Three of Scott Rothstein's law partners received nearly $18 million in payments since 2006 that bankruptcy attorneys contend they must surrender to benefit investors in Rothstein's massive $1.2 billion Ponzi scheme.
The attorneys handling the fallout of the Ponzi scheme filed suits against former partners Stuart Rosenfeldt, Russell Adler and Steven Lippman on Thursday in federal bankruptcy court in Fort Lauderdale, in their continuing efforts to reclaim money they allege rightfully belongs to Rothstein's investors.
All told, the bankruptcy attorneys are trying to collect nearly $9.5 million in payments and other benefits Rosenfeldt received, $6.5 million Lippman received and $1.9 million Adler received, according to the suits.
Rosenfeldt's attorney, Bruce Lehr, would not say whether Rosenfeldt is a target of the federal investigation into Rothstein's Ponzi scheme, and he said the payments to Rosenfeldt were proper.
Lippman's attorney, Bruce Zimet, said Lippman is not a target of the investigation and is willing to cooperate with federal investigators because he has nothing to hide. Zimet also said Lippman earned all the payments he received from the law firm.
Adler's lawyer could not be immmediatly reached.
Federal prosecutors say Rothstein turned his downtown Fort Lauderdale law firm, Rothstein Rosenfeldt Adler, into a criminal racketeering enterprise. The lawsuit against Rosenfeldt alleges that Rothstein funneled campaign contributions through payments to attorneys in the firm.
The lawsuit also says Rosenfeldt should not have earned more than $300,000 a year while working at the firm. It goes on to say Rosenfeldt earned nearly $600,000 in 2006; $1.2 million in 2007; a little more than $6 million in 2008; and $946,000 through October last year, when Rothstein's fraud scheme blew up.
Federal prosecutors alleged in their racketeering charges against Rothstein that he violated state and federal campaign laws by paying "bonuses" to his law partners who in turn made political contributions to local, state and federal candidates and to political parties.
Thursday's lawsuits say some of the political contributions were made through payments to Rosenfeldt, Adler and Lippman.
"The fact that significant amounts of alleged bonus or other payments to Rosenfeldt are not related to actual earned compensation ties to the timing of when Rosenfeldt received certain of such payments, and how he thereafter paid out similar amounts of money as political contributions," the lawsuit says.
"For example, and demonstrating it was part of a scheme to funnel cash out of RRA to use for political contributions and not to pay legitimate earned income, on May 19, 2008, Rosenfeldt, Russell Adler ("Adler") and Steven Lippman ("Lippman") each received an alleged bonus of $140,000 from RRA.
"On May 28, 2008 Rosenfeldt made a donation of $140,000 to the John McCain presidential campaign. Also on May 28, 2008, Lippman and his wife Marcy, made payments to the same campaign of $65,000 and $60,000 respectively. On June 12, 2008, Adler contributed $80,000 to the McCain campaign and his wife Katie likewise contributed $39,200.
"Thereafter, and through the balance of 2008 and much of 2009, Rosenfeldt, Adler and Lippman each received periodic alleged compensation payments from RRA and they (and/or their wives) then made a series of political contributions that trace close to receipt of the monies (which was received both before and after the contributions) with similar, if not identical payments then being made to the same candidates or political parties, including the McCain campaign, the Florida Republican Party, the Ohio Republican Party, the Pennsylvania Republican Party, the Missouri Republican Party, the Michigan Republican Party and Governor Charlie Crist."
Rosenfeldt's attorney, Lehr, said Rosenfeldt did nothing wrong and that he was entitled to the payments he received from the law firm.
"I'm sure as the facts are brought to light, it will be made clear that Stuart did not knowingly take any money wrongfully," Lehr said. "There are allegations of bonuses. There were no bonuses. There is nothing wrong with Stuart taking a distribution he thought was clean and then contributing to candidates pursuant to his political affiliations and beliefs."
The lawsuit against Rosenfeldt also alleges that he freely used the law firm's American Express card, charging over $1 million for personal expenses to benefit himself and his wife, Suzanne.
"Examples of Rosenfeldt's personal expenses paid by RRA that personally benefitted Rosenfeldt and Suzanne Rosenfeldt include: 72 pieces of jewelry purchased from J.R. Dunn Jewelers, numerous local hotel room charges, furniture for their home, vacations and personal travel, exotic reptiles, home repairs, athletic club charges, men's and women's clothing, groceries, charitable contributions, personal meals, general household items and other items," the lawsuit says.
Rosenfeldt was given nearly $9 million in loans from the law firm, according to the lawsuit, and has not repaid $458,000 of that. There was one other improper payment of $25,000 to Rosenfeldt, the suit says.
"In certain instances, whether a payment was made to Rosenfeldt as compensation or as a loan, he thereafter made: (a) over 50 other checks or transfers payable to "Cash" or himself in amounts ranging from $500 up to $50,000, and (b) at least 30 checks or transfers to his wife, Suzanne Rosenfeldt totaling at least $690,000, which included four joint transfers, totaling $250,000," the lawsuit says.
Rothstein, 47, pleaded guilty last month to five federal charges of racketeering, money laundering and fraud and faces up to 100 years in prison at his May 6 sentencing. Federal prosecutors and FBI and IRS agents are still conducting a sweeping investigation of the Ponzi scheme.
Database specialist Dana Williams contributed to this report.
Peter Franceschina can be reached at firstname.lastname@example.org or 954-459-2255.