Dec. 22 (Bloomberg) -- Scott Rothstein, the Florida lawyer convicted in a $1.2 billion investment fraud, said two of his former law firm partners also knew of the scheme, according to a transcript of a sworn deposition made public yesterday.
Rothstein, sentenced to 50 years in prison, said his former partners, Stuart Rosenfeldt and Russell Adler, were aware of the scheme, according to a transcript of the deposition taken this month at the federal courthouse in Miami as part of their law firm’s bankruptcy case. The transcript was posted on the website of the law firm Conrad & Scherer, which represents some of the investors seeking to recover money invested in the scheme.
“They knew that we were moving money illegally in and out of the law firm,” Rothstein said of Rosenfeldt and Adler, according to the transcript. “At various points in time, they came to know that there was a Ponzi scheme going on, although the word Ponzi was never utilized.”
Rothstein, formerly of Rothstein Rosenfeldt Adler PA in Fort Lauderdale, Florida, pleaded guilty in January 2010 to five counts of racketeering, money laundering and wire fraud after admitting he sold investors interests in bogus settlements in sexual-harassment and whistle-blower lawsuits.
Bruce Lehr, a lawyer for Rosenfeldt, said yesterday in a phone interview that his client wasn’t aware of the Ponzi scheme.
“Stuart Rosenfeldt had absolutely no idea of the wrongdoings of Scott Rothstein until Mr. Rothstein fled the country,” Lehr said. “Mr. Rothstein, who pleaded guilty and was sentenced to 50 years in prison, had no credibility then. The fact that after spending some time behind bars, he has decided to throw his law partner under the bus has not awarded him new credibility.”
Adler’s attorney, Fred Haddad, said Rothstein was lying about his client.
“He didn’t know anything about what Rothstein was doing,” Haddad said. “I like Scott personally. I’ve gotten drunk with Scott. But he said at the beginning of his depo that this would be the first time in his life that he’s told the truth. I think he still hasn’t reached the first time in his life to tell the truth.”
Rosenfeldt and Adler haven’t been charged with wrongdoing.
Eight people, including Rothstein, have been charged in the probe by the U.S. Of those, Rothstein and five others have been convicted.
Rothstein, according to the deposition transcript, described a complicated scheme with what he referred to as “sub-levels.”
“There were many arms,” he said, according to the transcript. “There were political arms, there were law enforcement arms, there were arms all over the place in every facet, as the judge pointed out when he sentenced me, in almost every facet of daily life.”
Rothstein named several people he said were involved in the scheme, including lawyers and other employees of the firm, according to the transcript. He said in the deposition in response to lawyer’s questions that other people at the firm knew nothing of his illegal actions.
“You’re going to find as you question me, there is a very large category of people that fell within the -- what we fondly refer to as living the rock star or the Rothstein lifestyle,” he said, according to the transcript. “That is, in fact, the way 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.”
Rothstein said, according to the transcript, that he probably spent about $200 million. He said he and others spent money on lavish parties, trips, dinners and gifts for wives or mistresses.
Several other people handled the details of getting money in from investors and paying the money out, while he helped convince new investors of the soundness of the investment by putting on what he called “dog and pony shows,” according to the transcript. His staff was supposed to be handling the payments to investors, he said in the transcript.
The case is In re Rothstein Rosenfeldt Adler PA, 09-34791, U.S. Bankruptcy Court, District of Southern Florida (Fort Lauderdale).
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