(CN) – Attorneys with Rothstein Rosenfeldt Adler, a 70-attorney international law firm based in Fort Lauderdale, say they learned “with surprise and sorrow” that managing partner/CEO Scott Rothstein “allegedly orchestrated a substantial misappropriation from investor trust accounts that made use of the law firm’s name.”
The Miami Herald reported today that Rothstein, 47, is suspected of running a Ponzi involving “hundreds of millions of dollars in fabricated legal settlements.”
Law firm president Stuart Rosenfeldt asked Broward County Court to appoint a receiver and dissolve the firm, saying the problems were discovered “in the past few days.”
Rothstein’s attorney said the lawyer has left the country and his whereabouts are unknown, but he is expected to return this week, the Herald reported.
According to the complaint in Broward County Court, “Stuart Rosenfeldt and the firm have filed this action to minimize any further damages caused by Mr. Rothstein, to emphasize that the innocent attorneys and staff of the complaint are not implicated in this controversy, and, most importantly, to protect the best interests of their clients.”
Rosenfeldt says Rothstein, “a charismatic and talented lawyer, has controlled firm management, especially financial matters, and has not extended access to core financial matters and records to any other attorney in the firm.”
Rosenfeldt and Rothstein founded the firm in 2002 in Fort Lauderdale. They have seven offices, in Florida, New York and Venezuela, and employ more than 70 lawyers.
Rosenfeldt says attorneys in the firm learned “in the past few days about irregularities surrounding a settlement funding business operated by Rothstein. The settlement funding business involved the purchase of structured legal settlements and the sale of these settlements to investors. Various investors have informed the firm that they believe that substantial funds are not accounted for and are missing. A review of the firm’s records undertaken over this past weekend indicates that various funds unrelated to the direct practice of law cannot be accounted for, circumstances suggesting that investor money may have been misused by Rothstein, who controlled all such accounts. Some investors allege that defendant Rothstein may have been fabricating nonexistent structured legal settlements for sale to investors.”
Rosenfeldt says any such transactions were done “without any knowledge of the other attorneys at the firm, and, in fact, Rothstein actively endeavored to hide the existence of the scheme. … (I)t appears that defendant Rothstein may have transferred substantial sums out of the investor trust accounts, and that the emergency appointment of a receiver is necessary to account for and, if appropriate, consider taking action to recover the missing investor trust account funds.”
Rosenfeldt says Rothstein refused to resign, and he owns 50 percent of the firm. Rothstein seeks judgment of dissolution and appointment of a receiver. He and the firm are represented by Kendall Coffey with Coffey Burlington of Miami.
Rothstein and his firm were major donors to Florida politicians, giving about $600,000 to the state Republican Party and about $200,000 to Democrats, leaving politicos worried about whether they should return the money, the Herald reported.
“On Friday, ‘He walked out on his wife and said, “Goodbye, baby, see you tonight,” kissed [her] and went to the airport,’ said a source close to the law firm,” according to the report in this morning’s Herald.