Exec Claims Bank Fired Him for|Reporting Rothstein’s Ponzi Scam

MIAMI (CN) - A top executive claims in court that his bank fired him for reporting suspicious activity in Scott Rothstein's Ponzi scheme before it made headlines, because the bank wanted to keep Rothstein's business.

South Florida attorney Scott Rothstein ran a massive investment scam which traded in fictitious structured settlements from purported high-profile lawsuits. He is serving a 50-year sentence for RICO conspiracy and money laundering.

Now Jonathan Hullick has sued Gibraltar Private Bank and Trust Co., Boston Private Financial Holdings, and Steven D. Hayworth, in Miami-Dade County Court.

Hullick, an expert in banking regulations, claims that Hayworth told him that Gibraltar didn't have to abide by federal banking regulations because "those laws were intended for 'less sophisticated banks that don't have our prestigious clients.'"

The complaint does not state Hayworth's position at the bank. But the Miami Herald reported on May 31 that Gibraltar had "replaced its founder, Steven D. Hayworth, formerly chairman and chief executive".

The Herald reported: "It is not clear whether Hayworth's departure is related to the bank's involvement with convicted Ponzi schemer Scott Rothstein. In February, Coral Gables-based Gibraltar agreed to a multimillion-dollar settlement to resolve lawsuits related to Rothstein, a former client and investor in the bank."

Hullick says he worked for Miami-based Gibraltar as its chief operating officer and executive vice president from 2006 until the company wrongfully fired him in 2008.

He claims that while working for Gibraltar he spotted suspicious activity in Rothstein's and Rothstein's firm's bank accounts, and reported it to Hayworth and other Gibraltar executives, who assured him the accounts were "taken care of."

After insisting that Rothstein be reported to authorities, and the accounts closed, Hullick says, Gibraltar asked him to "relax regulatory requirements," and when he refused, the bank fired him.

"On Oct. 29th through Oct. 31st 2008, Gibraltar held a meeting of all senior managers to discuss a wide variety of issues," the complaint states. "Two days before, Mr. Rothstein's relationship manager at Gibraltar, [nonparty] John Harris, sent Mr. Hayworth a long memorandum stating that Mr. Hullick 'was preventing' Mr. Harris from 'growing his market and serving his important clients ... especially people like Rothstein ... because of Mr. Hullick's insistence on following regulatory guidelines.' Mr. Harris further stated in the memorandum that Gibraltar should not follow those requirements and that Mr. Hullick should instead cooperate. [Ellipses in complaint.]

"Mr. Hayworth ordered Mr. Hullick to prepare a written response for the three-day executive meetings and tell the market managers how Mr. Hullick would begin relaxing regulatory requirements. Mr. Hullick told Mr. Hayworth that the banking regulations could not be avoided because they were federal laws. Mr. Hayworth told Mr. Hullick those laws were intended for 'less sophisticated banks that don't have our prestigious clients.'

"On Nov. 3, 2008, Mr. Hayworth fired Mr. Hullick 'for cause.'

"On Oct. 31, 2009 Mr. Rothstein fled to Morocco to evade capture for masterminding a Ponzi scheme which defrauded investors of more than $1 billion dollars. On Dec. 1, 2009, Mr. Rothstein returned from Morocco and turned himself in to United States Federal Marshals. Mr. Rothstein was subsequently arrested on charges related to the Racketeer Influenced and Corrupt Organizations Act, pled guilty and was sentenced to fifty years in an undisclosed federal penitentiary."

Rothstein this year admitted that he had asked Hayworth to fire Hullick, and that Hayworth promised he "would take care of it," according to the complaint.

To add insult to injury, Hullick says, Hayworth defamed him by telling bank regulators that he was violent and a danger to other employees, who were afraid to work with him.

Hullick claims that Allan Faircloth, the regional director for fraud and enforcement at the Office of Thrift Supervision, which audited Gibraltar in December 2010, "recently informed Mr. Hullick that Mr. Hayworth told him and other OTS investigators the following defamatory remarks:

"'Mr. Hullick was violent and a danger to employees. Employees were afraid to work alone with him or stay past 5 p.m. in the office with him. These employees were coming to me with their fears. After firing Mr. Hullick we had to hire off-duty police officers to patrol the elevator lobby because we are afraid he might return with a gun and try to hurt people.'"

The complaint continues: "Mr. Faircloth informed Mr. Hullick that he investigated and found 'zero employees' who said they expressed such fears to Mr. Hayworth, and that Mr. Hullick was 'nothing close to violent or dangerous.' One former employee told Mr. Faircloth that 'she would trust Mr. Hullick to babysit her children.' Although not recounted to Mr. Hullick until recently, Mr. Faircloth, upon the completion of his Gibraltar investigation, determined that Mr. Hayworth's defamatory remarks were 'the most egregious cases of character assassination' that Mr. Faircloth had ever come across."

Hullick seeks damages for defamation, retaliation, breach of employment agreement, whistleblowing violations, and aiding and abetting whistleblower violations.

He is represented by John Quaranta with Weil Quaranta.

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