Scott W. Rothstein

In the 2008 interview at his law firm, Rothstein described himself and told how he controlled all aspects of the firm's management:

This is where the evil happens. Look, I sleep in the bed I make. I tend toward the flashy side, but it's a persona. It's just a fucking persona. ... People ask me, 'When do you sleep?' I say I'll sleep when I'm dead. I'm a true Gemini. I joke around that there are 43 people living in my head and you never know what you're going to get. There are some philanthropists in there, some good lawyers, and I like to think some good businessmen. There are also some guys from the streets of the Bronx that stay hidden away until I need them. Does that sound crazy? I am crazy, but crazy in a good way.[21]

His personal office was opulent, with security and a compartmentalized layout. Anyone entering Rothstein's suite of offices had to use an intercom. He could exit, unseen through a second door. In the hallway, an ordinary looking brown door is actually the elevator door. Dozens of surveillance cameras and microphones hang from office ceilings. On his desk: four computer screens and the Five Books of Moses.[28] He had a Boeing 727 jet and in 2002, flew Bill Clinton, Kevin Spacey, and Chris Tucker to Africa on an anti-AIDS mission.[29] He owned an 87-foot (27 m) $5 million Warren yacht. His fleet of exotic cars included: 1974, 2006, 2007, and 2008 Ferraris, 2009 Bentley, 2007 Silver Rolls-Royce, and one 2008 and two 2010 Lamborghini Murcielagos — worth about $400,000 each, a pair of $1.6 million Bugattis, and a pair of Harleys which he maintains in an air-conditioned warehouse.[8][21][23] All were allegedly purchased and traded from Euromotorsports, the owner of which has an extensive criminal record.[30] All were seized shortly after his return from Morocco. He has a watch collection of over 100, valued at $1 million. In 2008, he was working on opening a cigar and martini bar on Las Olas Boulevard and two high-rise residential buildings in Brooklyn with New York partner Dominic Tonnachio. He was to take ownership of a "series of office buildings" on Oakland Park Boulevard.[25]

Roger Stone was a partner with Rothstein in RRA Consulting, an LLC which was set up to provide public affairs assistance to the RRA law firm's legal clients. According to Stone, that business never generated any clients. It was dissolved in late 2008. On August 27, 2009, Stone, the recipient of Rothstein's sponsorship of his blog until July 29, 2009, "StoneZone", wrote a column recommending Rothstein for the seat vacated by Senator Mel Martinez - a man with "a distinguished legal record, has been a key supporter of Governor Crist and John McCain, has an unmatched record of philanthropic activities and would bring an unconventional style of getting things done to Washington. Add Rothstein to the short list."[31] On November 4, 2009, Stone wrote, "Rothstein had no prior business success, no business acumen nor track record that would engender confidence in an investor. He could not read a balance sheet. He could not write or read a business plan. Rothstein was a lawyer, not an entrepreneur."

Stone claims that Rothstein has Attention Deficit Disorder (ADD) "so severe he never finished a martini, a cigar, a thought, or a sentence, never mind a transaction." According to Stone, neither law firm name partner Russell Adler nor Stuart Rosenfeldt were signatories on the RRA Trust Account.[32]

My family said that the higher you get on the poll, the more people see your ass. You better be sure your ass is clean. My ass is clean.[33]

— Scott Rothstein

He "appeared to be something out of a Great Gatsby movie."[34]

Nobody can really be surprised by this spectacular fall – the question wasn't whether it would happen, but when. How Rothstein was able to generate this kind of money practicing law seemed impossible.

— Michael Goldberg, a Fort Lauderdale attorney who serves as a court receiver in Ponzi cases.[35]

In 2008, his Rothstein Family Foundation gave $1 million to Holy Cross Hospital in Fort Lauderdale, where a lobby was to be named for him and his wife. On October 31, 2009 his firm sponsored at a charity golf tournament featuring former Gov. Jeb Bush.[36]

Between 2007 and 2008, he donated $2 million to the American Heart Association, Women in Distress, Alonzo Mourning Charities, Here's Help, and the Dan Marino Foundation.

Politicians of both parties have pledged to donate to charity or return his political contributions. On November 3, 2009, the Florida Republican Party, announced it would give Rothstein's donations ($600,000) to a charity.[10] Gov. Charlie Crist's Senate Campaign ($100,550), state Chief Financial Officer Alex Sink ($2,050), Senate President Jeff Atwater, Rep. Ellyn Bogdanoff, and that the Florida Democratic Party ($200,000) would return some or all of his contributions.

In June 2009, Harry Reid, the late former Democratic Senate majority leader received a contribution of $4,800.[36] A list of FEC filings indexed by NewsMeat include a total of $166,800 to the Republican Party and candidates, including $109,800 to John McCain's 2008 presidential campaign, and $17,600 to Democratic candidates.[37]

Debra Villegas, who handles his money, is the law firm's chief operating officer. She is co-owner with Rothstein in a home at 2307 Castilla Isle, as of May 2009. According to records, Rothstein originally purchased the property in September 2007, for $1.75 million, and sold it for $10 to a shell corporation in September 2009.[38]

In 2005, the year the Ponzi scheme allegedly began, Villegas earned $80,000 a year. In 2007, her salary had increased to $145,000. Villegas received two Swiss watches — a Rolex and a Breitling — from her "employer". Rothstein paid off her couch and a bedroom set and held title to her two Honda water scooters. Villegas was living in a $475,000 Weston home that Rothstein signed over to her in July 2009 for $100 and "love and affection," according to the deed. Villegas registered a 2009 $100,000 Maserati GranTurismo at the home in January, 2009. In November 2009, Federal prosecutors seized the home, alleging that it was among Rothstein's ill-gotten assets.[39]

Villegas' estranged husband, Tony Villegas, was charged on circumstantial evidence in the March 2008 murder in Plantation, Florida of Melissa Britt Lewis, a partner in Rothstein's firm. Although early news reports wondered at whether the evidence was substantial, according to New Times, "Nine days later, forensic testing revealed that Tony's DNA had been found on Melissa's suit jacket – the same jacket she wore on the day she died."[40] Police sealed the arrest affidavit.[41] Rothstein had a team of "executive protection specialists" to guard the firm and his family, his teen-aged daughter. The prosecutor who had first worked on the Villegas case, Howard Scheinberg, went to work for Rosenfeldt Rothstein Adler. Villegas, a train conductor, remains in jail awaiting trial.[42] Debra and Melissa shared a therapist, Ilene Vinikoor, whose husband, David, represented general counsel, David Boden in the Ponzi scheme investigation.[43]

You get anger from people ... that prick from the Bronx. ... They say I'm building the law firm too fast, that it must be a house of cards.[25]

On November 17, 2009, the Florida Bar Executive Committee voted to accept a request by Rothstein to be disbarred. The Florida Supreme Court entered an order permanently disbarring Rothstein on November 25, 2009.[44] Rothstein was removed from the Broward County Grievance Committee, and his name removed from the database of "The Best Lawyers in America".[19]

Rothstein, Rosenfeldt, and Adler's trust account was part of the Interest on Lawyer Trust Accounts (IOLTA) program that was paying hundreds of thousands of dollars a month to the Florida Bar Foundation.[45]

General counsel David Boden was present for at least one of the swindles, and negotiated the final papers with the investors' lawyers. Rothstein greets and informs the investor his firm was the preeminent sexual harassment law firm in the country. He says he'd figured out a basic formula which was that someone with $10 million net worth was usually willing to pay $2 million in cash to pay off their mistress. The key was confidentiality. Rothstein tells the investor that he would meet potential defendants in his office and would question them about affairs they had with an employee. The defendants would deny it. He pointed to artwork, and said there was a television screen behind it. He tells the investor he turned on a video of the guy having sex with his mistress, and told his client "We can either settle this now, or I can depose your wife, your mistress, you and your son about it." Since defendants" often couldn't or wouldn't pay the entire settlement up-front, Rothstein tells the investor that his first harassment case many years ago, involved a $3.5 million settlement and a million-dollar legal fee, so Rothstein assigned the settlement to a good friend and the plaintiff settles for $3 million without a trial. The "good friend" stood to be paid $3.5 million once the defendant paid up, a half-million dollar profit.

"In 20 years, I have never seen a defendant sue on breach of settlement," Rothstein told them. "The whole idea is that it's secret. Why would they sue?"

Although it did not appear completely legitimate, and it might have appeared that the plaintiffs were short-changed, it makes sense to the potential investor. The idea seems solid. The investor thinks that with enough of these cases at Rothstein's law firm, he could make huge sums of money.

Rothstein then discusses other larger cases: Eli Lilly and Company, involving $1.4 billion with plaintiff representation by Gary Farmer, a firm attorney who negotiated the settlement and who brought the case with him when he arrived at the firm. Several inside whistleblowers went to the fed with unlawful practices regarding the marketing and sales of an anti-psychotic medication called Zyprexa. It was one of the largest qui tam cases in history.

He tells the investor about a potential (allegedly fabricated) case where investors would buy whistle-blower million dollar settlements with a sixty percent short term investor profit. The arrangement would be completely secret; the investor would never know the name of the company or the whistle-blower. The settlement money would be deposited into a trust account at TD Bank, accessible only to the investor at the appropriate time. David Boden follows up with all questions and negotiates the contract.[48]

On November 2, 2009, Broward Chief Judge Vic Tobin sent an e-mail at 6:45 a.m. to judges about the Rothstein case:

I learned of some very distressing news yesterday. Whoever draws the case try to set the motion today because of the amount of clients and money involved. Also, if you have a case with the firm, please be patient. I don't know if the lawyers will come or not and if they do come, there is no money at this point to go forward with the case or pay firm employees.[49]

On November 3, 2009, retired Miami-Dade Circuit Judge Herbert Stettin was appointed the firm's receiver, responsible for approving the firm's day-to-day financial decisions. Firm president and 50% owner of the firm, Stuart Rosenfeldt, "deposited two-thirds of my life savings in my firm's operating account" to prop up finances in the short-term.[10]

Shimon Levy allegedly has had deep ties to Dean Heiser and Israeli organized crime and spent a year in an Israeli prison for hiding a mob figure suspected of two "grisly murders". In 1997, his partner at the Sea Club Resort on Fort Lauderdale beach, Zvika Yuz, was a victim of a murder which remains unsolved. His son, Ovi contacted the Plantation Police Department and began receiving protection during the time Rothstein fled to Morocco.[54]

Banyan Income Fund, a Fort Lauderdale-based hedge fund, invested hundreds of millions. It was run by Rothstein and involves Fort Lauderdale businessman George G. Levin, who reported Rothstein to the U.S. Attorney's Office for "suspicious activity." According to the lawsuit, Frank J. Preve is Chief Operating Officer and kept an office inside Rothstein et al. He is a convicted bank fraud and embezzlement felon. He pleaded guilty to bank embezzlement charges in 1985 and received ten years probation and a $10,000 fine for falsifying loan documents in another fraudulent scheme.[34] Banyon and other Rothstein investors' accounts were held at a Toronto-Dominion Bank branch in Fort Lauderdale.

Abraxas Discala, a businessman, reportedly raised $30 million through his hedge fund which he invested into Rothstein's scheme.[57][58]

The allegations are: George Levin was the general partner ("GP") who solicited each limited partner ("LP") to contribute at least $1 million. Initially, each LP contributed $250,000, subject to periodic capital calls up to the amount of their commitments. They were promised 12% annually (15% for first $100 million), to be paid quarterly. The general partner had to maintain a balance of not less than 10% of all contributions after any quarterly distributions. The general partner also gave a "clawback" guaranty to all LP's equal to their original contributions. LP's could not request redemptions during an initial one-year "lock-up" period and were required to give 90 days' notice for any withdrawals. Redemptions would be paid from the GP's own capital account "to the extent available" with a 10% hold-back, but otherwise, only from the purchased lawsuits settlement stream.

Banyon had paid Rothstein's firm at least $656 million, but the law firm anticipated $1.1 billion over a maximum 24-month period. It allegedly received and reinvested about $500 million. Levin expected to make 40% over 24 months but to only pay out 24%. Rothstein's law firm's IOLTA trust accounts established "for the plaintiff" in the purported litigation settlements were used to fund the phony settlement accounts, after the law firm had paid its overhead, keeping its insolvent operation afloat, which included "gifts" to partners and money given to politicians, charities, and pay for a massive advertising budget, as well as Rothstein's personal lifestyle, over three years, amounting to approximately a $500 million loss.

The interest on the funded IOLTA accounts went to the Florida Bar monthly, which was many millions, based on the Banyon contributions. In its prospectus, Banyon claimed to have a legal opinion that Banyon's interest in the IOLTA trust accounts "perfected automatically on execution of the transfer documents" – that the lawsuit proceeds assignments created by general counsel, David Boden. The LP's were warned that they could be taxed on the Partnership's income and realized gains even if no distributions were made. As long as reinvestments were ongoing, the ponzi scheme was facilitated.[30]

1. Venture capitalist Doug Von Allmen's companies' total loss, approximately $105.5 million, through the Banyon Income Fund include:

• The Von Allmen Dynastry Trust, overseen by wife Linda Von Allmen: $7 million.
• D&L Partners, Von Allmen's Missouri company: $45 million.
• Kretschmar: $8 million
• Razorback Funding LLC, a Delaware company: $32 million
• D3 Capital Club LLC, Delaware company: $13.5 million

2. BFMC Investment LLC, owned by Barry Florescue: $2.4 million[51]

3. Socialite art dealer Bonnie Barnett, mother of defendant, Andrew Barnett

4. The family of car dealers, Ed and Ted Morse.[13][29]

5. Ballamor Capital Management, Radnor, PA: $30 million.[59]