Scott Rothstein Scandal

Rothstein says he kept $1 million in cash handy for payoffs

 

In transcripts from his deposition, the convicted Ponzi schemer says, ‘We were handing out money like Santa Claus hands out candy canes.’

Upload and share your own.

You can share related videos and photos.

Submit: Video Pictures Stories

Sun Sentinel

Convicted Ponzi schemer Scott Rothstein said he stashed up to $1 million in cash in his law office so he could keep the money flowing for his illicit activities.

“We were handing out money like Santa Claus hands out candy canes to anybody that needed it for our purposes,” said Rothstein in a transcript of his Dec. 13 testimony released Thursday night. The fraudster is in the middle of an extraordinary 10-day deposition session behind closed doors where attorneys are quizzing him about his $1.2 billion Ponzi scheme, the largest financial fraud in South Florida history.

Rothstein said that among the people he paid off was former TD Bank executive Frank Spinosa. The disbarred attorney said that without help from Spinosa and two other bank officials, his swindle would have crashed. Investors who lost millions of dollars are suing TD Bank and Gibraltar Bank, alleging their employees allowed Rothstein’s scam to flourish.

Rothstein claimed he once slid Spinosa an envelope filled with at least $50,000 during one of their regular lunch meetings at Rothstein’s downtown Fort Lauderdale restaurant, Bova Prime. Spinosa helped pull off the fraud for the money and the chance to take part in the “rock star lifestyle” offered by the Rothstein Rosenfeldt Adler law firm, Rothstein alleged.

Spinosa’s attorney, Sam Rabin, said Thursday that Rothstein is lying, falsely accusing anyone he can of crimes so he can get his 50-year prison sentence reduced.

“Same con man, different motivation,” Rabin said. “The facts are Spinosa did not take part in the ‘rock star lifestyle.’ He did not receive money, the amount of which changed in each [of Rothstein’s] statements, and internal bank records reflect he did not look the other way.”

In transcripts released Wednesday, Rothstein said his two former law partners knew he was illegally moving money through their booming downtown Fort Lauderdale firm and did nothing about it.

Rothstein not only implicated Stuart Rosenfeldt and Russell Adler, but said seven other attorneys within and outside the Rothstein Rosenfeldt Adler firm helped keep the Ponzi scheme alive.

Rothstein, brought to Miami from a federal prison so he can be questioned by lawyers, described how outside attorneys were paid to lie, how he laundered money and how he put bank officials “in his pocket.”

“There is a very large category of people that fell within the . . . what we fondly refer to as living the rock star or Rothstein lifestyle,” Rothstein said. “And that is, in fact, we paid off a substantial number of the people that we were ultimately, for lack of a better term, bribing to do our dirty work.”

In his first testimony ever about his criminal activities, Rothstein’s massive financial fraud, for which he was sentenced in 2010 to 50 years in prison, comes across as not so much as a methodical scheme but as a daily scramble to keep the money coming in and investors in the dark.

Among the attorneys named by Rothstein as aiding him was Ken Padowitz, a well-known former Broward homicide prosecutor who shared office space with the firm. Rothstein described Padowitz, who ran for judge in 2006, as being “involved on a sublevel,” helping draft a false legal opinion letter to help Rothstein attract new funding.

Attorneys for Rosenfeldt, Adler and Padowitz denied the allegations leveled by Rothstein, saying people need to consider the source — an accomplished and admitted con man.

“Ken’s impeccable reputation in the community as a former assistant state attorney and homicide prosecutor speaks for itself,” said Padowitz’s attorney, David S. Weinstein. “Scott Rothstein’s reputation for dishonesty speaks for itself. Rothstein has lived a complex series of lies in order to prop up his scam.”

Adler’s attorney, Fred Haddad, said he rejects anything Rothstein has to say.

“The only way out of jail is to dump on those he knows,” Haddad said.

Rothstein’s Ponzi scheme, which collapsed around Halloween 2009, revolved around investors believing they were buying big-dollar legal settlements in sexual harassment and whistleblower cases from plaintiffs who preferred to get a lump payment quickly rather than wait for all the money. The now-disbarred attorney said his office staff created hundreds of phony settlements, making up names of people and companies.

He said that many within his 70-lawyer firm had no clue about his activities and if they did, felt that some of them would have reported him to authorities.

“In a law firm that size, it’s not difficult to hide information,” he said.

dealsaver
The Miami Herald: Subscribe now!

More from
Fort Lauderdale

Join the
Discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

We have introduced a new commenting system called Disqus for our articles. This allows readers the option of signing in using their Facebook, Twitter, Disqus or existing MiamiHerald.com username and password.

Having problems? Read more about the commenting system on MiamiHerald.com.

Hide Comments

This affects comments on all stories.

Cancel OK
0 comments