurateur Tony Bova is hoping to resurrect himself from the Scott Rothstein Ponzi ashes.

Just two weeks after Bova closed the doors on Rothstein’s vanity restaurant, the money-losing Bova Prime on Las Olas Boulevard in downtown Fort Lauderdale, a PR firm has put out a news release saying Bova is opening a new Italian restaurant in Boca Raton.

Bova and his wife, Laurie, are holding a private grand opening ceremony June 30, an event they call a celebration of “our new beginning.”

Though invites were sent Wednesday to local media, the Bovas won’t be talking publicly. The invite says, “Also please note that this is a celebration of new beginnings and the Bovas will not be conducting interviews at this time.”

The new restaurant is billed as “VIVO Partenza, a Modern Italian Restaurant,” at 1450 N. Federal Highway, the former site of two Bova operations – Mario’s Tuscan Grill and then Bova Ristorante.

Rothstein, who bought into a partnership with Bova in 2008, ordered the first Boca Raton restaurant, Bova Cuccina, closed last October as his $1.4 billion Ponzi scheme was becoming unmanageable. Rothstein poured at least $2 million into Bova operations since late 2008, according to records in his law firm's bankruptcy case.


Bova Ristorante

Bova closed Bova Ristorante in early April just as he was preparing to file for personal bankruptcy, listing $8.7 million in debts and $2.1 million in assets.

The June 30 event will feature cocktails, hors d’oeuvres and live entertainment, according to the invitation, and will be followed by a very-important-person party.

“If you have important clients/connections that you would like to invite to the party that follows the VIP reception, please let me know and I will supply you with those details,” the PR release says. “Those guests will just need to email me with their RSVP. If you really feel they should be at the VIP party, then please let me know.”

It sounds just like the sort of event Rothstein would have loved to attend.

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We received several requests for the full text of U.S. District Judge James Cohn's sentencing order and findings in the Scott Rothstein case:

The Court has considered the statements of all parties, the presentence report which contains the advisory guidelines, the statutory factors set forth in 18 United States Code, Section 3553 (a), the sentencing memorandum filed on behalf of Mr. Rothstein, the government’s responsive sentencing memorandum, a sentencing statement of victims Coquina Investments and Emess Capital, and numerous letters including that of Mr. Rothstein, all of which have been docketed and are a part of the public record. In light of Mr. Rothstein’s agreement to forfeit all assets, the Court finds that he is financially unable to pay a fine. However, restitution is mandatory.

In its simplest form, this case is about the selling of fake financial products. The marketing, however, was anything but simple. It was sophisticated, rivaling that of Madison Avenue’s advertising elite. It was all about image, wealth, power and influence, WPI.

The marketing component of the fraud focused on attracting investors with deep pockets. Mr. Rothstein displayed all of the trappings of success, the multimillion dollar homes, the expensive cars, the boats, the restaurants, the jewelry, and a 70-lawyer law firm that appeared to be thriving.

He maintained political connections stretching from the Broward Sheriff’s Office on one end of Broward Boulevard all the way down to the Fort Lauderdale Police Department on the other end of Broward Boulevard, to the governor’s mansion in Tallahassee and all the way to the United States Congress in Washington and down Pennsylvania Avenue to the White House.

The local society page was constantly adorned with photographs of Mr. Rothstein and his wife arm in arm with sports celebrities, politicians, community leaders and socialites. The political contributions which were funneled through the law firm’s attorneys, their wives, and other employees placed the Rothstein brand in much demand.

The philanthropy which included donations to hospital, religious and charitable organizations endeared Mr. Rothstein as one of Broward County’s most prolific benefactors.

The police security details, the dinners with law enforcement officers, and the trips to sporting events with BSO brass created an appearance of legitimacy. But we now know it was a façade, a fraud.

When considering the nature and circumstances of the offense, it is important to recognize that this Ponzi scheme was not the result of poor business decisions. Quite to the contrary. This was fraud from the inception perpetrated over a period of four years causing approximately 400 investors to lose more than $400 million.

As is the case with most Ponzi schemes, there comes a time when the new money coming in is not sufficient to satisfy the demands of older investors and the Ponzi implodes. Unfortunately, many innocent people have been swept up by the tsunami that followed.

The seriousness and the magnitude of this crime must be given significant weight in determining an appropriate sentence.

The centerpiece of Mr. Rothstein’s mitigation argument is the alleged unwarranted disparities among defendants with similar records who have been found guilty of similar conduct. He describes the case of 59-year-old attorney Marc Dreier who orchestrated a Ponzi scheme over a four-year period stealing approximately $380 million from 13 hedge funds as erringly similar to this case.

In Mr. Dreier’s case, the district judge imposed a sentence of 20 years imprisonment, finding the sentence to be sufficient but not more than necessary to satisfy the requirements of sentencing. However, as Mr. Rothstein concedes in his sentencing memorandum, Mr. Dreier never attempted to corrupt the federal judicial system by creating false and fraudulent court orders and forging the signatures of federal judicial officers to those orders.

Mr. Rothstein created the fraudulent court orders in order to perpetuate the fraudulent scheme. These actions constitute the most egregious wrongs a licensed attorney can commit and represent a total disrespect for the authority and dignity of the courts.

There can be no conduct more reviled than an attorney perpetrating such a fraud on the court.

Accordingly, the Court finds major dissimilarities to the Dreier case.

Mr. Rothstein’s argument of unwarranted sentencing disparities was illustrated by 39 cases which were cited in the summary found at docket entry 272-11. I would merely point out that if any of these cases involved an attorney defendant forging the signatures of judicial officers, then we could compare apples with apples. Otherwise, this argument is unpersuasive.

Moreover, even if there was a comparable fact pattern, it would not be binding on this Court. Mr. Rothstein suggests that he is deserving of a downward departure under United States sentencing guidelines Section 5K2.0 or a downward variance based upon his extraordinary post-offense conduct.

The facts supporting his request include his voluntary return from Morocco, his immediate and extensive debriefing by federal agents, his participation in undercover operations, his immediate decision to identify and turn over all available assets to the government and consent to forfeiture, his assistance in providing victims’ representatives with information for pursuit of claims, and his remorse and rehabilitation.

The government does not oppose a variance asserting that it is beyond dispute that Mr. Rothstein’s post-offense conduct has been extraordinary. However, the government urges a sentence of 40 years imprisonment as opposed to the 30-year sentence suggested by Mr. Rothstein.

It does not appear that a downward departure under Section 5K2.0 would apply since cooperation is adequately taken into consideration by Section 5K1.1, which requires a motion by the government.

In addition, Section 3E1.1 covers acceptance of responsibility for which a three-level reduction was granted, albeit as the defendant points out, he was still left with a total offense level exceeding 43, which computes to a guideline sentence of life.

A downward variance would require, in the Court’s estimation, a showing that the post-offense conduct related to one of the factors referenced in 18 United States Code, Section 3553 (a). In that regard, the Court finds that the post-offense conduct would fall within the broad factor of the history and characteristics of the defendant.

Since the government has dealt exclusively with Mr. Rothstein subsequent to his arrest, the Court has no reason to doubt the government’s representation as to the value of Mr. Rothstein’s post-offense conduct. Accordingly, the Court will consider the conduct and assign appropriate weight to this sentencing factor.

Having carefully considered the guidelines and Section 3553 (a) 1 factors the Court turns its attention to the purposes of a sentence as stated in Section 3553 (a) 2. And those purposes are:

To reflect the seriousness of the crime, to promote respect for the law, to provide just punishment, to afford adequate deterrence to criminal conduct, to protect the public from further crimes of the defendant.

The seriousness of these crimes is self-evident. Approximately $1.2 billion was invested resulting in a loss of over $400 million to over 400 investors. The defendant admits on page 10 of his sentencing memorandum that the nature and circumstances of the offense weigh heavily in favor of a substantial sentence. The defendant further admits that he deserves and expects to receive a lengthy sentence.

However, he tempers his comments by stating that the sentence imposed should be based on the gravity of the crimes rather than disapproval of his lifestyle. The Court agrees that the sentence should be based on the gravity of the crimes. But as the Court pointed out earlier during Mr. Nurik’s argument, the Court also feels that lifestyle was related to the 3553 (a) factors.

The defendant’s greed and arrogance are part of his history and characteristics, just as his extraordinary post-offense conduct. His opulent lifestyle, funded by stolen money, is a major part of the nature and circumstances of this offense.

The forgery of signatures of three different members of the federal judiciary on fake court orders show a lack of respect for the law.

And lastly, the issue of adequate deterrence is of particular significance in the case of white collar crimes.

The crimes require thought, preparation, and calculation. Longer sentences for economic crimes have been a congressional goal over the past decade. As noted by the government, the 11th Circuit in Martin stated that economic and fraud-based crimes are prime candidates for general deterrence.

In the final analysis, the Court is guided solely by the standard of reasonableness. In order to determine what is reasonable, the Court must take a step back and ask:

What makes the Rothstein case different? Why has this case generated such public interest? Why has this case created such a media frenzy.

I am sure there are many reasons, but I think the primary reason is that Mr. Rothstein infiltrated so many spheres of public interest. He infiltrated so many parts of our daily lives – politics, sports, charities, law enforcement, the judiciary, the society page, TV commercials, the legal profession, billboards, magazines.

Mr. Rothstein was seemingly omnipotent. He was everywhere. Not only was he everywhere, but he was everywhere with excesses. When someone of that perceived stature is found to be a cheat, we start to question how we were deceived and even reexamine our own values.

I think that public perception is important in determining adequate deterrence. Certainly the public is well aware of these crimes and the manner in which they were committed.

Having considered the purpose of a federal sentence guided by the standard of reasonableness, the Court finds that a sentence of 50 years, that is 600 months, imprisonment is sufficient but not greater than necessary to comply with 18 United States Code, Section 3553 (a) 2.

Therefore, it is the judgment of this Court that the defendant, Scott W. Rothstein is hereby committed to the custody of the Bureau of Prisons to be imprisoned for a term of 600 months. This term consists of 240 months as to each of counts 1 and 2, such terms to be served consecutively to each other, 120 months as to count 3, to be served consecutively to counts 1 and 2, and 240 months as to each of counts 4 and 5, such terms to be served concurrently with each other and with counts 1, 2 and 3.

It is further ordered that, pursuant to 18 United States Code, Section 3664 (d) 5, the victims’ losses are not yet ascertainable. Therefore, the Court will set the date of August 30, 2010 at 9 a.m. for final determination of victims’ losses.

Upon release from imprisonment, Mr. Rothstein shall be placed on supervised release for a term of three years as to each of counts 1 through 5, to run concurrently. Within 72 hours of release, Mr. Rothstein shall report in person to the probation in the district where released.

While on supervised release, Mr. Rothstein shall not commit any crimes, shall be prohibited from possessing a firearm or other dangerous devices, shall not possess a controlled substance, shall cooperate in the collection of DNA, and shall comply with the standard conditions of supervised release including the following special conditions:

Financial disclosure requirement, no new debt restriction, self-employment restriction, and permissible search, as as noted in part G of presentence report. It is further ordered that Mr. Rothstein is assessed $100 as to each of counts 1 through 5, for a total of $500.

The total sentence imposed is 600 months imprisonment, three years supervised release, and a $500 special assessment. Forfeiture of the defendant’s right, title, and interest in certain property is hereby ordered, consistent with the plea agreement.

… (Exchange with prosecutor regarding forfeiture issues)

Okay. Now that sentence has been imposed, does the defendant or his counsel object to the Court’s finding of fact or to the manner in which sentence was pronounced?

MARC NURIK, defense attorney: I don’t think under the plea agreement we have the right, Your Honor.

THE COURT: Let me advise you, if there’s anything you did not waive, that you do have the right to appeal those matters. Any notice of appeal must be filed within ten days, actually I think this should be 14 days after entry of judgment being entered in this case. If you are unable to pay for the cost of an appeal, you may apply for leave to appeal in forma pauperis.

Gentlemen, is there anything further?

NURIK: May I have a moment, Your Honor?

THE COURT: Sure.

LAWRENCE LaVECCHIO, assistant U.S. Attorney: Nothing from the government, Your Honor.

NURIK: Nothing, Your Honor.

THE COURT: All right. We will stand in recess.

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By Peter Franceschina
Sun Sentinel

The government has released the names of the individuals and the corporations that were the winning bidders in the June 3 auction of Ponzi schemer Scott Rothstein's exotic cars and luxury yachts.

The auction generated $5.8 million, which will go toward a restiution fund for victims of Rothstein's massive $1.4 billion investment fraud scheme.

Rothstein, 48, was sentenced to 50 years in federal prison on Wednesday, and his former chief operating officer, Debra Villegas, is scheduled to plead guilty Friday afternoon to a money laundering charge that carries up to 10 years in prison.

Here are the winning bidders:

Lot Number Description Price Winning Bidder
1 2009 Yamaha Waverunner FX 1800H $9,000 Value Only, LLC
2 2009 Yamaha Waverunner FX 1800H $10,000 Mario Verdeja
3 2008 Cadillac Escalade $44,000 Eurocars USA, Inc.
4 2007 Ford Expedition $47.500 Stokesay Casle, LLC
5 1967 Chevrolet Corvette Stingray $103,000 Yes! Ft Lauderdale
6 2009 Bentley Continental GTC $179,000 Alliance Shippers, Inc.
7 2008 Ferrari F-430 Spyder $199,000 Todd McAuliff
8 2006 Nor-Tech Supercat $187,500 Martin Hellkamp
9 1999 Searay Sundancer 540 $220,000 Manuel Roman
10 2005 Riva Aquariva Super $255,000 Ocean Properties
11 2007 Rolls-Royce Phantom $240,000 Keith Muller
12 2008 Mercedes-Benz SLR McLaren, $301,000 Yes! Ft Lauderdale
13 2008 Bugatti Veyron EB 16.4 $858,000 Yes! Ft Lauderdale
14 2009 Maserati Gran Turismo $90,000 Manuel Batista
15 2007 Warren S87 Motor Yacht $2,510,000 Chartouni Nabil
16 2010 Lamborghini Murcielago LP670-4 $382,000 Bentley Sportscars Inc.
17 2006 Ferrari F430 Spyder, $165,000 Mark Krohn

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By Peter Franceschina
Sun Sentinel

The fruits of Fort Lauderdale attorney Scott Rothstein's massive Ponzi scheme are on the auction block. Exotic autos and yachts -- toys for the well-heeled set worth millions -- will be sold to the highest bidder, whether investor or private collector, at today’s auction at the Broward County Convention Center in Fort Lauderdale. Proceeds will go to a restitution fund to help pay victims of Rothstein's $1.4 billion fraud scheme.

As the lot numbers come up for bid, we will post pictures of the cars and yachts with descriptions and then provide the winning bid. The first items to be auctioned will move down the blog as newer items come under the gavel.

First up are some appetizers, two Yamaha WaveRunners. A crowd of several hundred people has grown into a thousand or more packed into one of the exhibit halls at the Broward County Convention Center. Some folks have flown in from as far as Texas and even Canada to bid. IRS agents are standing by the cars, politely bantering with the curious and those who are here to plunk down some serious cash if they get the winning bid.

12:45 p.m.

The auction is now underway. Incredibly, the first lot, a WaveRunner, sold for $9,000 in a matter of mere seconds. Looks like the auctioneers are going to run the prices up at a blistering pace. It's standing room only around the seated bidders, with auction workers in tuxes weaving through the audience to identify bidders.

Well, it's over. In a little over an hour the government collected $5.8 million. They're already clearing the chairs.

The final lot, the second Ferrari.

Lot 17
2006 Ferrari F430 Spyder
Winning bid: $165,000

2006 Ferrari F430 Spyder: 4.3 L V8, 6 Speed F1 Style Manual Transmission, Red Exterior, Black Convertible Top, Power Steering, Windows, Power Locks, Power Seats, AM/FM/CD Player, Tan Leather Interior, ABS Brakes, Aluminum Wheels, Odometer Reads: 6,448, VIN: ZFFEW59A560148863

One of the fastest cars in the world is up.

Lot 16
2010 Lamborghini Murcielago LP670-4 Super Veloce
Winning bid: $382,000

2010 Lamborghini Murcielago LP670-4 Super Veloce: 6.5L V12, 6 Speed Automatic Transmission w/ Manual Mode, OD, White Exterior, Black Interior, Automatic Climate Control, AM/FM/MP3, Navigation System, Power Steering, Power Locks, Power Windows, Aluminium Wheels, Odometer Reads: 298, VIN: ZHWBU8AHXALA03837

One of Rothstein's main status symbols got to two million in about two minutes. Then it took another 10 minutes for it to reach its final price. There was quite a bit of drama as the bidders steeled themselves to go higher.

Lot 15
2007 Warren S87 Motor Yacht
Winning bid: $2,510,000

2007 Warren S87 Motor Yacht: Length: 87’05”, Beam: 19’05”, Draft: 5’, Hull Number: 777, Marshall Islands Official Number: 858440, Hull ID: WAR87777B707, RINA Classed: 100-A-1.1.Y, Present Class: Unknown, Lower Deck Layout: Port Forward Head w/ Shower Enclosure, Starboard Forward Closet, Forward Master Stateroom, King Berth, Port Cabinetry, Starboard Desk, Aft Sofa and Cabinetry w/ Video Monitor, Passageway and Stairs, Port Twin Berth Stateroom w/ Hanging Locker, Head and Shower Enclosure, Starboard Full Berth Stateroom w/ Hanging Locker, Head and Shower Enclosure, Port Galley, Starboard Dinette, Starboard Forward Single Berth Master’s Cabin,

Next up is the Maserati Rothstein gifted to his chief operating officer, Debra Villegas. It went to 90k in under a minute.

Lot 14
2009 Maserati Gran Turismo Coupe
Winning bid: $90,000

2009 Maserati Gran Turismo Coupe: V8, Automatic Transmission, Blue Exterior, Gray Leather Interior, AM/FM/CD Player, GPS, Power Steering, Power Windows, Power Brakes, Power Locks, Air Conditioning, Alloy Wheels, Odometer Reads: 12,778, VIN: ZAMGJ45A090042326

A star of the auction is up, the vaunted Bugatti. "Help yourself to the Bugatti," the auctioneer said, as bids shot to 750k. Rothstein paid $1.5 million for the very rare car last fall. The bidding hit the mid-800s, then inched up from there in dramatic fashion.

Lot 13
2008 Bugatti Veyron EB 16.4
Winning bid: $858,000

2008 Bugatti Veyron EB 16.4: 16 Cylinders, Quad Turbo Chargers, 7 Speed Transmission, Black/Blue Exterior, Tan Leather Interior, AM/FM/CD, Alloy Wheels, Odometer Reads: 801, VIN: VF9SA25C28M795153

The Mercedes shot to 175k immediately, and is now at 290k.

Lot 12
2008 Mercedes-Benz SLR McLaren Convertible
Winning bid: $301,000

2008 Mercedes-Benz SLR McLaren Convertible: V8, 5 Speed Transmission, Yellow Exterior, Black Leather Interior, AM/FM/CD Cassette, Power Seats, Power Windows, Power Locks, Air Conditioning, Alarm, Alloy Wheels, Odometer Reads: 692, VIN: WDDAK76F98M001788

Lot 11
2007 Rolls-Royce Phantom
Winning bid: $240,000

2007 Rolls-Royce Phantom EWB: V12, 6 Speed Automatic Transmission W/Over Drive, Silver Exterior, Power Window, Power Locks, White Leather Interior, AM/FM/CD, Satellite Radio, Navigation, Telephone, TV, Refrigerator, Alloy Wheels, Odometer Reads: 5,302, VIN: SCA1L68557UX23044, Secure All of Florida - Miami, FL

Another Italian beauty is up, at 170k in seconds.

Lot 10
2005 Riva Aquariva Super Vessel
Winning bid: $255,000

2005 Riva Aquariva Super Vessel: Length: 33’, Beam: 9’02’, Unknown Draft, Fiberglass Construction, Hull ID: XFA33R74G405, Cabin Layout: Vee Berth w/ Storage Below, Marine Toilet in Center, Port and Starboard Cabinetry, Sliding Entrance Door, Deck Layout: Rope Locker, Foredeck, Cockpit w/ Port Helm, Helm Seat, Starboard Wet Bar,

Second yacht is up, at 210k.

Lot 9
1999 Searay Sundancer 540 Express Cruiser Vessel
Winning bid: $221,000

1999 Searay Sundancer 540 Express Cruiser Vessel: Length: 55’, LOA: 59’04” (Including Stern Elevator), Beam: 15’11”, Draft: 3’11”, Fiberglass Construction, Hull ID: SERY0500I899, Interior Layout: Queen Berth Forward Cabin w/ Air Conditioning, Port Cabinet Washer and Dryer, Starboard Hanging Locker, Salon w/ Port Head and Shower, Starboard Settee and Table, Port Galley w/ Corian Countertops, Starboard Aft Full Berth Cabin Head and Shower Enclosure, Engine Compartment, Lazzarette, Deck Layout: Bow Anchor Roller Chock,

The first boat, a speedster powered by jet engines, is up, now at 180k.

Lot 8
2006 Nor-Tech Supercat Vessel w/ Trailer
Winning bid: $187,500

2006 Nor-Tech Supercat Vessel w/ Trailer: Length: 50’, Beam: 12’, Draft: 3’, Hull ID: AOV49012A306, Fiberglass Construction, Engines: Twin Inboard Lycoming Gas Turbine Aircraft Engines, Model: T53-L-13-B, 1400 HP, Equipment: Sage Surface Outdrives, SCS Gearboxes (3 EA), Performance Marine Products, 4 Cylinder Hydraulic Steering, Dana Trim Tabs, Trailer: Broward Trailer, Custom Tri-Axle, VIN: 1B9GB53356H809006

The first of two Ferraris could not break 200k, it was like it slammed into a wall.

Lot 7
2008 Ferrari F-430 Spyder Convertible
Winning bid: $199,000

2008 Ferrari F-430 Spyder Convertible: V8, 6 Speed F1 Style Manual Transmission, Red Exterior, Tan Leather Interior, AM/FM/CD Player, Navigation, Power Seats, Power Locks, Power Windows, Alloy Wheels, Odometer Reads: 399.9, VIN: ZFFEW59A380163011

The Bentley shot to over hundred thousand in seconds. It's now more than 175k.

Lot 6
2009 Bentley Continental GTC
Winning bid: $179,000

2009 Bentley Continental GTC: V12, 6 Speed Automatic Transmission, White Exterior, Navy Blue Top, Beige Leather Interior, Bluetooth, Satellite Radio, GPS, Phone, Power Windows, Power Seats, Power Locks, Alloy Wheels, Odometer Reads: 2,386, VIN: SCBDR33W29C059672

A very desirable 1967 Vette is up now, at more than $88,000. Whoops now at 100k. It sold for $103,000 in about two minutes.

Lot 5
1967 Chevrolet Corvette Stingray Convertible
Winning bid: $103,000

1967 Chevrolet Corvette Stingray Convertible: V8, "427" Engine, 4 Speed Manual Transmission, 2 Door, Red Exterior, Black Leather Interior, AM/FM Radio, Air Conditioning, Alloy Wheels, Odometer Reads: 34,505, VIN: 194677S104745

Lot 4
2007 Ford Expedition Limousine
Winning bid: $47,500

2007 Ford Expedition Limousine: V8, Automatic Transmission, Black Exterior, Two Tone Microfiber Suede Interior, Air Conditioning, Power Windows, Power Doors, Power Locks, Power Seats, GPS, Pioneer CD/DVD Player, Satellite TV’s, Siren, Public Address System, Massager, Odometer Reads: 7,414.7, VIN: 1F1FK15557LA59223

Lot 3
2008 Cadillac Escalade
Winning bid: $44,000

2008 Cadillac Escalade: V8, 6 Speed Automatic Transmission W/Over Drive, Black Exterior, Dark Gray Leather Interior, AM/FM/DVD Player, CD Changer, TV, Sunroof, Tire Monitors, Chrome Wheels, Odometer Reads: 20,290, VIN: 1GYEC63858R234458

Lot 2
2009 Yamaha Waverunner FX 1800H Personal Watercraft
Winning bid: $10,000

2009 Yamaha Waverunner FX 1800H Personal Watercraft: Length: 11’, Beam: 4’, Hull ID: YAMA3661I809, Engine: Yamaha Gasonline Inboard, In-Line 4 Cylinder, Raw Water Cooled, Model: Super High Output, 210 HP, Electric Start, Supercharger, Battery Charger, Additional Equipment: Shorepower Cable, Fire Extinguisher, Bilge Pump.

Lot 1
2009 Yamaha Waverunner FX 1800H Personal Watercraft
Winning bid: $9,000

2009 Yamaha Waverunner FX 1800H Personal Watercraft: Length: 11’, Beam: 4’, Hull ID: YAMA3661I809, Engine: Yamaha Gasonline Inboard, In-Line 4 Cylinder, Raw Water Cooled, Model: Super High Output, 210 HP, Electric Start, Supercharger, Battery Charger, Additional Equipment: Shorepower Cable, Fire Extinguisher, Bilge Pump.

12:20 p.m.

The auction is a bit delayed. There are so many people here not all of those who want to register have had the chance, but the last few stragglers are now signing up. WealthTV, the lifestyle and entertainment network that broadcasts in hi-def, is here.

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By Peter Franceschina
Sun Sentinel

Ponzi schemer Scott Rothstein’s favorite hangout – Bova Prime, the restaurant he owned on Las Olas Boulevard in downtown Fort Lauderdale – appears to have shut its doors for good.

The restaurant was dark Wednesday during the lunchtime hour, and tables appeared to have been removed from the front of the restaurant. There was no sign on the locked doors and the phone rang unanswered.

A spokeswoman for the Stiles Corp., the building's owner, said the restaurant provided notice Tuesday that it was closing. "They did close, but we don't have any further details," said Stiles spokeswoman Adrienne Zvi.

Rothstein’s business partner in the Bova restaurant group, prominent South Florida restaurateur Tony Bova, filed for personal bankruptcy in April. At the time, Bova’s attorney revealed that Rothstein was the 100 percent owner of Bova Prime and that the restaurant was losing money and could shut its doors if new investors were not found.

Neither Bova nor his attorney – who was out of the country, according to his voicemail – could immediately be reached for comment. Bova listed $8.7 million in personal debts and $2.1 million in assets in his bankruptcy.

Before the bankruptcy filing, Bova closed Bova Ristorante in Boca Raton because it was losing money, his attorney said. Rothstein ordered a second Boca Raton restaurant, Bova Cucina, closed in October for the same reason.

The two restaurants were included in the April bankruptcy liquidation, where Bova listed their combined debts at $12.3 million.

The Bova Prime location, in the same Bank of America building that once housed the Rothstein Rosenfeldt Adler law firm, is caught up in the law firm’s bankruptcy case and its assets could be subject to forfeiture by federal prosecutors looking to collect restitution for Rothstein’s victims.

Rothstein, 47, ran a $1.4 billion Ponzi scheme selling non-existent legal settlements to investors, before his massive scheme imploded last fall. Rothstein and Bova became business partners in 2008, and Rothstein had a 50 percent interest in the two Boca Raton restaurants, bankruptcy records show.

Rothstein has pleaded guilty to five federal felonies and faces up to 100 years in prison at his June 9 sentencing.

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

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By Jon Burstein
Sun Sentinel

Debra Villegas – the chief operating officer of Ponzi schemer Scott Rothstein's law firm – is poised to reach a plea agreement in her criminal case, her attorney said Friday.

A status conference in Villegas’ case was scheduled for Friday morning, but the court hearing was cancelled. Villegas’ attorney, Robert Stickney, was at the federal courthouse in Fort Lauderdale and told the Sun Sentinel that Villegas will plead guilty in her criminal case on June 11.

Villegas, a close Rothstein confidante, is the only one of his associates so far to be criminally implicated in his $1.4 billion fraud. Villegas was charged last month with conspiracy to commit money laundering and entered a not-guilty plea at that time.

Stickney did not specify whether Villegas would be pleading guilty to the money laundering charge, which carries up to 10 years in prison, or an amended charge. U.S. District Judge William Zloch, who is presiding over the Villegas case, refuses to accept no-contest pleas. If there is a plea agreement, Villegas would have to accept responsibility for the criminal behavior outlined by prosecutors, but she also likely would get a break in her sentence.

Villegas, 42, is accused of forging nonexistent legal settlement agreements, which Rothstein used to dupe investors into believing he was raking in tens of millions of dollars in whistle-blower and employment discrimination cases.

All signs within recent weeks have pointed to Villegas pleading guilty rather than fighting the case. Prosecutors last month said she has been cooperating with them since November, shortly after Rothstein's Ponzi scheme and the Rothstein Rosenfeldt Adler law firm collapsed. In addition, prosecutors noted in court records that they didn't expect her case to go to trial.

Rothstein, 47, has pleaded guilty to five felonies and faces up to 100 years in prison at his sentencing, scheduled for June 9. He began cooperating with authorities in early November and was arrested by the FBI on Dec. 1. His current whereabouts are unknown, but he remains in federal custody.

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By Peter Franceschina
Sun Sentinel

Wednesday morning update: Kim Rothstein's attorney has filed a notice to continue a court hearing scheduled for this afternoon, saying that he is working toward a settlement with bankruptcy lawyers and also trying to narrow the legal issues in dispute. Below is the original blog post from Tuesday morning.

Kim Rothstein wants a clawback suit – demanding she repay her Ponzi schemer husband Scott Rothstein's bankrupt law firm more than $1 million – thrown out.

Her attorney and lawyers for the bankrupt Rothstein Rosenfeldt Adler law firm are scheduled to go before a judge Wednesday afternoon.

Kim Rothstein’s attorney, Michael Seese, argued in a motion to dismiss the clawback complaint that the bankruptcy lawyers did not provide enough specifics in their allegations to meet the necessary legal standards to go forward.

As part of his argument, Seese asserts that the bankruptcy lawyers did not spell out details for every purchase Kim Rothstein made using an American Express card that was funded by Ponzi money flowing through Scott Rothstein’s law firm.

“In each case, the complaint provides aggregate sums paid out to Mrs. Rothstein over the four-year period. The complaint does not attempt to break the transfers down by transaction,” Seese wrote in the motion to dismiss.

Bankruptcy lawyers fired back Monday with a 10-page response, which began with a blunt “introduction:”

“Mrs. Rothstein spent over $880,000 of RRA money on handbags, shoes, clothing, plastic surgery treatments and other such personal dalliances. These purchases were made for Mrs. Rothstein’s sole personal benefit. Mrs. Rothstein also admitted under oath to receiving transfers from RRA to reimburse her for her personal political contributions,” bankruptcy lawyers wrote. “Finally, Mrs. Rothstein received what is nominally titled “professional fees” from RRA, even though she provided no meaningful services to the debtor.”

Seese wants the judge to force the bankruptcy lawyers to provide more details on Kim Rothstein’s prolific spending habits. “The plaintiff should provide dates, amounts, name of the transferee and name of the transferor, particularly in a case such as this, where criminal forfeiture law and bankruptcy law have repeatedly intersected,” he wrote.

Bankruptcy attorney Chuck Lichtman wrote in the Monday response that the clawback suit provides more than sufficient details.

“Mrs. Rothstein spent more than $880,000 in personal expenses from 2006 through to 2009 on an American Express card that was entirely paid for by RRA,” Lichtman wrote. “It is incredulous that Mrs. Rothstein now suggests that the trustee has to provide her with a list of every time she used the firm-paid credit card to purchase a new pair of shoes or luxury handbag.”

In a deposition earlier this year, Kim Rothstein answered dozens of questions about her spending habits. She shopped so hard she couldn’t remember specifics about her spending. She liked expensive Jimmy Choo shoes, Louis Vuitton handbags, Gucci accessories and evening dresses by Zola Keller. She could burn through thousands of dollars on a shopping outing, or drop nearly $5,000 buying several pairs of shoes from a chic Los Angeles boutique online.

The arguments over the clawback suit are scheduled to go before U.S. Bankruptcy Judge Raymond Ray at the Wednesday hearing. Ray denied a similar motion to dismiss earlier this month filed by former RRA partner Russ Adler and his wife. The bankruptcy lawyers are seeking $1.2 million in alleged overpayments and loans Scott Rothstein made the Adlers.

Scott Rothstein, 47, pleaded guilty to five felonies related to his $1.4 billion Ponzi scheme and faces up to 100 years in prison at his scheduled June 9 sentencing. The only other person to be charged so far in the wide-ranging federal investigation is his former chief operating officer, Debra Villegas, who is expected to plead guilty to a money laundering charge.

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By Peter Franceschina
Sun Sentinel

One of the attorneys who handled the political wing of Ponzi schemer Scott Rothstein's law firm was questioned by bankruptcy attorneys for three hours Thursday about all things Rothstein.

Grant Smith, a lawyer and lobbyist, testified he met Rothstein in 2006 through Rothstein’s partner Russ Adler and was hired that May, at a time when the Rothstein Rosenfeldt Adler law firm had about 20 attorneys but was growing rapidly.

At Smith's side during the deposition was well-known Miami defense attorney Neal Sonnett, who said Smith – who until this week was working for the trustee overseeing the bankruptcy of Rothstein’s law firm – is not a target of the wide-ranging federal investigation into Rothstein’s massive investment fraud.

“He has not received a target letter and will not receive a target letter. We have offered full cooperation and any time they want to talk to him we will make him available,” Sonnett said during a break in the deposition. “In this case Grant is one of the good guys. He has nothing to hide and nothing to worry about.”

When Smith joined the RRA firm, Rothstein – already close to then-Attorney General Charlie Crist – wanted to ramp up his political operations and influence, Smith testified.

“He thought it was a way to do more with the connections he had,” said Smith, adding Rothstein held several fundraisers that year for Crist's successful gubernatorial campaign.

Smith said he coordinated political events and fundraisers for local, state and national candidates during his time at the firm, where he earned more than $300,000 a year, bankruptcy records show.

While federal prosecutors allege Rothstein and unnamed co-conspirators violated state and federal election law through illegal campaign contributions, Smith said he was never aware of any improprieties involving the firm's political activities.

In funneling millions of dollars into political races, Rothstein routinely used a large web of corporate entities to make hard and soft money contributions. Rothstein also reimbursed some of the attorneys and employees in the firm for political contributions they made.

Smith said he was never aware those illegal reimbursements were taking place, until the law firm imploded in late October as Rothstein's fraud came to light.

“I did come to know it afterward,” he said.

Smith said he once warned Rothstein that his corporate entities making political contributions had to have a legitimate source of independent income for those donations.

“I just said you need to make sure we are compliant with this,” Smith testified. "He said, ‘OK.’”

Rothstein was making the contributions through dozens of corporations using money from his $1.4 billion fraud, according to records in his law firm's bankruptcy.

Smith said he did not become aware that Rothstein was selling investments in purported structured legal settlements until early 2009, never suspecting they were fraudulent and did not actually exist. He said he was only vaguely aware of details concerning those investment deals, had no idea of their magnitude and never got involved in them.

“At one point, I think it was in August, he told me about the business,” Smith testified. “I had seen a lot of people investing with Scott.”

He said he believed Rothstein told him the first structured settlement deal was an investment for car dealer Ted Morse. “When Scott was telling me about the business, I believe he told me his first one was with Ted,” Smith testified.

Smith said he expressed an interest in getting involved in the investment deals but it never came to fruition. He said other than Rothstein’s general counsel, David Boden, he didn’t know anyone else at the law firm who was aware of Rothstein’s deals. Boden has testified that he was involved in about 35 of Rothstein’s deals.

Bankruptcy attorney David Cimo asked Smith when he first noticed Rothstein was living an ostentatiously wealthy lifestyle. Smith replied that it was during the job interview process.

“The first time we went out to lunch, I was picked up in a red Bentley. He was wearing a nice watch,” Smith said.

“He was already blinged out when you met him?” Cimo asked.

“Yes,” Smith said. “It was a hobby of Scott’s. Cars came and went.”

Smith said he attended Rothstein’s opulent wedding at the former Versace mansion on South Beach. Cimo asked him if it was over the top.

“It was a lovely wedding,” Smith said with a grin. “I think it was all over the top.”

There were a few lighter moments as Cimo reviewed some of Rothstein’s e-mails to firm members. Rothstein referred to the hedge funds investing with him as “hogs,” as in hedge hogs, Smith said, “in a loving, endearing way.”

When Rothstein wrote that they should head out for “choir practice,” Smith said, it was code for going out for drinks.

Rothstein, 47, pleaded guilty in January to five federal felonies and faces up to 100 years in prison at his June 9 sentencing. The only other person to be charged so far in the wide-ranging federal investigation is Rothstein's former chief operating officer, Debra Villegas, who is cooperating and expected to plead guilty to a money laundering charge.

After the deposition was over, Smith said he was crushed by the collapse of the RRA firm.

“I thought we were building something for the future,” he said. “I was proud to be part of it.”

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By Peter Franceschina
Sun Sentinel

Ponzi schemer Scott Rothstein's bankers are being questioned this week by bankruptcy attorneys trying to determine if they knew anything about the disbarred attorney's massive investment fraud.

On Tuesday, the attorneys took the deposition of Jennifer Kerstetter, an assistant branch manager for TD Bank who said she had no idea Rothstein was running a Ponzi scheme that brought in $1.4 billion.

Rothstein had about two dozen trust accounts at TD Bank. Hundreds of millions of dollars flowed through those accounts over the course of Rothstein's five-year fraud. TD Bank is the target of lawsuits by investors allegedly bilked by Rothstein. The latest suit against the bank was filed last week by a group of Texas investors who allege they put $37 million into the scheme.

This week's second deposition of a TD Bank employee got underway Wednesday morning. The bankruptcy attorneys are questioning Weston branch manager Roseanne Caretsky, who described when she first met Rothstein as a bank client in the fall of 2007.

Caretsky said that by early 2009 Rothstein was considered to be a "VIP customer" based on the relationship he had with the bank and the account balances he kept there, a status enjoyed by only a handful of customers.

"It was just larger clients in the branch," Caretsky testified.

Both Kerstetter and Caretsky testified that Rothstein was allowed to use the bank's conference room on occassion to meet with business associates, after Rothstein picked up computer printouts of his account balances.

Everyone at the bank branch would be on their "toes" when Rothstein was coming in, Kerstetter said. Bank employees were even given a photograph of Rothstein taken from the Internet so they would know what he looked like when he arrived, she said.

At one point Kerstetter sent the account balance information to one of Rothstein's employees, his uncle, Bill Boockvor, by e-mail. Those electronic balances were later altered, Caretsky said she learned after Rothstein's scheme imploded last October.

"I saw documents that were altered and it had to be from that original e-mail," she testified.

Some of the TD Bank balance information was altered to reflect the accounts held hundreds of millions of dollars that were not there, both women testified.

Former TD Bank regional vice president Frank Spinosa is set to deposed on June 10. His attorney has said he will not answer questions and instead will invoke his Fifth Amendment right against self-incrimination. Spinosa was fired by the bank a few weeks after the Ponzi scheme came to light.

Rothstein, 47, pleaded guilty in January to five federal felonies and faces up to 100 years in prison at his June 9 sentencing. The only other person to be charged so far in the wide-ranging federal investigation is Rothstein's former chief operating officer, Debra Villegas, who is cooperating and expected to plead guilty to a money laundering charge.

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By Jon Burstein and Peter Franceschina
Sun Sentinel

One of Ponzi schemer Scott Rothstein's closest associates — Debra Villegas, the woman he made his second-in-command at his law firm — pleaded not guilty Wednesday morning to a money-laundering charge alleging that she was instrumental to his massive investment fraud.

Villegas, 42, became the second person criminally implicated in Rothstein's $1.4 billion conspiracy when federal prosecutors filed the single charge against her Tuesday as part of a far-reaching investigation targeting Rothstein's associates and business partners.

During a brief hearing in federal court in Fort Lauderdale, Villegas entered the not-guilty plea and U.S. Magistrate Robin Rosenbaum ordered that Villegas could be released on a $250,000 personal-signature bond. Villegas surrendered to federal marshals at the courthouse at about 8:15 a.m. Wednesday and was led into the courtroom handcuffed and shackled, wearing a cream-colored jacket and pants.

Assistant U.S. Attorney Lawrence LaVecchio informed the magistrate that Villegas first began cooperating with authorities last November, and LaVecchio said she has provided information not only about Rothstein’s Ponzi scheme but other criminal activity involving the Rothstein Rosenfeldt Adler law firm.

LaVecchio told the judge it was beneficial to authorities to have Villegas remain free rather than be jailed while she is cooperating. The magistrate determined that Villegas is not a flight risk, but as with most federal defendants, Villegas had to surrender her passport.

“The defendant has known this day was coming, and if she would have fled, she would have fled some time ago,” LaVecchio said.

Villegas has known Rothstein for years, rising from paralegal to his most trusted associate as chief operating officer of his now-bankrupt law firm, Rothstein Rosenfeldt Adler. As his Ponzi scheme was going full steam last year, Rothstein made clear to co-workers at the firm that her authority was absolute.

"When she speaks she is speaking for me ... thus, absent extraordinary circumstances, no one is to challenge her authority or come to me to attempt to override any decision she makes," Rothstein wrote, according to an e-mail contained in a lawsuit. "WE WOULD NOT EXIST WITHOUT HER. SHE HAS HELPED ME AND CONTINUES TO HELP ME MORE THAN I COULD EVER EXPLAIN."

The criminal charging document filed Tuesday alleges that Villegas forged non-existent legal settlement agreements, which Rothstein used to dupe investors into believing he was bringing in millions of dollars in whistle-blower and employment discrimination cases. The money-laundering conspiracy charge is punishable by up to 10 years in prison.

Villegas' attorney, Robert Stickney, confirmed Tuesday that Villegas has been assisting federal authorities since the Ponzi scheme was revealed.

"My client has been cooperating with the U.S. Attorney's Office since the inception of this case," he said.

Rothstein, 47, also is cooperating with authorities. He has pleaded guilty to five felonies and faces up to 100 years in prison at his sentencing scheduled for June 9.

John Gillies, who leads the FBI in South Florida, said in a statement Tuesday that Villegas should have turned in her boss for his crimes.

"We sometimes must make tough choices in our lives, and in this case Debra Villegas made the wrong choice," Gillies said. "She could have done the right thing and reported Rothstein's fraud to law enforcement, but instead she assisted him in carrying out the scheme. She chose greed over her integrity and now she will have to pay the price for her actions."

As Rothstein's close confidante, Villegas worked in his sealed-off inner sanctum, handled aspects of his personal and professional financial affairs and was well-rewarded, earning $120,000 a year.

Rothstein also bought her a $475,000 Weston home, which he deeded to her last summer out of "love and affection," and a $100,000 Maserati, which she has surrendered to federal authorities. Prosecutors are seeking the forfeiture of the Weston home. Villegas took a $100,000 mortgage out on the home just days before Rothstein's Ponzi scheme collapsed, records show.

Stickney said Wednesday that Villegas has moved to Clewiston, in part to ease her stress, and is willing to sign over the Weston home to the government. He also said her Cadillac Escalade has been repossessed.

Prosecutors allege in the six-page charging document that Villegas was involved in the money-laundering conspiracy from 2007 through the implosion of Rothstein's scheme in late October. As in the charges laid out against Rothstein, prosecutors make reference to unnamed co-conspirators several times.

Attorneys for investors who claim they were cheated by Rothstein say Villegas knew what was happening within Rothstein's inner sanctum. She was named as a defendant in the $120 million lawsuit filed by investors represented by Fort Lauderdale attorney William Scherer.

"As I've alleged in my complaint, she is a principal co-conspirator in running this massive Ponzi scheme," Scherer said. "Accepting that as true, those are criminal violations as well as civil fraud."

Villegas has described Rothstein as "like a brother." He took care of her family after her estranged husband was charged in March 2008 with murdering her best friend, Rothstein law firm partner Melissa Britt Lewis.

Before Villegas' name came up in Rothstein's investment fraud, she found herself in the media spotlight as a central figure in the Lewis murder investigation. Plantation police believe Villegas' now ex-husband, Tony Villegas, killed Lewis out of jealousy, because he thought Lewis played a role in his marriage's demise. Tony Villegas has pleaded not guilty and is now awaiting trial.

Debra Villegas has told police that for years she led a double life.

At work, she was the assertive force behind the day-to-day operations of Rothstein's downtown Fort Lauderdale law firm and more than 150 employees. At home, she said, she lived in fear of Tony Villegas — his physical abuse of their children and his threats that he would kill her if she left him.

"I run Scott's law firm," she told Plantation police detectives investigating Lewis' murder. "I negotiate … saving hundreds of thousands of dollars a week. I go head to head with anybody and Scott calls me a cold-hearted bitch. I'm just like the toughest person in the world until I got into that little world [home] and I was so terrified whether I stayed or left that he was gonna kill my kids and kill me.

"I am the most private person in the world," she said. "I hid [the abuse] from Scott, who is like a brother to me."

U.S. Attorney Jeffrey Sloman used Tuesday's developments as an opportunity to warn investors about deals that sound too good to be true, and he also hinted at further arrests.

"Investment fraud schemes target people from all walks of life and often result in the loss of their life's savings. The best way to avoid being victimized by fraudsters is to do your homework and to ask hard questions before investing," Sloman said in a statement. "As today's case demonstrates, we remain committed to prosecuting investment fraud schemes and all who participate, from top to bottom."

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By Peter Franceschina and Jon Burstein
Sun Sentinel

Ponzi schemer Scott Rothstein's chief operating officer at his defunct law firm was charged Tuesday morning with money laundering.

Debra Villegas, 42, is scheduled to have her first court appearance on Wednesday, federal court records indicate. The charging document alleges that Villegas forged legal settlement agreements, which Rothstein sold to investors. Her new attorney could not immediately be reached for comment.

Villegas was charged by way of an "information," rather than a grand jury indictment, indicating she is cooperating with prosecutors. Another indication she is cooperating is that prosecutors noted in court records that the case would not go to trial. The money laundering conspiracy charge is punishable by up to 10 years in prison.

Rothstein, 47, ran a massive $1.4 billion fraudulent investment scheme from his downtown Fort Lauderdale law offices. He pleaded guilty to five felonies and is scheduled to be sentenced on June 9.

Villegas is the first person to be charged, other than Rothstein, in a far-reaching federal investigation.

John Gillies, who heads the FBI in South Florida, said in a statement that Villegas should have turned Rothstein in for his crimes.

“We sometimes must make tough choices in our lives, and in this case Debra Villegas made the wrong choice,” Gillies said. “She could have done the right thing and reported Rothstein’s fraud to law enforcement, but instead she assisted him in carrying out the scheme. She chose greed over her integrity and now she will have to pay the price for her actions.”

U.S. Attorney Jeffrey Sloman used Tuesday's developments as an opportunity to warn investors about deals that sound too good to be true.

“Investment fraud schemes target people from all walks of life and often result in the loss of their life's savings. The best way to avoid being victimized by fraudsters is to do your homework and to ask hard questions before investing,” Sloman said in a statement. “As today’s case demonstrates, we remain committed to prosecuting investment fraud schemes and all who participate, from top to bottom.”

As Rothstein's chief operating officer and close confidante, Villegas worked in his sealed-off inner sanctum and handled some of his personal and business financial affairs.

Rothstein bought her a $475,000 Weston home, which he deeded to her last summer for $100 and "love and affection." Rothstein also bought her a $100,000 Maserati, which she surrendered to federal authorities. Prosecutors are seeking the forfeiture of the Weston home, along with all of Rothstein's other properties.

Prosecutors allege in the six-page charging document that Villegas was involved in the money laundering conspiracy beginning in 2007 and up until Rothstein’s scheme imploded in late October. As in the charges laid out against Rothstein, prosecutors make reference to unnamed co-conspirators several times.

Villegas has been described by lawyers suing Rothstein as his “Number 2” – a paralegal who quickly rose to power in his law firm.

Villegas has said Rothstein is “like a brother.” He took care of her family after her estranged husband was charged in March 2008 with murdering her best friend, Rothstein law firm partner Melissa Britt Lewis.

Attorneys for investors bilked by Rothstein are convinced she knew what was happening within Rothstein’s inner sanctum. She was named as a defendant in the $120 million lawsuit filed by investors represented by Fort Lauderdale attorney William Scherer.

“As I’ve alleged in my complaint, she is a principal co-conspirator in running this massive Ponzi scheme,” Scherer said. “Accepting that as true, those are criminal violations as well as civil fraud.”

Before Villegas’ name came up in Rothstein’s massive fraud, she had found herself in the media spotlight as a central figure in the Lewis murder investigation. Plantation police believe Villegas’ now ex-husband, Tony Villegas, killed Lewis out of jealousy, believing Lewis played a role in his marriage’s demise.

Villegas told police that for years she led a double life.

At work, she was the assertive force behind the day-to-day operations of Rothstein’s law firm with more than 150 employees. With no college degree, she worked her way up from being a paralegal handling labor and employment litigation files to a COO earning more than $120,000 a year.

At home, she lived in fear of Tony Villegas – his physical abuse of their children and his threats that he would kill her if she left him, she said.

“I run Scott’s law firm,” she told Plantation police detectives investigating Lewis’ murder. “I negotiate…saving hundreds of thousands of dollars a week. I go head to head with anybody and Scott calls me a cold-hearted bitch. I’m just like the toughest person in the world until I got into that little world [home] and I was so terrified whether I stayed or left that he was gonna kill my kids and kill me.”

She said she forced Tony Villegas to leave their Sunrise house after he grew increasingly abusive with their children, including hitting one of their sons in the head with a textbook. She said that for years she hid what was happening inside her home.

“I am the most private person in the world,” she said. “I hid [the abuse] from Scott who is like a brother to me.”

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By Peter Franceschina
Sun Sentinel

Scott Rothstein’s super expensive exotic toys – the Italian sports cars and yachts – are going to auction at 11 a.m. June 3 at the Broward County Convention Center.

The high-living Rothstein agreed to forfeit the cars and boats to the federal government as part of his January plea agreement. He pleaded guilty to five felonies for running a $1.4 billion Ponzi scheme from his downtown Fort Lauderdale law offices and faces up to 100 years in prison at his June 9 sentencing.

Rick Levin, the Chicago-based auctioneer handling the sales, would not say Thursday what he expects the items will fetch.

“They are worth what someone is willing to pay for them,” Levin said. “These are very unusual, high-end things. As far as one auction, this is certainly an auction packed with some wonderful cars and yachts. It is a concentration of high-end personal property.”

Going under the gavel:

Cars:
2008 Bugatti Veyron
2009 Bentley Continental GTC
2007 Rolls – Royce Phantom
2009 Ferrari 430 Spyder
1967 Corvette Convertible
2007 Ford Expedition Limo
2008 Cadillac Escalade
2008 Mercedes - Benz SLR
2009 Maserati GT
2010 Lamborghini LP-670SV

Vessels/watercraft:
2007 87' Warren Yacht
2005 33' Riva Aquariva Super
1999 55' SeaRay Sundancer
2006 Nor-Tech Supercat
Yamaha Jet Skis

The proceeds of the sale will be held by the government to benefit the victims of Rothstein’s massive investment fraud scheme.

The cars can be previewed by the public from 9 a.m. to 3 p.m. May 10 and 9 a.m. to noon June 2 at at Secure-All of Florida, 1240 N.W. 74th Street, Miami. The cars can also be previewed at 9 a.m. the day of the auction.

The yachts and personal watercraft can be previewed from 9:30 a.m. to 3:30 p.m. May 11 and May 27 at National Liquidators, 1915 Southwest 21st Avenue, Ft. Lauderdale.

Registration will begin at 9 a.m. on the day of the sale at the Broward County Convention Center, Exhibit Hall D. Bidders are required to have a cashier's check deposit in order to register to bid.

For terms of sale, visit www.treas.gov/auctions/treasury/gp.

For more information on the auction, visit www.ricklevin.com.

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By Peter Franceschina
Sun Sentinel

Ponzi schemer Scott Rothstein’s defense attorney wants at least another month to prepare for his client’s sentencing, scheduled for May 6.

Defense attorney Marc Nurik filed a motion Wednesday to continue the sentencing, and he noted that federal prosecutors do not object to the extension.

Rothstein, 47, has pleaded guilty to five felonies in his $1.4 billion Ponzi scheme and has been cooperating with federal authorities.

Ever since Rothstein helped bring federal charges against a reputed Mafia figure in mid-March, his whereabouts have been a mystery. He was initially being held in a federal detention center in Miami after his Dec. 1 arrest, but he was moved to the St. Lucie County Jail just before prosecutors announced charges against reputed Mafioso Roberto Setterini of Miami Beach, who allegedly agreed to destroy boxes of documents that Rothstein told him were incriminating in his Ponzi case.

Shortly after being placed in the St. Lucie County Jail, federal marshals whisked him away to an undisclosed location, though authorities said he remains in federal custody.

Nurik said in his motion that Rothstein is no longer in South Florida, and that has made it a hardship for him to prepare for sentencing – he has only been able to meet with Rothstein twice in recent weeks.

“The special circumstances of the defendant’s pretrial incarceration have severely
hindered undersigned counsel’s ability to sufficiently meet with and confer with his client and review matters critical to sentencing,” Nurik wrote. “The defendant is presently in protective housing outside of this District and treated differently than other inmates. Undersigned counsel’s contacts with his client must be arranged and approved in advance through the government, which creates delay.

“There have been numerous occasions in the past few months when undersigned counsel has been unaware of his client’s location and has been repeatedly out of contact with his client for substantial periods of time, including one period for over two weeks.”

Continuances in high-profile, complex cases are not unusual. Nurik informed U.S. District Judge James Cohn that he conferred with prosecutor Lawrence LaVecchio and that prosecutors had no objection to the delay. Rothstein faces up to 100 years in prison on the charges.

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By Peter Franceschina
Sun Sentinel

“When she speaks she is speaking for me . . . thus, absent extraordinary circumstances, no one is to challenge her authority or come to me to attempt to override any decision she makes… WE WOULD NOT EXIST WITHOUT HER — SHE HAS HELPED ME AND CONTINUES TO HELP ME MORE THAN I COULD EVER EXPLAIN...OUR OFFICES THAT WE CURRENTLY OCCUPY WOULD NOT HAVE BEEN COMPLETED WITHOUT HER... OUR GROWTH WOULD BE IN REVERSE.”

--Scott Rothstein, in an undated e-mail to his law firm colleagues, referring to his chief operating officer Debra Villegas

One of the richer veins of information for the attorneys dissecting Scott Rothstein’s massive $1.4 billion Ponzi scheme has been the trail of e-mails he left behind.

The bankruptcy lawyers sorting through the wreckage of Rothstein’s bankrupt Rothstein Rosenfeldt Adler law firm have used the e-mails extensively during depositions of Rothstein’s law firm colleagues and business associates.

Fort Lauderdale attorney Bill Scherer, who is heading a civil lawsuit against Rothstein and his alleged co-conspirators, has included numerous e-mails from Rothstein and others as part of his court filings. The e-mails come from an interested party, and there may be other e-mails that surface and tell a different story.

Scherer alleged Tuesday that Rothstein likened himself in one e-mail to Robin Hood with a twist: "In the continuing saga of stealing from the rich and giving to the richer," Scherer quoted Rothstein as writing.

Scherer says his legal team has unearthed e-mails that they believe were written by a number of Rothstein’s business partners.

They include: Michael Szafranski, a financial advisor who allegedly was supposed to “verify” that the legal settlements Rothstein was selling to investors actually existed; George Levin, a Fort Lauderdale businessman whose Banyon investment entities put $775 million into the Ponzi scheme; Frank Preve, a manager who worked for Levin; Mark Nordlicht, who runs a New York hedge fund, Platinum Management, that invested in Banyon; Jack Simony, another fund manager; and Mel Lifshitz, an investor.

The e-mails also make references to Fort Lauderdale businessman Doug Von Allmen, one of the plaintiffs in Scherer’s suit whose family lost about $100 million, and former TD Bank executive Frank Spinosa. The e-mails contain shorthand, jargon and sometimes refer to people by either their first or last names.

Here is a compilation of those emails, in chronological order, as they are contained in court exhibits or excerpted in court filings:

April 17, 2008
Preve to Rothstein, concerning a legal settlement that already had been purchased by investors:
“This is one we already funded completely (according to our books)….is it worth getting Centurion to fund it again or will it be a hassle ‘proving’ she got the money when Milk Toast comes in???”

July 7, 2008
Preve to Rothstein:
“Hoodsie,
You send me the deposit and I will send the $687,500 back to you as a ‘mistake’ so your books are balanced.”

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By Peter Franceschina
Sun Sentinel

Federal prosecutors took their next step Monday in stripping Ponzi schemer Scott Rothstein of all the worldly possessions he left behind when his massive fraud scheme blew up last fall.

Rothstein had already agreed to give up tens of millions of dollars in cash, multimillion dollar homes, exotic sports cars, hundreds of pieces of jewelry, and his interests in dozens of businesses as part of his January plea agreement.

But there has been little action on the forfeiture front, as prosecutors and the bankruptcy trustee for Rothstein’s defunct law firm have quietly battled behind the scenes over control of the assets caught up in the criminal case.

U.S. District Judge James Cohn, who is overseeing the criminal case, ordered prosecutors to make a decision by 2 p.m. Monday on whether they would seek forfeiture of the assets.

Prosecutors beat the deadline, and they have targeted more than $75 million in assets.

They are seeking to lay claim to 24 properties Rothstein either owned or had an interest in, for which he paid $47 million; 20 exotic cars, including Ferraris, Lamborghinis and Bentleys; three yachts worth more than $5 million; more than 300 pieces of jewelry, including watches, necklaces and earrings; 20 bank accounts containing $20 million; and Rothstein’s interests in two dozen businesses and more than 100 corporations.

The filing of the court documents sets the next stage in the forfeiture proceedings. The bankruptcy trustee has repeatedly claimed in court filings that the assets seized by prosecutors actually belong to Rothstein’s law firm, because Rothstein used funds that flowed through his law firm trust accounts to run his Ponzi and buy the assets. Similar disputes have taken place in the Bernard Madoff Ponzi scheme and other fraud cases.

If the judge approves the prosecution’s motion for forfeiture, the bankruptcy trustee can then begin filing legal claims against the assets.

Rothstein, 47, pleaded guilty to five federal felonies and faces up to 100 years in prison at his May 6 sentencing. He is the only one to be charged so far in the far-reaching federal investigation.

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By Peter Franceschina
Sun Sentinel

The attorneys handling the bankruptcy of Scott Rothstein’s massive Ponzi scheme are asking a judge for an emergency order to freeze upwards of $33 million that was paid to a Miami-Dade financial advisor.

The financial advisor, Michael Szafranski, invested tens of millions of dollars with Rothstein at the same time he was supposed to be “verifying” that the legal settlements Rothstein was selling to investors were legitimate, according to court documents.

Szafranski, 32, is being sued by the bankruptcy attorneys to recover $33 million in payments he and his investment companies received from Rothstein. In a motion filed late Tuesday, the attorneys asked the bankruptcy judge to issue an injunction to prevent Szafranski from dissipating the funds.

“Szafranski’s involvement in [the] Rothstein Ponzi scheme is undeniable,” the motion says. “At best, Szafranski can merely claim that he was grossly negligent in discharging his duties as ‘independent verifier’, and too eager to blindly please his ‘master.’ At worst, Szafranski was an integral co-conspirator and facilitator of Rothstein’s Ponzi scheme.”

The lawyers note in the motion that Szafranski – who kept an office in the same downtown Fort Lauderdale building as Rothstein’s law firm – invoked his Fifth Amendment right against self-incrimination over 1,000 times during a deposition last month.

Szafranski’s attorney, Carlos de Zayas, informed the bankruptcy attorneys that Szafranski would invoke his Fifth Amendment rights because his relationship with Rothstein was “within the scope” of a far-reaching federal investigation into the fraud scheme, according to the deposition transcript. De Zayas could not immediately be reached Wednesday for comment.

During the March 8 deposition, Szafranski refused to answer questions about his financial background, how he recruited investors for Rothstein and how he verified Rothstein’s legal settlements, which were non-existent. The bankruptcy attorneys allege in their Tuesday court filing that Szafranski’s e-mail exchanges with Rothstein, which took place at the end of October as the Ponzi scheme was imploding, show that he knew investor funds had been diverted and that the legal settlements did not exist.

Szafranski’s wife also repeatedly invoked her right against self-incrimination in her deposition. She refused to answer questions about how she bought a $1.5 million Bal Harbour home for cash at the end of September, according to the deposition transcript. The home is listed in Miami-Dade property records under her maiden name.

Rothstein’s Ponzi scheme, estimated to have brought in more than $1.4 billion dollars, collapsed last fall. Rothstein, 47, pleaded guilty in January to five federal felonies, including racketeering, money laundering and fraud. He faces up to 100 years in prison at his May 6 sentencing.

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As Fort Lauderdale elected officials prepared to vote Tuesday night on a new police union contract, three of the five said they will insist on reforms in off-duty details because of the embarrassment of officers working for confessed Ponzi schemer Scott Rothstein.

Mayor Jack Seiler, Commissioner Bruce Roberts and Vice Mayor Romney Rogers said they believe changes must be made to the police department's off-duty detail policies, and that change is coming soon. All three said the police officers' work for Rothstein brought to light the need for reform. They said they talked about it in a closed door session as recently as Tuesday afternoon.

For a memory refresher, read on the jump our story from last summer on this issue, a few months before Rothstein's Ponzi scheme imploded. The Sun Sentinel's reporting on this story prompted Rothstein to race to City Hall to confront me during a City Commission meeting. I was warned of his pending arrival by Police Chief Frank Adderley. Rothstein's detail coordinator, Sgt. Steve Greenlaw, was also in the Commission chambers that night.

Greenlaw is under investigation by the police department for his work for Rothstein.

> Discuss this entry

By Peter Franceschina
Sun Sentinel

The reputed Mafioso allegedly brought down by Ponzi schemer Scott Rothstein pleaded not guilty Thursday morning to charges of money laundering and obstruction of justice, and will remain in federal custody for the time being.

Roberto Settineri, 41, appeared in court wearing khaki jail scrubs and handcuffed. He did not have to say a word to U.S. Magistrate Robin Rosenbaum during the brief hearing – his attorney did the speaking for him.

Settineri and two of his reported associates - security firm operators Daniel Dromerhauser, of Miami, and Enrique Ros, of Pembroke Pines - were indicted March 10 on federal charges for reportedly shredding two boxes of documents at Rothstein's request and laundering $79,000 for him, before Rothstein himself was arrested Dec. 1 in a massive $1.2 billion investment fraud scheme. Dromerhauser and Ros had already entered not-guilty pleas.

Settineri’s attorney, Jeffrey Weiner, said he could not comment on Rothstein’s connection to the case.

“I just have an overview. There is so much more to it,” Weiner said. “There’s a lot to this case.”

Weiner said he will eventually ask for a hearing for the magistrate to determine whether Settineri can be released on bond. Prosecutors, though, plan to oppose Settineri's release, Weiner.

Weiner said prosecutors have mounds of evidence in a years-long investigation into Settineri, a reputed Italian Mafia figure, and that it will take him several weeks to review that before he asks for a bond hearing.

Settineri is thought to have acted as a key intermediary between a crime family in Sicily and the Gambino crime family in New York City, according to federal prosecutors. Settineri was arrested as part of a joint U.S.-Italian operation.

In Palermo, Italy, police arrested 20 people suspected of crimes related to the Santa Maria di Gesu crime family - including extortion, drug trafficking and attempted homicide. In New York, reputed Gambino soldier Gaetano Napoli Sr. and his sons - Thomas Napoli and Gaetano Napoli Jr. – were charged with extortion, obstruction of justice and bankruptcy fraud.

Rothstein has pleaded guilty to five counts of racketeering, money laundering and fraud. He faces up to 100 years in prison at his May 6 sentencing.

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By Peter Franceschina
Sun Sentinel

After former U.S. Sen. Mel Martinez announced last August he would be resigning his seat, Fort Lauderdale attorney Scott Rothstein – a large political donor to Gov. Charlie Crist – harbored thoughts of being appointed to the post by Crist.

That is according to veteran political operator Roger Stone, who gave a little more than two hours of sworn testimony Monday morning in a bankruptcy deposition.

Stone said that while Rothstein may have wanted to hold the seat until his friend Crist could win it in this year’s election, Rothstein may also have just wanted the prestige of having his name mentioned as a possible choice.

Stone said Rothstein paid him $75,000 for political consulting after the seat was thrown open by Martinez’s announcement.

“Specifically, there was a strong candidate from Jacksonville that Scott did not want to be appointed,” Stone said. “He was amenable to the appointment of Sen. LeMieux but wanted to ascertain whether he had any chance for appointment himself, which frankly we talked him out of.”

Crist appointed his close confidante and former chief of staff, George LeMieux, to the seat at the end of August. Crist is now running for the senate seat. Stone said he presumed Rothstein consulted with Crist on the candidates for the appointment.

“I think that there was a very brief time in which Scott himself considered whether this was something that he wanted,” Stone said. “I think he was more interested in being mentioned, which as you know has a value in the political and legal community.”

Two months after the appointment, Rothstein's massive $1.2 billion Ponzi scheme exploded. He was arrested Dec. 1 and pleaded guilty to five felony counts of racketeering, money laundering and fraud. He faces up to 100 years in prison at his May 6 sentencing.

In late 2005, Rothstein and Stone agreed to set up a consulting company to assist Rothstein’s clients in the political arena, Stone said. Stone and Rothstein’s law firm partner, Stuart Rosenfeldt, first met in 1976 when Rosenfeldt joined Ronald Reagan’s presidential campaign.
Rosenfeldt wanted Stone to meet Rothstein, and the three men were joined by Crist, who was running for governor from his position as the state’s attorney general, for dinner at The Capital Grille, Stone testified.

“Scott Rothstein is a very engaging raconteur when he wants to be,” Stone said. “We all hit it off.”

Stone set up an office within the downtown Fort Lauderdale offices of Rothstein Rosenfeldt Adler, but he said he spent very little time there. He said one of Rothstein’s interests in hiring him was to get Crist on the short-list of possible vice presidential running mates for John McCain during the 2008 presidential election.

“I think we did pretty good,” Stone said. “He got on everybody’s short list.”
He described chaotic book keeping on the part of Rothstein, and said his bills for his consulting work would go unpaid for months.

As Rothstein’s spending became more flamboyant, Stone said he became suspicious. He hired a private investigator about a year and half ago, but the investigator was unable to determine the source of Rothstein’s wealth, Stone said.

“I had my own suspicions that everything was not on the up and up. If you like a red Lamborghini, that’s fine, but why must you also buy it in yellow?” Stone said. “Scott’s spending became so profligate and so over the top and you had no discernible track record of business success.

"I’m speaking of a larger tendency of Scott to act like Rodney Dangerfield in "Caddyshack," and just throw money around. The volume of it got to the point where it made no sense," Stone said. "This was not somebody who had a business track record in real estate or hedge funds or anything else… I found it hard to believe he was making this great fortune in quote unquote business because he never demonstrated any particularly great business acumen."

But he said Rothstein never confided in him about his investment scheme, and that when asked about the source of his money, “He would say, ‘hedge funds.’”

And while he said he could never get the manic Rothstein to return business calls or e-mails, Rothstein enjoyed being a joker. Rothstein was so loud in restaurants other patrons would leave, Stone said, or ask to have their tables moved away from him.

"He had an amazing ability to become the center of attention no matter where he was.
If it involved, yelling, waving his arms and making animal noises, that’s what he would do," Stone said. "He would often call you, make animal noises and hang up. That was his idea of a joke."

> Discuss this entry

Fort Lauderdale Police Officer Deanna Garcia-Lemieux is back on patrol.

Garcia-Lemieux was on administrative leave while the department investigated her work for Kim and Scott Rothstein, as a coordinator of the security detail involving Fort Lauderdale police officers. Also under investigation: Sgt. Steve Greenlaw, the co-coordinator of the detail.

The investigation is ongoing, police spokesman Sgt. Frank Sousa said. And Greenlaw remains on administrative leave.

But on March 16, Garcia-Lemieux was reinstated to full duty. A memo from assistant Chief Tom Harrington advised her that "effective immediately, you are hereby advised that you are reinstated to full duty with no restrictions.''

Click here for a memory refresher on this.

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By Sally Kestin
Sun Sentinel

A distinguished group of Florida business and civic leaders is in Tallahassee this week brushing up on their leadership skills, attending a low country boil and rubbing elbows with past and prospective governors of the state.

In attendance as a member of Leadership Florida is none other than Stuart Rosenfeldt, the former law partner of Fort Lauderdale’s con man extraordinaire, Scott Rothstein.

Rosenfeldt is one of 55 hand-picked members of the leadership organization’s current class, apparently chosen before his Rothstein Rosenfeldt Adler law firm collapsed in bankruptcy last fall and his ex-partner went to a federal lock-up for running a $1.2 billion Ponzi scheme.

Rosenfeldt has denied any knowledge of the scam but is under investigation by the Florida Bar and is being sued by lawyers handling the law firm’s bankruptcy, who contend he was grossly overpaid with proceeds from the Ponzi scheme and must repay $9.5 million.

Rosenfeldt could not be reached late Thursday afternoon. He’s a registered guest at the Doubletree Hotel in Tallahassee, where the Leadership Florida conference is being held.

Started by the Florida Chamber of Commerce in 1982, Leadership Florida is considered a prestigious group “dedicated not only to their local communities, but to their statewide community,’’ the Web site says.

Each year a new class of 55 leaders is chosen to participate in an 8-month program that includes leadership training and education on Florida’s history, demographics and opportunities.

The current 3-day session that started Wednesday includes a visit to the Brogan Museum’s African American art exhibit, lunch with reporters at the Governor’s Club, and a talk by former Gov. Reubin Askew and ex-Florida Supreme Court Justice Joseph Hatchett.

On Thursday’s schedule: a visit to the Wakulla Correctional Institute to learn about faith-based and community prisons. No word on whether Rosenfeldt participated in that.

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By Peter Franceschina
Sun Sentinel

Marc Nurik – Scott Rothstein’s criminal defense attorney – got a pay raise to $500,000 a year and was forgiven $190,000 in loans in the final month of Rothstein’s $1.2 billion Ponzi scheme, Nurik testified Tuesday during a deposition.

Nurik came to the deposition with fortifications – an energy drink, a power bar and Fig Newtons – to answer questions from bankruptcy lawyers seeking to reclaim assets for creditors of the defunct Rothstein Rosenfeldt Adler law firm.

The bankruptcy attorneys have filed lawsuits against several of the former Fort Lauderdale law firm’s partners seeking millions of dollars, alleging they were overpaid for their work and received loans they never repaid.

Nurik admitted he would regularly ask Rothstein for money to cover personal expenses.
He testified he can’t repay the $190,000 in loans he received after he joined the law firm in October 2007. His salary was $350,000 and Rothstein promised a $50,000 loan that year. If he brought business into the firm, the loan would be converted to a bonus, Nurik said.

Nurik said he lived rent free for more than a year in a Castilla Isles home bought by Rothstein for $1.9 million and didn’t pay expenses on the home, but began paying the expenses and $2,500 in monthly rent after Rothstein’s Ponzi scheme imploded in late October.

That month, Nurik said he convinced Rothstein to raise his pay to $500,000 a year and convert the loans into bonuses. He said he has yet to pay income tax on the bonuses and didn’t consider the free rent to be income on which he owed taxes.

Bankruptcy lawyer Chuck Lichtman asserted that the $190,000 was in fact loans, and subject to return to creditors. Nurik said he would be willing to negotiate repayment to creditors to avoid a lawsuit, adding he deserved the bonuses because he brought $1.9 million in business to the firm.
He said he was paid $50,000 by Rothstein’s wife’s family to defend Rothstein, but returned that money and is not currently being paid for his defense work.

There were a few testy moments in the questioning, but also jokes about Nurik having to sell gift law firm cufflinks and a pen on eBay to repay creditors.

Nurik didn’t know anything about Rothstein’s fraudulent investment scam selling non-existent legal settlements, he testified, and didn’t regularly socialize with him.

“As it turns out, obviously, I was not in his inner-inner circle,” Nurik said. “I didn’t socialize with him. I was not part of his group of friends.”

Rothstein, 47, has pleaded guilty to five federal counts of racketeering, money laundering and fraud. He faces up to 100 years in prison at his May 6 sentencing. He has been held in federal custody since his Dec. 1 arrest.

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By Peter Franceschina
Sun Sentinel

Kim Rothstein blew through nearly $900,000 on her American Express credit card since 2006, and now the bankruptcy attorneys dissecting her husband's massive Ponzi scheme want it back.

That's according to a claw-back lawsuit filed late Wednesday in federal court in Fort Lauderdale. All told, the lawyers allege Rothstein, 35, owes $1.1 million to creditors of her husband's defunct law firm.

But it could be many million dollars more, because the accountants working for the bankruptcy attorneys have not finished analyzing how much Scott Rothstein spent on his wife. She said in a recent bankruptcy deposition that he bought her so much jewelry she could not list every item.

"It is believed this additional sum is well into the millions of dollars, just on jewelry purchases alone, and not counting personal consumer goods," the suit says.

Kim Rothstein liked expensive shoes, Louis Vuitton handbags, Gucci accessories and evening dresses by Zola Keller. She could burn through thousands of dollars on a shopping outing, or drop nearly $5,000 buying platform shoes from a chic Los Angeles boutique online.

She used the Am Ex card for "jewelry, clothing, shoes, handbags, leather goods, plastic surgery treatments, eyewear, electronics, local hotel room and spa charges, household furnishings, home gym equipment, vacations and personal travel, athletic club charges, groceries, charitable contributions, personal meals, general household and other items," according to the suit.

The suit also seeks repayment of $153,000 in salary she was paid from the Rothstein Rosenfeldt Adler law firm and $104,000 she made in political contributions that were reimbursed to her by the law firm.

"The third set of payments the Trustee seeks to recover includes payments made by RRA to Mrs. Rothstein, some of which were classified in RRA’s financial records as 'professional fees or fee/cost income,' even though Mrs. Rothstein provided essentially no meaningful services to RRA," the suit says.

"These payments were reflected by numerous checks written by RRA to Mrs. Rothstein over a 4-year period from the RRA payroll or operating accounts. During 2006, Mrs. Rothstein received $78,198.71 in 'professional fees or fee/cost income,' and she also received $75,000 on February 20, 2009. These payments provided no benefit to RRA and thus, RRA received no or less than reasonably equivalent value in exchange for these payments."

Kim Rothstein's civil attorney, Scott Saidel, could not immediately be reached for comment Wednesday evening.

As for the political contributions, the suit says she made large donations from her personal savings account and then money was wired into that account from law firm bank accounts to reimburse her.

“For example, on November 8, 2007, Mrs. Rothstein made a political contribution of $28,500 to the National Republican Senatorial Committee, and on November 13, 2007, a $30,000 wire transfer from an RRA operating account was credited to Mrs. Rothstein’s personal account,” the suit says.

“Similarly, on May 29, 2008, Mrs. Rothstein wrote a check for $70,000 to the John McCain presidential campaign and on May 30, 2008, a $74,223.99 wire transfer was sent from an RRA trust account to Mrs. Rothstein’s personal account. These two political contribution reimbursements totaled $104,223.99.”

Scott Rothstein, 47, pleaded guilty to five counts of racketeering, money laundering and fraud in January. He has been held in federal custody since his Dec. 1 arrest. He faces up to 100 years in prison at his May 6 sentencing.

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The lawsuit I told you about Tuesday (see below this post) is right here if you want to read it.

In the suit, Danielle Filler is said to have been seriously injured in the August 2009 crash she had with Sarah Merricks in downtown Fort Lauderdale. Merricks was driving the Bentley of Fort Lauderdale cigar store owner Muhammad "Moe'' Sohail, a friend of Rothstein's, and he was a passenger in the crash. T

hat's how this accident ended up in the news; Rothstein called Fort Lauderdale Police Chief Frank Adderley to the scene. Filler's attorney cried foul, suggesting the presence of Rothstein and Adderley at the crash scene pointed to possible interference in the investigation. The city of Fort Lauderdale reviewed the accident and cleared Adderley of any interference or wrongdoing.

Filler wants compensation of greater than $15,000, the suit says. It names Merricks, Sohail and his insurance company, State Farm Insurance.

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A lawsuit has been filed in the case of a downtown Fort Lauderdale auto crash that drew Ponzi suspect Scott Rothstein and Fort Lauderdale Police Chief Frank Adderley to the scene.

One of the two drivers, Danielle Filler, is suing the other, Sarah Merricks, for auto negligence. Merricks was driving a Bentley owned by cigar store owner Moe Sohail, a close friend of Rothstein’s, when she and Filler collided. Filler was attempting to make a turn in her BMW.

Merricks, the Morrocan-born girlfriend of Sohail’s, was ticketed for driving on a restricted license. Filler, though, was found at fault.

The crash scene presence of Chief Adderley drew attention, and sparked a city investigation as well as an ongoing state investigation. The city cleared Adderley, saying he didn’t try to influence the crash investigation to favor Merricks. Adderley was summoned to the scene by Rothstein, via cell phone.

Filler’s attorney, John Uustal, said Tuesday he couldn’t comment on the suit.

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By Peter Franceschina
Sun Sentinel

It appears Scott and Kim Rothstein were joint-filers when it came to their personal income taxes.

The IRS filed a tax lien Monday against the $1.2 billion Ponzi schemer and his wife, saying the couple owes $10,096,816.67 to Uncle Sam for the 2008 tax year.

Rothstein compensated himself well as the chief executive of his downtown Fort Lauderdale law firm during that year, to the tune of nearly $36 million, according to bankruptcy records. Another tax lien may be forthcoming: He pulled down $10.5 million up to Oct. 31 of last year, when his massive Ponzi scheme imploded.

And of course, Rothstein likely wasn't reporting his ill-gotten gains as part of his personal income, yet he is still responsible for paying the taxes on the Ponzi money.

And so, it appears, is his wife, at least according to the tax lien. The IRS does not comment on personal tax matters, but Kim Rothstein's attorney, Scott Saidel of Boca Raton, said Wednesday that he does not expect her to be on the hook for the $10 million.

Saidel limited his comments on the tax matters, because he is in sensitive negotiations with federal authorities.

"I don’t have a comment on that because it is part of an ongoing thing. Right now there are some delicate negotiations going on, and I don’t want to upset that apple cart," Saidel said. "This is all part and parcel of the settlement that is going on with respect to Scott’s criminal charges."

Kim Rothstein is essentially broke, Saidel said, and she will soon be moving out of the couple's $6.5 million Isla Bahia Drive home, which is subject to forfeiture. Technically, the Rothsteins still own the home until the final forfeiture order is issued by the judge, but Saidel said Kim Rothstein no longer wants to remain there.

"They haven’t forced her to leave, because they haven’t taken the property yet. She is choosing to leave because that house holds a great deal of negative energy for her right now," Saidel said. "Kim is just trying to get through all this and get it resolved. She just hopes that whatever punishment Scott gets, there is some sort of life after prison."

Saidel said Kim Rothstein is not a target of the sweeping federal investigation into her husband's investment fraud scheme.

Scott Rothstein, 47, pleaded guilty in January to five counts of racketeering, money laundering and fraud. He faces up to 100 years in prison at his scheduled May 6 sentencing.

In a move that may be related to Kim Rothstein's pending exodus, federal prosecutors on Wednesday filed a motion in Scott Rothstein's criminal case asking the judge to grant them permission to go inside all of the Rothstein properties subject to forfeiture.

Prosecutors want to determine who is living in the homes and paying rent, according to the motion, and if the tenants want to remain they will have to sign lease agreements with the government.

U.S. Marshals and IRS agents also will videotape the inside and outside of the properties to document their condition.

Kim Rothstein has been managing the properties and collecting the rents, which go into a trust account maintained by Saidel, prosecutors said. Prosecutors want to collect the money Saidel has in the trust account, and take over the management of the properties.

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By Peter Franceschina
Sun Sentinel

The bankruptcy attorneys cleaning up the wreckage of Scott Rothstein's $1.2 billion Ponzi scheme have set up a new Web site to keep creditors informed of their efforts in the fast moving case.

The Web site www.rra-bk.com includes court filings, upcoming court dates, important documents, a full court docket, and an e-mail address for creditors to submit questions.

Since the bankruptcy case was filed Nov. 10 -- just days after the massive fraud scheme imploded -- there have been 350 court filings in the bankruptcy case.

On the Web site, creditors, or just the curious, can take a look at the clawback suits that have been filed against Rothstein's former law partners, the trustee's monthly financial reports and periodic notifications about what steps are being taken to recover investors' money.

The legal maneuvering in the case is far reaching, and more clawback suits are expected -- the latest clawback suits say Rothstein's Ponzi was somewhere between $1.2 billion and $1.6 billion. Last week, the bankruptcy attorneys issued 21 subpoenas to businesses and individuals to trace how Rothstein spent the Ponzi cash.

The subpoenas are going to a number of Fort Lauderdale businesses, including Ultimate Cigars, a Rothstein hangout; Mayors Jewelers, where Rothstein spent hundreds of thousands of dollars; Kurland Photo; Handy Storage; Neiman Marcus; California Closet; Shades of Light; the Ritz Carlton; Casa Chameleon; and Moda Mario, a Las Olas Boulevard clothier specializing in European fashions.

Rothstein, 47, pleaded guilty last month to five counts of racketeering, money launder and fraud. He faces up to 100 years in prison at his May 6 sentencing. A sweeping federal investigation into his scheme continues.

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The memory of the 1995 horrific explosion in Plantation that killed three people has been resurrected this week. My article about Kim Rothstein's bodyguard, Joe Alu, upset Angela Smith, whose daughters died in that tragedy, a disaster that riveted South Florida.

A friend of Smith's brought me the 911 tape. Smith wants you all to hear it.

Click here. WARNING: It's very disturbing. And click here and here for the Alu story and the Smith reply to it.

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By Peter Franceschina
Sun Sentinel

As the dismantling of Ponzi schemer Scott Rothstein's empire continues, the next items to go under the auction gavel were among his most coveted possessions: The Italian supercars, the luxury British Grey-Poupon-mobiles and the status-establishing yachts.

Now that all his personal political and sports memorabilia have been auctioned off (netting more than $150,000 for creditors of his now-bankrupt Fort Lauderdale law firm) federal prosecutors are moving swiftly to offload the exotic cars and watercraft.

Prosecutors won court permission Friday to auction off the toys. The money will eventually be distributed to Rothstein's bilked investors. The government wants to quickly dispose of the cars and yachts to preserve their value.

Here's how prosecutors put in their motion to U.S. District Judge James Cohn, who is overseeing Rothstein's criminal case (Rothstein faces up to 100 years in prison at his May 6
sentencing on five federal felonies):

"The vehicles and vessels are the subject of a protective order. They are subject to
depreciation in value by virtue of the passage of time, and increasing storage and maintenance costs. Proceeding immediately to effect the sale of these assets, with the proceeds being held by the Internal Revenue Service, will best preserve the value of the assets identified for forfeiture at the conclusion of all or part of the criminal case."

Details of the upcoming auction are not yet available, but here's what's going on the block:

1990 Ferrari F40;

2009 white Bentley convertible;

2008 yellow McLaren Mercedes Benz SLR;

2007 black limousine Ford Expedition;

2008 Red Ferrari 430 Spider;

2007 silver Rolls Royce convertible;

2006 silver Hummer;

2008 Cadillac Escalade;

1967 red convertible Corvette;

2008 Black Bugatti Veyron EB 16.4;

2008 blue Rolls Royce drophead convertible;

2006 red Ferrari F430 Spider;

2008 Chevrolet Corvette (registered to Rothstein’s uncle, William Boockvor;

2009 Chevrolet Corvette Z06 (registered to former law partner Les Stracher);

2009 blue Maserati GranTurismo coupe (registered to former law firm chief operating officer Debra Villegas);

2009 White Mercedes Benz; 2008 Mercedes Benz S65 VR Turbo (registered to former law partner Stuart Rosenfeldt);

2009 red BMW convertible ( registered to Rothstein’s nephew);

2009 Mercedes Benz SLK 350 convertible (registered to Rothstein’s sister);

2010 white Lamborghini Lp-670sv;

2007 87-foot Warren yacht;

33-foot Aquariva;

Oh, and four barely-used Yamaha personal watercraft. The feds should bring in more than a few million for the restitution aspect of the criminal case.

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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.

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Angela Smith, mother of the two teen-age girls who were burned alive in Plantation 15 years ago, says former Police Officer Joe Alu is no hero.

Smith called Wednesday after reading the Sun Sentinel report about Alu and his relationship with Ponzi schemer Scott Rothstein.

Smith said she's "never ever recovered'' from what happened July 25, 1995, on a cul de sac in Plantation Park.

Her ex-boyfriend held her and her three daughters hostage for an hour, she said. She hit a panic button summoning police, and within minutes of their arrival, her two oldest daughters, Hideko, 16, and Anne Marie, 14, were dead, along with their captor, Steven Joseph, her ex-boyfriend. Only the youngest daughter, Cherise, who was 11 at the time, survived.

"He is not a hero and he never was a hero,'' Smith said Wednesday. "He used the death of my children for fame and fortune.''

The aftermath of the tragedy was messy. Alu and one of his colleagues on the scene, Det. James O'Hara, sued Smith's insurance company, arguing Smith could have prevented it. The insurance company settled for $300,000.

Smith countersued Alu, accusing him of mishandling the crisis by running into the room. She also said he set the fire by shooting his gun. Investigators said that wasn’t true; it went off in the aftermath.

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Thousands of Sun Sentinel readers viewed this video of Joe Alu, bodyguard to Kim Rothstein, when it was first posted last fall on our Broward Politics blog. It was our most popular video on that blog, ever.

Read my latest story about him on the jump.

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While the Sun Sentinel awaits the full transcripts of the city's investigation into police Chief Frank Adderley, I offer you a couple of new photographs that have emerged.

These are part of the city's investigatory file, and show Adderley in a pink shirt at the crash scene of cigar store owner Moe Sohail, alongside Scott Rothstein (yellow shirt), who had called him there on his cell phone.

It was a photograph of the two that prompted media attention and the city's investigation.

Now the FDLE also is investigating whether Adderley influenced the handling of the collision.

I asked the city two additional questions: How long was Adderley at the scene?

And what was the reason the driver of Sohail's Bentley, Sarah Merricks, was not cited for speeding, given that a witness said she sped and blew through a red light just before the crash, and also given that the personnel on scene said speed was a factor.

The city's responses are on the jump.

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Kim Rothstein unloads items from the Princess Kimberly yacht
before it is seized. (Photo by Joe Cavaretta).

Kim Rothstein, wife of Ponzi schemer Scott Rothstein, will seek half of whatever assets they owned before the illegal investment scam began, her lawyer Scott Saidel said.

"She does have a claim to anything pre-Ponzi,'' he said last week.

She came into the relationship in debt. She won't be in debt when the dust settles on this case, Saidel predicted. In fact, she'll likely have an amount that "to the common person'' would not be "an insignificant amount,'' he said.

Read more on the jump.

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The Florida Department of Law Enforcement will take over where the city of Fort Lauderdale left off, investigating Police Chief Frank Adderley to see if his friendship with Ponzi schemer Scott Rothstein led him astray.

The city cleared Adderley of wrongdoing for his involvement at the crash scene of Moe Sohail, a friend of his and Rothstein's. Now FDLE is investigating it, at the request of Commissioner Charlotte Rodstrom and Vice Mayor Bruce Roberts, the former police chief.

Here's the six page summary of the city's probe into the August crash of Sohail.

Mike Morisson, an FDLE spokesman, said the agency opened its investigation Jan. 20 and will take witness statements. If any evidence of a crime is uncovered, the case would be forwarded to the State Attorney's Office, he said. If there is no such evidence, the findings will be reported to the City Commission, he said.

Adderley already admitted he flew on a private jet to a New York Jets game with Rothstein, and failed to report the travel as a gift, like state law requires. He filed a late gift disclosure saying the flight was paid for by Ted Morse, another mutual friend of his and Rothstein's. The city still has open a review of that matter and a look at whether it was the only unreported gift Adderley accepted.

I'm still waiting for all the documents from the city, including all the statements given to the Office of Professional Standards. In the meantime, here are a few things to chew on, on the jump page:

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The city of Fort Lauderdale's Office of Professional Standards cleared police Chief Frank Adderley today of misconduct in the crash investigation involving a Scott Rothstein associate.

The city determined "there is no evidence to refute Adderley's testimony'' that he didn't get involved in the police and fire departments' handling of a crash involving cigar store owner Muhammad "Moe" Sohail.

He told city OPS Director Robert Bates that Rothstein, his friend, called him on his cell phone that afternoon, Aug. 21, advising him that their mutual friend, Sohail, had been in a serious crash and was injured. He said he was concerned and went to the downtown Fort Lauderdale crash scene to check on Sohail, whose store he frequented. The crash was a head-on collision not far from City Hall, at Northeast Third Avenue and First Street, by the federal courthouse.

An interesting item in the investigatory pile: one fire lieutenant said he saw piles of cash in large denominations in Sohail's Bentley. He said there were at least six stacks of cash, which he saw Sohail stuffing into a white paper bag. Sohail said he had just been to the bank.

"I looked in the car,'' fire Lt. Tom Connor told the city investigators, "and saw multiple stacks of bills. Wrapped bills, in stacks. ... They were all on the floor and the guy was picking them up and putting them in a bag. ... I was like 'Wow, that's a lot of cash. ... I remember seeing one stack of hundreds.''

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Fort Lauderdale Police Chief Frank Adderley gave an interview to former city employee Elgin Jones, now a journalist with the South Florida Times, about his relationship with Scott Rothstein, the Ponzi convict.

From left, radio personality "Footy,'' Chief Frank Adderley, Kim
and Scott Rothstein.

Chief Adderley said it's not fair for people to say the police missed "red flags'' about Rothstein's ill-gotten gains.

Here's a link to Jones's interview, which can be viewed on video.

Adderley is under investigation by the city, because of his relationship with Rothstein. For one thing, he flew on a jet to a football game in New York but didn't report it as a gift as the law requires. Rothstein was on the plane but it was owned by Ted Morse, a friend of Rothstein and Adderley's. Adderley filed the disclosure late, after the media brought the flight to light.

"I think we need to look at Scott Rothstein for who he was, and now the guy that he is,'' Adderley told Jones.

"Who he was? He was a successful businessman. He had 70-plus attorneys that worked in his firm. He interacted with charities throughout our city, throughout our county. He dealt with directors of those charities. He dealt with politicians, who he made a number of, had a number of fundraisers and donations to them.
"And I kind of think it's unfair here that the police department is the only person, based on the people that he was in contact with, that should have figured out that he was part of a Ponzi scheme. I find it that the police is definitely an easy target for any type of subject, and I just think that it's unfair that we're being portrayed as the person who quote 'missed the red flag' when no one gave us the red flag.
"No one ever called the police department and said that this guy was conducting an illegal activity. No one contacted Crime Stoppers indicating this illegal activity was taking place in our city. So for someone to say that we missed the red flag and no one showed us the red flag, I think it's unfair.''

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By Peter Franceschina
Sun Sentinel

As part of his Wednesday plea agreement, jailed Ponzi schemer Scott Rothstein agreed to give up all the trappings of the luxury life he once lived.

Tens of millions of dollars in cash, multimillion dollar homes, exotic sports cars, hundreds of pieces of jewelry, his interests in dozens of businesses – assets with an estimated value of between $50 million and $100 million.

And some of those closest to Rothstein also lost some fine possessions, including homes, cars and jewelry.

Rothstein also agreed to forfeit a Brooklyn condominium he apparently bought for his former law partner Russell Adler, purchased in August for $475,000, land records show. Adler is listed in New York land records as the owner.

Here is a rundown on the forfeited Rothstein assets, which will likely be making their way to auction in the coming months to repay victims of the Ponzi scheme:

Cash, $17.9 million, held in various bank accounts, including $15 million Rothstein wired to Morocco before he fled there in late October. More than $250,000 was found in Rothstein’s home.

Eighteen properties in South Florida, including Rothstein’s $6.45 million Isla Bahia Drive home, a Weston home he bought for his chief operating officer, Debra Villegas, for $475,000 and signed over to her in July for $100 and “love and affection” and a $9 million Boca Raton home he bought from car dealer Ed Morse last fall.

Two New York apartments, including one Rothstein bought for $6 million in June 2008 and another he bought for $560,000 in June.

Two side-by-side homes on Narragansett Bay in Rhode Island, bought for $5.6 million.

His 10 percent ownership in the Versace mansion on South Beach.

An 87-foot Warren yacht worth about $5 million and a 33-foot Aqua Riva, which he kept at the dock behind his home, and a 55-foot Sea Ray.

A very impressive car collection:

1990 Red Ferrari F40 coupe; 2009 white Bentley convertible; 2008 yellow McLaren Mercedes Benz SLR; 2007 black limousine Ford Expedition; 2008 Red Ferrari 430 Spider; 2007 silver Rolls Royce convertible; 2006 silver Hummer; 2008 Cadillac Escalade; 1967 red convertible Corvette; 2008 Black Bugatti Veyron EB 16.4; 2008 blue Rolls Royce drophead convertible; 2006 red Ferrari F430 Spider; 2008 Chevrolet Corvette (registered to Rothstein’s uncle, William Boockvor; 2009 Chevrolet Corvette Z06 (registered to former law partner Les Stracher); 2009 blue Maserati GranTurismo coupe (registered to Villegas); 2009 White Mercedes Benz; 2008 Mercedes Benz S65 VR Turbo (registered to former law partner Stuart Rosenfeldt); 2009 red BMW convertible ( registered to Rothstein’s nephew); 2009 Mercedes Benz SLK 350 convertible (registered to Rothstein’s sister); and last but certainly not least, a 2010 white Lamborghini Lp-670sv.

$1.2 million Fidelity stock investments account in Rothstein’s name.

304 pieces of jewelry, including watches, earrings and necklaces.

$80,000 in American Express gift cards.

16 Dupont lighters.

Five watches, to be turned over by former law partner Les Stracher.

Rothstein’s guitar collection, worth an estimated $10,000 to $20,000.

Rothstein also agreed to forfeit his interests in dozens of businesses and corporate entities. He has been held in federal detention since his Dec. 1 arrest. He faces a lengthy prison term at his May 6 sentencing.

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Staff writer Sally Kestin has this intriguing bit of news:
Fort Lauderdale police Sgt. Steve Greenlaw, coordinator of Scott Rothstein's off-duty guard detail, may have been enrolled in 401(k) profit-sharing benefits at Rothstein's law firm, according to documents in the firm's bankruptcy case.

Greenlaw is under internal investigation by the police department to find out whether he violated city policy when he was working off-duty for Rothstein. Greenlaw was among the 28 officers who guarded Rothstein's house, restaurant and law firm, but he also acted as the coordinator of the detail, scheduling all the officers for the work.

One allegation, lodged by Rothstein bodyguard Joe Alu, is that Greenlaw was employed by Rothstein Rosenfeldt Adler as a driver, and drove Scott and Kim Rothstein twice. Outside employment must be cleared with police officials, and Chief Frank Adderley said Greenlaw did not ask to work as a driver for Rothstein and did not have permission to do so.

Greenlaw’s name is included in a list of RRA employees and family members in a Dec. 4 court filing in the bankruptcy case. It’s a motion by bankruptcy trustee Herbert Stettin to terminate RRA’s 401(k) and profit sharing plan, remove Rothstein as the plan’s trustee and authorize Stettin to select a new trustee.

The plan contained assets of $1.4 million and as of the end of 2008 had 60 participants with money in their accounts.

Police Chief Frank Adderley said Wednesday he was unaware Greenlaw might have been given a retirement benefit from RRA.

Greenlaw also is listed as an unsecured creditor in the Dec. 22 bankruptcy filing of all the schedules. He is listed being owed an unknown amount, which could include wages, salaries, commissions or benefits.

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If you had any doubt Scott Rothstein fancied himself a tough guy, take a look at this:

The image above comes from a collage of photos of the alleged Ponzi schemer and his former law partner, Stuart Rosenfeldt, that hung in Rothstein's law office and bore the plaque: "Two Guys and a Law Firm Does a Great Pair of Wacky Bosses Make!"

Rothstein's photos, his political and sports memorabilia, and all of his office furniture and equipment goes on auction Jan. 23 at AMC Liquidators on Commercial Boulevard in Tamarac. There is a lot of buzz surrounding the auction, so we decided to take a sneak peek at what will be going under the gavel.

So here are some amateur shots courtesy of an iPhone.

The auction billboard, from a Rothstein Rosenfeldt Adler house ad:

California Gov. Arnold Schwarzenegger apparently gave Rothstein a bathrobe:

With former Florida Sen. Mel Martinez:

With wife Kim and Dan Marino:

With former Florida Gov. Jeb Bush:

With former vice presidential candidate Sarah Palin:

With Connecticut Sen. Joe Lieberman:

With John and Cindy McCain:

With John McCain and Florida Gov. Charlie Crist:

With New Mexico Gov. Bill Richardson:

With George W. Bush:

An invitation to George W. Bush's second inauguration:

A tribute to Broward Sheriff Al Lamberti:

And finally, the infamous "Scott, you're amazing!" shot:

-- Peter Franceschina

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City officials declined to say what policies they are suspected of violating. The allegation by Alu is the first hint at what investigators might be looking at in Greenlaw’s case.

Alu, a retired police officer who works as Kim Rothstein’s personal bodyguard, told the Sun Sentinel that Greenlaw was hired by Rothstein Rosenfeldt Adler.

“They had him on the payroll as a driver,’’ Alu said. Alu has known Greenlaw since he first got into law enforcement. Alu, then a Plantation officer, hired Greenlaw at that agency, he said. He called him “squeaky clean’’ and a “worry wart’’ who wouldn’t have driven for the Rothsteins without permission.

Fort Lauderdale officers are not allowed to work as bodyguards, but Alu said Greenlaw was just a driver, and only drove for the Rothsteins twice.

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The city suspended two Fort Lauderdale police officers Friday afternoon, under suspicion they violated department policy in their off-duty work for then-lawyer, now-Ponzi-suspect Scott Rothstein.

Sgt. Steve Greenlaw and Officer DeAnna Garcia-Lemieux were put on administrative leave with pay, city officials confirmed Sunday morning. Both were coordinators of Rothstein's off-duty detail, and were each paid 5.5 percent of the overall detail amount, by Rothstein.

"I can confirm they were suspended with pay, and it was for issues arising out of the Rothstein detail,'' Mayor Jack Seiler said Sunday morning.

The suspensions come after weeks of the city and police chief defending their decision to allow high-ranking police officers, detectives, undercover officers and the department spokesman to guard Rothstein's home, restaurant and law firm. The off-duty detail began in April and was yanked on Nov. 2 when the city learned Rothstein might have been running a $1.2 billion investment scam. Federal authorities said in their "information'' backing up Rothstein's arrest that he "utilized funds illegally obtained through the Ponzi scheme to hire members of local police departments purportedly to provide security for [Rothstein Rosenfeldt Adler] and defendant Rothstein's personal residence.'' The document goes on to say that he provided "gratuities'' to high ranking police personnel to "curry favor'' and to "deflect law enforcement scrutiny.''

Seiler has said in recent weeks that the city will never again allow officers to guard a person's home on a permanent basis as was done for Rothstein.

Fort Lauderdale Police Chief Frank Adderley approved the off-duty work for Rothstein in April. By then he'd already been wooed by Rothstein, and had flown to New York in a jet with him to see a New York Jets-Miami Dolphin game, Adderley admitted two weeks ago in a late gift disclosure filed with the state. The jet was paid for by Rothstein pal Ted Morse, Adderley said.

The work at Rothstein's residence was unique; no other person in the city's history hired officers on a permanent, 24-hour basis at their home. Personal bodyguard details are banned in Fort Lauderdale, but Adderley ruled that guarding Rothstein's home was not body guarding. (Click here to see who worked the detail.)

City officials said they could not give details Sunday about what policies the two are suspected to have violated, and whether either of the two traveled anywhere with Kim or Scott Rothstein.

Fraternal Order of Police union President Jack Lokeinsky said he was notified of the suspensions but couldn't comment further.

Rothstein said he wanted the security because the murder of one of his law firm lawyers Melissa Britt Lewis rattled him and his wife.

"Until you’re in the position that someone close to you is murdered by someone else that you trusted, you don’t understand how it turns your life upside down,'' he said last summer. "You can call me whatever you want. You can call me paranoid, you can call me extra security conscious. .. But at the end of the day no one close to me is going to be killed, raped, attacked, harmed in any way so long as I have the ability to provide the extra protection.''

When he hired the officers in April, Lewis's suspected murderer was already behind bars awaiting trial. Her murder was a year prior, in March 2008.

Rothstein said he didn't know the officers who guarded his home, except for one.

"I couldn't tell you,'' he said when asked who guarded there. "Right now I could name one officer, Steve Greenlaw.''

On the jump: Our story from this summer, questioning the off-duty detail.

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Some key players in the Scott Rothstein $1.2 billion Ponzi saga may soon be telling what they know under oath and producing any records they have.

The trustee for the bankruptcy of the former Rothstein Rosenfeldt Adler law firm issued 15 subpoenas for depositions late Wednesday, the same day Rothstein's attorney announced in court Rothstein would plead guilty Jan. 27 in his racketeering and conspiracy case.

The bankruptcy lawyers want some of Rothstein's closest associates and investors to sit down in late January and early February to give sworn statements.

Those who will be getting the subpoenas include Rothstein's wife, Kim; Debra Villegas, the law firm's chief operating officer; Irene Stay, the law firm's chief financial officer; Amy Howard, a law firm staffer; Ingrid Sahdala, a law firm staffer; William Boockvor, Rothstein's uncle and a law firm staffer; Marc Nurik, Rothstein's criminal defense attorney; and Steven Caputi, owner of Cafe Iguana (where Rothstein had an ownership interest).

Subpoenas also were issued for Rothstein's biggest investor, Fort Lauderdale businessman George Levin, whose Banyon investment funds put $775 million into the Ponzi, according to bankrupty records; Frank Preve, a Levin business associate; and Michael Szafranski, a financial advisor hired by investors to verify Rothstein's legal settlements who also had an investment fund that put $31 million into the scheme, according to a civil suit and bankruptcy records.

-- Peter Franceschina

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Fort Lauderdale Police Chief Frank Adderley answered our questions about his dealings with Scott Rothstein, after a prolonged silence. (See the full interview story below.)

Here and on the jump are most of our written questions, and his answers, the way they were written in the e-mail (casually punctuated and abbreviated, in other words ... ):

QUESTION: When you were in new york at the jets game, did Rothstein pay for lunch for the group, at a place called Harry Chippiano’s or something like that, the tab being close to $4,000?
ANSWER: I’m not sure of the name of the restaurant and who paid for the bill. I ordered a drink and a cup of coffee and left enough money to cover my order and tip.

Q: Did you ride in a limo? paid for by Rothstein?
A: No, I rode in an SUV that I was led to believe was arranged by Ted Morse.

Q: Did you go to a cigar shop after lunch and did Rothstein pay for cigars for you there?
A: No, we went to the Cigar Shop before the restaurant. I had cigars before I entered the shop. No, Rothstein didn’t pay for my cigars.

Q: did the value of any of that exceed $100?
A: Not that I’m aware of.

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