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Law Practice Management

‘Sonic Boom’: Rothstein Churned $250M in Trust Funds Last Month, Lawyer Says

Posted Nov 17, 2009 3:55 PM CDT
By Martha Neil

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Attorney Scott Rothstein allegedly wired $18 million to Morocco last month and churned some $250 million that flowed through his trust accounts in October, as he apparently prepared for a possible relocation to the African country, according to news reports.

“Those are enormous figures,” attorney Bill Scherer, who represents investors and is pointing the finger of blame at the bank concerned, tells the Mayo on the Side blog of the South Florida Sun-Sentinel. “That’s like going 200 mph on I-95 in a Chevy—sonic booms should have been sounding.”

But investors and federal authorities are still trying to figure out exactly where all the money went in a claimed Ponzi scheme allegedly operated by Rothstein that may have involved up to $1 billion or more. As the sign for Rothstein Rosenfeldt Adler came down today from the law firm's offices at the Bank of America building in downtown Fort Lauderdale, Fla., attorney John Genovese, who is representing investors, noticed a Rothstein deposition for Thursday, reports another Sun-Sentinel article today.

Rothstein and his lawyer, Marc Nurik, couldn't immediately be reached by the newspaper for comment about today's coverage. However, Nurik has said previously that the $18 million figure is wrong, although he couldn't provide a more accurate amount, according to another Sun-Sentinel article yesterday.

As discussed in previous ABAJournal.com posts, Rothstein hasn't been criminally charged. However, he has been accused in federal forfeiture proceedings of operating a Ponzi scheme that an FBI official says may have exceeded $1 billion.

He has also agreed to give up his law license.

Meanwhile, an emergency hearing is scheduled Friday in federal bankruptcy court concerning a request by the U.S. Trustee for South Florida that an independent trustee be appointed to oversee the bankruptcy of Rothstein's law firm. Presently, a receiver appointed by a Broward Circuit Court judge is serving in both roles.

Not only the law firm itself, but "its owners, officers, employees, professional and all business and family relationships may very well be the subject of serious inquiry and scrutiny throughout these proceedings," writes attorney Steven Schneiderman, who represents the U.S. Trustee, in court filings. RRA's "business operations are tainted with allegations wrought with fraud and a Chapter 11 trustee who is an independent fiduciary answerable to no one but the court, is the only remedy that should be considered."

In an Oct. 17 e-mail to his RRA colleagues signed "Love ya Scott," Rothstein asked for information to help a "client" who feared being prosecuted in the U.S. and wanted to know what countries don't extradite here, the newspaper reports.

A day earlier, according to what the Daily Pulp blog of the Broward-Palm Beach New Times says is another Rothstein e-mail to the firm, he apparently tried to fend off challenges to his authority and that of the firm's chief operating officer in a largely all-caps diatribe.

"I will NEVER tolerate insubordination. I will NEVER tolerate attacks," he writes at one point. "NEVER!!!!!!!!!!!!!!!!!!!!!!!!"

Additional coverage:

ABAJournal.com: "Lawyer in Ponzi Probe Returns from Morocco After Hinting of Suicide"

ABAJournal.com: "FBI: Rothstein Scheme Could Top $1B; Filing: Firm Spent $1.4M in Escrow Funds"

ABAJournal.com: "Lawyers Find New Jobs Despite Stigma of Claimed $1B Rothstein Scheme"

Broward-Palm Beach New Times: "Scott Rothstein's Emails Reveal His Mindset and Dependence on Debra Villegas"

The Buzz (St. Petersburg Times): "More Rothstein allegations lobbed"

Updated at 4:04 p.m. to link to Broward-Palm Beach New Times article and on Nov. 18 and Nov. 20 to link to subsequent ABAJournal.com posts.

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