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Scott Rothsteins wife,
Kim, was left in charge
of some assets,
including several
houses.
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South Florida Business Journal - March 15, 2010
/southflorida/stories/2010/03/15/story8.html?s=industry&b=1268625600%5E3017471
Friday, March 12, 2010
Feds: RRA bankruptcy fees have heavy impact on victims
moneySouth Florida Business Journal - by Paul Brinkmann
The standoff between the U.S. Attorneys Office in Miami and the
bankruptcy trustee for the defunct law firm of
Ponzi schemer Scott W. Rothstein kicked up a notch this
week.
The two overseers of Rothsteins wreckage are butting heads over
the best way to distribute assets and restitution in
the case. U.S. Attorney Jeff Sloman represents the U.S.
Department of Justice, which controls assets forfeited by
Rothstein following his arrest for running the $1.2 billion
scheme. The federally appointed bankruptcy trustee,
senior Judge Herbert Stettin, is trying to recover assets from
Rothsteins former law firm, Rothstein Rosenfeldt
Adler. Rothstein was chairman of the firm and used the firms
name to help solicit investments in his scheme.
Sloman recently filed a motion with the federal court, seeking
to stop a joint conference with the trustee.
The U.S. attorney took aim at fees being racked up by bankruptcy
attorneys in the Chapter 11 case of RRA.
Fees demanded by bankruptcy attorneys are having a heavy impact
on the money available to victims of the scheme, prosecutors
said.
Law and accounting firms working on the bankruptcy recently
asked the court to approve $2.2 million in fees. The two law
firms
representing Stettin Miami-based bankruptcy specialists Berger
Singerman and Genovese Joblove & Battista are seeking the
lions share of that, $1.5 million.
Rothstein, who is jailed pending his sentencing hearing in May,
signed over his assets to the feds, stating he thought that was
best for
alleged victims and creditors.
Attorney: fees are well deserved
From the perspective of the alleged victims, legal fees in the
bankruptcy are well deserved, said attorney William Scherer, who
represents
alleged investors who claim to have put more than $125 million
into the scheme.
This is a massive endeavor, so I wouldnt take a position that
the fees requested are too high at all, he said.
Scherer said his clients were bothered by the fact that
Rothsteins wife, Kim Rothstein, was left in charge of some assets,
including several
houses.
I dont know what the government was thinking, he said. They
should put a professional in there.
Stettins attorneys have attempted to cite other Ponzi schemes,
including those of Bernard Madoff and New York attorney Marc
Dreier, as
examples of cases where other bankruptcy trustees were tapped to
distribute Ponzi schemers assets.
But, attorneys for Sloman argued that, in the Dreier case, there
was an agreement struck that detailed terms of the feds arrangement
with
the bankruptcy estate.
Szafranski takes the fifth
In other recent court action, investment adviser Michael
Szafranski recently cited the Fifth Amendment repeatedly during
questioning in a
deposition for the RRA bankruptcy, Scherer said.
Szafranski was grilled about what efforts he made to verify that
investments in the Ponzi scheme were tied to supposed lawsuit
settlements
that Rothstein touted, but Szafranski did not answer.
Scherer said he still has questions about Gibraltar Private Bank
& Trust, one of the banks that handled accounts for RRA.
But,Charles Lichtman, an attorney with Berger Singerman, said that
bank has cooperated fully with requests from the bankruptcy
trustee.
In a Broward County Circuit Court hearing on March 5, TD Bank,
which also handled Rothstein accounts, argued it should be
dismissed
from a lawsuit filed by Scherers clients. But, Judge Jeffrey
Streitfeld held off on a ruling for that motion because Scherer is
filing an
amended complaint with more complete allegations soon.
[email protected] | (954) 949-7562
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