Now in Legal Rebels:
Posted Nov 20, 2009 07:40 pm CST
Hundreds of millions of dollars disappeared last month from the accounts of South Florida law firm Rothstein Rosenfeldt Adler, a receiver said today in a bankruptcy proceeding.
Bloomberg covered the revelation by the dissolving law firm’s receiver, retired Miami Judge Herbert Stettin.
“Huge amounts of money were moved and removed in October,” Stettin said in the Fort Lauderdale court proceeding. “It almost defies logic.”’
Creditors filed an involuntary bankruptcy petition against the law firm after name partner Scott Rothstein came under investigation for allegedly running a Ponzi scheme that could cost investors $1 billion.
A $100 million lawsuit filed today offers more specifics. Investors claim that, in October alone, as much as $500 million moved through Rothstein’s accounts at a TD Bank branch in Fort Lauderdale, the Associated Press reports. The suit names TD Bank as a defendant and says it was “the financial epicenter of the Ponzi scheme.”
The bank ignored “red flags,” the suit says, and provided investors with a false sense of security that funds would be released only to them, the suit says.
Other defendants named in the suit (PDF posted by the Miami Herald) include Rothstein; Rothstein’s assistant, Debra Villegas; law firm partner and general counsel David Boden; and the law firm’s director of corporate development, Andrew Barnett.
The suit alleges that Vallegas furnished false bank statements to investors, and that Boden and Barnett helped recruit investors. All three are accused of having “actual or constructive knowledge” of the Ponzi scheme.
Prior reports said Scott Rothstein wired $18 million to Morocco last month and may have been considering a permanent move there.