November 3, 2009 6:38 PM
Scott Rothstein Returns to 'Fraud Lauderdale'
Posted by Brian Baxter
CORRECTION: Nov. 3, 7:00 p.m. A previous version of this post mistakenly referred to RRA cofounder Stuart Rosenfeldt as Steven Rosenfeldt. We regret the error.
A few years back when researching a story on one of the largest frauds in South Florida history, we found ourselves driving around Fort Lauderdale. The strip malls, chain stores, and endless expanse of freeways reminded us of New Jersey with palm trees.
Given New Jersey's own dubious history of corruption, it's little surprise that we heard some FBI agents refer to the city just north of Miami as "Fraud Lauderdale." The city ended up in the media spotlight on Tuesday, when local police cordoned off the downtown offices of Rothstein Rosenfeldt Adler on trendy Las Olas Boulevard.
The cause for the scene: name partner Scott Rothstein (right), who built the 70-lawyer firm from a seven-lawyer shop he cofounded in 2002. Rothstein is accused of misappropriating more than $200 million through a structured settlement side business that has caused the liquidation of his fast-rising firm.
Sibling publication the Daily Business Review reports (subscription required) that Rothstein returned from Morocco on Tuesday hours before a hearing to remove him from control of the firm.
The Florida Sun-Sentinel reports that a chartered Gulfstream V jet arrived at a local airport from Casablanca at the same time Rothstein was spotted at the airport. Flight records show the same jet flew from Fort Lauderdale to Casablanca on October 27. (The Wall Street Journal reports that Rothstein wired $16 million to an individual in Casablanca.)
According to the DBR, Stuart Rosenfeldt, Rothstein's fellow 50 percent equity partner, asked a state court judge in Broward County to appoint him custodian of the firm instead of hiring an outside receiver to oversee its liquidation. The firm might not be able to make its next payroll.
"There's only so much money," Rosenfeldt told the DBR, adding that he planned to create a new firm with lawyers from now-defunct RRA. "Why spend it on a receiver?"
One South Florida lawyer familiar with the situation found Rosenfeldt's proposal galling.
"That makes no sense," says the lawyer, who requested anonymity. "We don't know if he's involved in this or not. He's says he's not, but how do you know unless someone independently comes in and looks at this?"
At least six U.S. lawyers have resigned from RRA, including Marc Nurik, a partner who is now representing Rothstein. The DBR reports that another 15 lawyers affiliated with the firm in Venezuela have also terminated their relationships.
While criminal charges have yet to be filed against Rothstein--a spokeswoman for the U.S. attorney's office in Miami did not respond to a request for comment--the Miami Herald reports that he met with federal law enforcement officials Tuesday afternoon.
Property records show that Rothstein spent more than $15 million on real estate properties in Florida, New York, and Rhode Island. He also owns a fleet of high-priced automobiles. Not surprisingly, Florida's Republican Party, the recipient of many a Rothstein fund-raiser, also announced on Tuesday that it would return those donations.Make a comment