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January 5, 2012 4:03 PM

Scott Rothstein Says Firm Was Hotbed of Pot, Ponzi, and Prostitutes

Posted by Brian Baxter

Just when The Am Law Daily thought the legal news out of South Florida—where strippers allegedly pose as paralegals to entertain drug barons incarcerated in downtown Miami's Federal Detention Center—couldn't get seamier, leave it to Scott Rothstein to set us straight.

As reported by sibling publication the Daily Business Review, recently released deposition transcripts covering two weeks of testimony by Rothstein last month offer a glimpse of the disgraced Fort Lauderdale attorney's now-defunct firm that manage to pierce even our cynical veneer.

Rothstein, whose $1.2 billion Ponzi scheme collapsed in November 2009, began cooperating with federal prosecutors probing organized crime activity in South Florida after pleading guilty to fraud charges in January 2010.

Sentenced to 50 years in prison in June 2010, Rothstein is not currently being held in a federal correctional facility, according to Bureau of Prisons records. Multiple news reports have put him in the federal witness protection program as a result of his cooperation with authorities.

In the meantime, Rothstein is tangled in a welter of civil litigation stemming from his massive scam. And that litigation, the DBR reports, has prompted Rothstein to reveal that his former firm, Rothstein Rosenfeldt Adler (RRA), covered the cost of some unusual expenses for its then-partners and associates. 

Rothstein's most eye-popping disclosure: at one point, his firm was spending $60,000 a month on escorts and prostitutes for himself and RRA lawyers, as well as RRA clients, bankers, and other individuals, with the trysts taking place in a condo paid for by the firm that was across the street from RRA's Fort Lauderdale headquarters, according to the DBR.

Several recipients of Rothstein's alleged largesse vehemently deny the convicted felon's claims, the DBR reports. An attorney for a financial adviser once employed by Rothstein, for example, calls the disbarred lawyer an "admitted con man" whose word cannot be trusted.

The DBR reports that federal prosecutors prevented Rothstein from naming police officers that alleged were also treated to escorts and trips to such adult establishments as Solid Gold and Tootsie's Cabaret.

Marijuana consumption was also apparently common at RRA's Fort Lauderdale headquarters—a little too prevalent, according to The Wall Street Journal, which uncovered an interesting exchange between Rothstein and an attorney questioning him on December 16, the fifth day of depositions.

Asked whether he smoked pot before dispensing legal advice, Rothstein denied doing so, but said some of his colleagues got high "in the office, in the garage, outside the office, I had some partners that couldn't come to work without smoking pot." Rothstein testified that when he discovered marijuana was being sold out of RRA's office, he tried to put a stop to it, but not for the usual reasons.

"Pot, not a great idea in the office," Rothstein said. "I don't know why, specifically, it bothered me; but it troubled me, probably because they were actually dealing the pot out of the office while I was in the middle of running a several-hundred-million-dollar Ponzi scheme."

At another point during the deposition marathon, Rothstein angrily stormed out of the room after being asked whether he had anything to do with the 2008 murder of former RRA partner Melissa Britt Lewis.

Rothstein, who denied having anything to do with Lewis's death, called insinuations to the contrary "disgusting" when questioned by Mary Barzee Flores, a partner at Miami firm Stearns Weaver Miller Weissler Alhadeff & Sitterson representing a private bank that worked with Rothstein and is being sued for its alleged role in orchestrating illegal money transfers.

The DBR reports that Flores pressed Rothstein on whether Lewis might have been murdered because she discovered his Ponzi scheme—an assertion that caused the convicted felon to blow his top. Rothstein acknowledged having had a romantic affair with Lewis, whom he met when he was an adjunct professor and she was a student at Nova Southeastern University's law school. (The trial for Lewis's alleged killer that was to begin next week has been postponed indefinitely, according to the Broward Palm Beach New Times.)

During his initial deposition on December 12, Rothstein maintained that he planned to tell the truth about everything he knows as part of his cooperation agreement with the government. 

Conrad & Scherer, a plaintiffs firm representing victims of Rothstein's massive fraud, has posted complete transcripts of all 24 depositions taken from Rothstein last month on its Web site.

 

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