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Embattled Attorney Returns To Broward
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Charles Trainor Jr./ The Miami Herald
At the court hearing where a receiver was appointed, Judge Streitfeld stripped Rothstein of control over his law firm. Rothstein maintained that he had 50% control over the firm, but the judge said Rothstein "relinquished" authority by missing two court hearings in two days relating to the firm's future.
Kendall Coffey, who is representing Stuart Rosenfeldt, said Rothstein is "O-U-T. Out of the picture as far any control, power or influence over the firm."
At the hearing, investors mixed in with the attorneys and media covering the hearing. None of the investors spoke to reporters, but their lawyers did.
Jeffrey Sonn is representing several investors. He said he has heard of people losing hundreds of millions of dollars in Rothstein's investment business.
"The money's missing," Sonn of Sonn & Erez said. "People have asked for their money back and they're not getting it. I've heard all sorts of numbers. I heard Stuart Rosenfeldt say yesterday it may be hundreds of millions. The truth is nobody knows how big this is."
Another attorney said Rothstein's connections to South Florida charities may have played a role in his ability to find investors.
"I think that might have something to do with it," said attorney William Scherer, who is also representing several investors. That news could mean big losses for South Florida charities.
Tuesday night, CBS 4 News confirmed that several big names -- auto dealer Ed Morse and George Levin of Banyan Investments -- were among those who allegedly lost money.
Also Tuesday, Governor Charlie Crist, the Republican Party of Florida and the Democratic Party of Florida returned money donated by Rothstein and his firm over the past several years.
Meanwhile, Fort Lauderdale police surrounded the building housing the law firm of Rothstein, Rosenfeldt and Adler Tuesday afternoon. Fort Lauderdale Police Spokesman Sgt. Frank Sousa explained the police presence.
"[Rothstein] is allowed to go to his office," Sousa said. "We're not going to prohibit him from going to his office. [We are here] to maintain privacy matters and make sure the peace is kept."
Every corner of the Bank of America building on the 400 block of E. Las Olas Blvd. was saturated with members of the Fort Lauderdale Police Department.
Rothstein's attorney Marc Nurik told CBS4's Jim DeFede Tuesday that he would return to South Florida within "24 to 48 hours."
Earlier in the day, Nurik said he did not talk to Rothstein about his whereabouts.
"He always had a return flight," Nurik said. "At this point I expect Mr. Rothstein to walk off of the plane on his own steam."
Monday afternoon another hearing was held before Broward Circuit Judge Jeffrey Streitfeld, but no decision was made on who should oversee the dissolution of the law firm, which employs more than 150 people, including 70 lawyers. Rothstein was not expected to attend, Nurik told DeFede.
"This has been a seismic blast that has been devastating to the law firm," Coffey told Judge Streitfeld. "There have been a number of resignations today in the wake of this bombshell."
Outside the courtroom, attorneys packed the hallway. Many of the attorneys represented investors and creditors who fear their money is gone.
It appeared, however, that in addition to possibly raiding client trust funds the scheme also primarily involved a separate company Rothstein set up to sell investments in structured settlements.
"It is with surprise and sorrow that the attorneys of Rothstein Rosenfeldt Adler 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," attorney Kendall Coffey wrote in an emergency filing asking the courts to appoint a receiver to help them sort through the firm's finances Monday. Coffey was hired by the remaining partners in the firm.
Shortly after Monday's hearing got started, a man pleaded with sheriff's deputies to let him enter the packed courtroom, saying he had rented a private jet to fly down from New York and that he was afraid Rothstein had stolen millions from him.
Rothstein has not been charged with any wrongdoing. The FBI is reportedly now investigating the allegations. Rothstein's attorney did not respond to requests for an interview.
Stuart Rosenfeldt, who started the firm with Rothstein in 2002, appeared shell shocked Monday at the courthouse. The judge has kept Rosenfeldt onboard as CEO of the firm.
"It's just very sad to see a beautiful thing that we built fall apart," said Rosenfeldt.
He said he learned there were problems with the firm's finances Friday "when people who were friends of Scott called me up and told me he had stolen money from them."
How much?
"I have no clue, but they represented to me it was in the hundreds of millions of dollars," he said.
Rosenfeldt said he tried to contact Rothstein when the allegations first surfaced but could not get Rothstein on the phone. Instead, he said, they traded a few text messages. He would not say what the messages were.
"Scott was like a brother to me and that's all I really can say," he said. "And I'm shocked and dismayed to find out what I've learned in the last few days."
If the allegations against Rothstein are true they would mark an incredible fall for a man who just a few months ago seemed very much in control of the political world around him. A major fundraiser for Gov. Charlie Crist and John McCain during last year's presidential race, his firm had grown from just a handful of attorneys in 2002 to more than 70 in offices throughout Florida and in Washington.
Rothstein also has contributed to numerous charities, including a foundation for children and youth run by former Miami Dolphins star Dan Marino and former Miami Heat star Alonzo Mourning.
Rothstein has considerable personal wealth, and owns a $6.4 million home in Fort Lauderdale, properties in Manhattan and along Rhode Island's coast, and a large collection of expensive cars, including a Rolls-Royce and a Bentley.
The well-connected attorney was protected around the clock, until Monday, by off-duty Fort Lauderdale police officers. That assignment, which was paid for by Rothstein, has now been canceled by top officials at the police department, a spokesman said.
According to Rosenfeldt, Rothstein operated a business using the law firm's name in which legal settlements were purchased and then offered for sale to investors.
"Various investors have informed the firm that they believe substantial funds are not properly accounted for and are missing," Rosenfeldt's motion says, adding that some investors claim Rothstein "may have been fabricating nonexistent" legal settlements for sale.
The exact amount of money involved isn't known. Rosenfeldt said the firm's law practice will continue and there is no evidence that any other lawyers were involved. However, some employees have resigned or left.
The allegations come on the heels of two high-profile FBI corruption investigations in Broward County that resulted in criminal charges against Dr. Alan Mendelsohn, a politically-connected ophthalmologist, and three local politicians accused of taking bribes to steer business toward favored companies. More charges are likely in those cases, which are unconnected to Rothstein but have rocked the county's political establishment.
CBS4's Jim DeFede, Dave Game, Jasmine Kripalani, Carey Codd and Daniel Lastra contributed to this report.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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