Monday, November 23, 2009

Florida Lawyer Suspected In Largest Ponzi Scheme Since Madoff

Scott W. Rothstein, 47, of Miami, Florida, is suspected of running a Ponzi-type investment fraud scheme that could top $1 billion in losses to investors, making it the largest since the Bernard Madoff case. Since 2005, according to a forfeiture complaint, Rothstein allegedly solicited investors for settlements of sexual harassment and other labor-related lawsuits. Rothstein reportedly offered investors a chance to buy the settlements at a discount in deals that would pay the original plaintiffs a smaller lump sum immediately. The investors would then collect a given settlement's full value over time. One such deal purported to provide annual returns of some 80 percent. However, prosecutors allege that many of the settlements offered by Rothstein never existed, defrauding the investors. The government's forfeiture complaint sought to seize Rothstein's 87-foot yacht, more than a dozen properties, bank accounts, ownership stakes in more than a dozen companies and 20 luxury cars, including a 2009 Bugatti Veyron that sells for $1.5 million, among other things.

Read the story here, here, here and here.

Read the amended civil complaint filed by investors here.
Update (3/11/10): Rothstein was sentenced this week to 50 years in prison for orchestrating a Ponzi-type investment fraud scheme that defrauded investors out of as much as $1.2 billion. Rothstein had pleaded guilty January 27, 2010 to one count of conspiracy to violate the racketeering influenced corrupt organization (RICO) statute; one count of conspiracy to commit money laundering; one count of conspiracy to commit mail fraud and wire fraud; and two counts of wire fraud.

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