FBI: Fla. lawyer's alleged fraud over $1 billion

AP News
|
Posted: Nov 12, 2009 5:37 PM

The suspected Ponzi scheme run by a high-profile South Florida lawyer is likely to exceed $1 billion and involved thousands of investors in the U.S. and abroad, a top FBI official said Thursday.

John Gillies, special agent in charge of the FBI's Miami field office, said investigators want more investors with attorney Scott Rothstein to come forward so they can better understand the full scope of the alleged scam. Gillies said the probe is likely to take weeks before any criminal charges are filed.

"We are conducting this investigation in a timely manner. But we will not be pushed. We are far from over," Gillies said.

The FBI set up a dedicated e-mail address _ Rothstein.Investment@ic.fbi.gov _ for the investors with Rothstein, who was offering huge returns through legal settlements that investigators say were pure fiction. The FBI also set up a toll free number: 1-800-225-5324, with callers asked to select the "Rothstein Option."

Profits of 20 percent or more were commonly promised, but a civil forfeiture complaint contends that Rothstein was running a classic Ponzi scheme in which money from new investors was used to pay off older ones _ and Rothstein kept most of it himself.

"We're seeking any information from victims who may be out there. We believe there's information out there," Gillies said. "I would put this as one of the biggest alleged fraud schemes we've investigated in South Florida."

Rothstein's attorney had no immediate comment Thursday.

Also Thursday, attorney Stuart Rosenfeldt stepped down as CEO of the law firm he co-founded with Rothstein, giving full control to court-appointed receiver Herbert Stettin, firm spokesman Charles Jones said.

Rothstein, 47, was removed from the same position a week ago as the scandal broke.The 150-employee firm, Rothstein Rosenfeldt Adler, has also been hit with a bankruptcy petition filed by creditors. At a hearing Thursday, the firm's attorneys said it would not contest the petition.

The FBI and Internal Revenue Service have already seized much of Rothstein's empire, including yachts, luxury cars and bank accounts, and placed liens on about $18 million in South Florida real estate that could be forfeited if Rothstein is convicted of a crime. Those assets would typically be auctioned to repay wronged investors.

No one else has been implicated by name in the fraud, but Gillies said he wouldn't rule out other people.

"I don't believe this was a one-man show," Gillies said.

Attorneys for numerous Rothstein investors are already heading to the courts with lawsuits aimed at recovering their losses.