Federal authorities on Monday were conducting a criminal investigation into high-profile Fort Lauderdale attorney Scott Rothstein, who is suspected of operating a Ponzi scheme by selling tens of millions of dollars in fabricated legal settlements to investors.

Rothstein -- known for giving hundreds of thousands of dollars to state politicians and as the co-sponsor of a golf-tournament benefit with former Gov. Jeb Bush on Friday -- hired a lawyer over the weekend from his own firm.

Rothstein was out of town and could not be reached for comment. News of the investigation spread from South Florida to Tallahassee.

``Nobody can really be surprised by this spectacular fall -- the question wasn't whether it would happen, but when,'' said Michael Goldberg, a Fort Lauderdale attorney who specializes in serving as a receiver for the courts in Ponzi cases. ``How Rothstein was able to generate this kind of money practicing law seemed impossible to anyone familiar with law firm economics.''

On Monday, political candidates and parties that received campaign contributions from Rothstein and his law firm were debating whether to return the money.

The state's chief financial officer, Demoractic gubernatorial candidate Alex Sink, said she was giving back an unspecified amount of donations. Records show she received $2,050.

``These are very serious allegations,'' Sink's campaign said. ``The campaign is returning or donating to charity Mr. Rothstein's and his wife's personal contributions, as well as contributions from the account of his law firm and AAMM Holdings, LLC.''

Rothstein, his wife and employees and relatives of employees of his law firm have contributed $100,550 to Republican Gov. Charlie Crist's Senate campaign since the governor announced in May, according to campaign finance records. Rothstein's law firm is one of Crist's top contributors.

Also on Monday, a former top federal prosecutor in South Florida representing Rothstein's firm filed a motion asking a state judge to have an independent receiver figure out the potential losses suffered by Rothstein's investors.

Rothstein ``has declined to resign despite the asserted and substantial irregularities because he purports to hold a 50 percent share of the law firm,'' states a complaint filed in Broward Circuit Court by Kendall Coffey, the former U.S. attorney in Miami, who was hired to represent the Rothstein Rosenfeldt Adler firm in Fort Lauderdale.

The complaint seeks an emergency appointment of a receiver and dissolution of the firm.

The complaint states: ``It is with surprise and sorrow that the attorneys of Rothstein Rosenfeldt Adler, P.A., have learned that Scott W. Rothstein, the managing partner and CEO of the firm, has, according to assertions of certain investors, allegedly orchestrated a substantial misappropriation of funds from investor trust accounts that made use of the law firm's name.''

``A review of the firm's records undertaken over this past weekend indicates that various funds unrelated to the direct practice of the law cannot be accounted for,'' the complaint further says, ``circumstances suggesting that investor money may have been misused by Rothstein who controlled all such accounts.''

But after questions from Broward Circuit Judge Jeffrey Streitfeld, Rothstein's partner, Stuart Rosenfeldt, agreed to consider taking on the financial investigation himself. Streitfeld told Coffey to file a new motion in the morning and that he will hold a hearing at 4:30 p.m. Tuesday. By that time if Rothstein hasn't surfaced to object, Streitfeld indicated that Rosenfeldt could fulfill the role of what he had intended for a receiver.

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. In order to post comments, you must be a registered user of MiamiHerald.com. Your username will show along with the comments you post. Thank you for taking the time to offer your thoughts.

     Showing: Oldest first Newest first Most-recommended first Least-recommended first

@Nyx.AuthorDisplayName@ wrote on @Nyx.PostedAtTime@:

@Nyx.repliedToText@

@Nyx.replyAnswerText@

Reply to this Comment @Nyx.Recommender@ @Nyx.AbuseReporter@