Hyde in China

Hedge funds fight back in Scott Rothstein fraud suit

Mon, 14 Feb 2011 15:37:04 -0500

By Peter Franceschina Staff Writer Two New York hedge funds that invested with Ponzi schemer Scott Rothstein are fighting back in the largest fraud suit ever filed in Broward circuit court. The suit was brought in the fall of 2009 by a group of Rothstein investors, headed by wealthy Fort Lauderdale entrepreneur Doug Von Allmen, that alleges losses of more than $100 million. The suit has been amended three times and is more than a thousand pages long. The hedge funds, Platinum Partners Arbitrage Fund and Centurion Structured Growth, are related and named as defendants. They are already contesting some of the settlement agreements a trustee for Rothstein’s bankrupt law firm, Rothstein Rosenfeldt Adler, has reached in federal clawback suits. They also are suing one of Rothstein’s banks, TD Bank, and Rothstein’s largest feeder, Fort Lauderdale businessman George Levin. Last week, Platinum Partners filed a counterclaim in the state case, alleging that the funds lost more than $20 million investing with Rothstein. The counterclaim alleges that Von Allmen and the group of investors have overstated their losses because they did not account for returns received from Rothstein. Fort Lauderdale attorney Bill Scherer, who represents the investors, said Von Allmen had no idea Rothstein was running a Ponzi scheme and put money in until the very end. While the investors are seeking $280 million in damages, they have overstated their loses by $120 million, according to the counterclaim. Scherer said the investors he represents lost roughly $165 million. “The damages are higher than at,” he said. Platinum and Centurion assert that allegations that they solicited investments for Rothstein are false, and that instead Von Allmen played that role just before the $1.4 billion fraud scheme imploded. “By thus joining Rothstein's conspiracy, it is Von Allmen and those who conspired with him who have rendered themselves liable under Florida law to all victims of Rothstein's scheme, including the Fund Defendants and those Plaintiffs who did not join in Von Allmen's conspiracy,” the counterclaim alleges. Scherer denied that. “They essentially took the allegations that we have made against them for aiding and abetting the Rothstein Ponzi and flipped it around, and said our victims did what we accused them of doing,” he said. “The only problem is, they got back all of their money, all but $20 million out of R440 million. That is a pretty good return.” The high-stakes litigation involves dozens of plaintiffs and defendants. Boxes and boxes of documents in the case are stored at the clerk of court’s office. More than 78 volumes of pleadings have already been created. Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to racketeering, money laundering and fraud.

"American Greed" will feature Scott Rothstein next week

Mon, 14 Feb 2011 14:15:14 -0500

CNBC's "American Greed" will feature Ponzi schemer Scott Rothstein on Feb. 23 at 10 p.m. The "American Greed" crew appears to have gotten some previously unseen footage of Rothstein, who pulled off the largest fraud in South Florida history. Those featured in the preview include Fort Lauderdale attorney Jeffrey Sonn, Rothstein's defense attorney Marc Nurik and Sun-Sentinel reporter Peter Franceschina.

Former Scott Rothstein law partner Russell Adler reaches $350,000 clawback settlement

Thu, 27 Jan 2011 12:21:32 -0500

By Peter Franceschina Staff Writer Russell Adler, one of Ponzi schemer Scott Rothstein’s former law partners, owes more than $200,000 to the IRS and has little in the way of assets, yet he has agreed to pay $350,000 to the estate of his bankrupt law firm. The last-minute settlement in a clawback suit was reached Wednesday night and announced Thursday in U.S. Bankruptcy Court. If Adler fails to pay the money within 2 1/2 years, a judgment for $500,000 will be entered against him. The bankruptcy attorneys marshaling assets for the now-defunct Rothstein Rosenfeldt Adler law firm agreed to the settlement, in part, because there is little likelihood Adler would be able to pay a hefty judgment, according to court documents filed Thursday that outline Adler’s financial condition. “Critical to determining [the] settlement was a detailed analysis of the Adlers’ current financial condition, which based upon mediation related financial disclosures revealed that the Adlers have no existing bank, securities or other accounts upon which to execute, no equity in their home, leased vehicles and no other liquid non-exempt assets that could be used to satisfy any potential judgment,” bankruptcy attorney Chuck Lichtman wrote in a motion asking a judge to approve the settlement. “Further, it appears as if the Adlers may be subject to an IRS notice of lien or other action in an approximate amount of $234,000 and Mr. Adler could be facing other types of exposure in potential Florida Bar or criminal proceedings.” The proposed settlement comes ahead of a trial on the clawback suit that was scheduled for Feb. 14. Adler has said he knew nothing about Rothstein’s massive $1.4 billion investment fraud scheme, and he admitted no wrongdoing in the settlement. "I did nothing wrong and was eager to go to trial and be vindicated. The settlement was purely a business decision that will put this case behind us and let me focus on my family, my future and the pursuit of justice for my clients,” Adler said Thursday in a statement. The $350,000 will go toward paying back the creditors of Rothstein’s law firm, which has been in bankruptcy since his fraud scheme imploded in the fall of 2009. To pay the money, Adler agreed to give up half of the legal fees he earns from cases he is handling that originated with his former law firm, and 15 percent of the fees from new cases. He also agreed to surrender a $90,000 retirement account. The bankruptcy attorneys were seeking $1.2 million from Adler, alleging he was overpaid and received loans from the law firm that were not repaid. The clawback suit alleged Adler and his wife used $475,000 of that money to buy a Manhattan co-op apartment. Adler surrendered the apartment to the federal government as part of the criminal forfeiture proceedings against Rothstein. Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to federal charges last year.

Republican Party of Florida agrees to return $75,000 in Scott Rothstein contributions

Wed, 26 Jan 2011 11:22:25 -0500

By Peter Franceschina Staff Writer The Republican Party of Florida has agreed to cough up $75,000 in contributions from Ponzi schemer Scott Rothstein, to settle a clawback lawsuit filed by bankruptcy attorneys. Rothstein, who ran a $1.4 billion investment fraud scheme from 2005 until the fall of 2009 and rained dollars down on politicos, gave roughly $237,000 to the state party through multiple contributions. After Rothstein’s fraud came to light, the Republican party returned $90,000 to the federal government, which went into a restitution fund for the fraudster’s victims. The attorneys marshaling assets for Rothstein’s bankrupt law firm Rothstein Rosenfeldt Adler filed a clawback suit against the Republican party in November in an effort to reclaim the contributions. The state party answered the suit by denying it had any responsibility to return the contributions. But the bankruptcy attorneys and party officials began negotiating behind the scenes, and on Dec. 12 the party’s board of directors voted to approve the $75,000 settlement, according to the proposed agreement filed late Tuesday in U.S. Bankruptcy Court in Fort Lauderdale. Both sides said the settlement will save legal costs and avoid a protracted court battle. The agreement still must be approved by the judge overseeing the bankruptcy case. It also looks like the bankruptcy attorneys will be bringing another chunk of change into the estate – they have reached a proposed $700,000 settlement with a New York company, Utica Advisors, that invested late in the Ponzi scheme. Utica Advisors invested $1.8 million with Rothstein in July 2009 and was to be repaid $2.6 million over three months, but received only $2.3 million before the fraud’s collapse, according to court documents. The $700,000 settlement also must be approved by the judge. Rothstein, 48, is serving a 50-year prison sentence after pleading guilty to committing the massive fraud.

Rothstein bodyguard hit with $300k clawback suit

Fri, 10 Dec 2010 11:41:17 -0500

By Peter Franceschina Staff Writer The former bodyguard for Ponzi schemer Scott Rothstein’s wife, Kim, has been hit with a $300,000 clawback suit alleging law firm money went to purchase a Victoria Park condo. The bankruptcy suit against bodyguard Joe “Meaty” Alu – a former Plantation police officer – alleges that $301,000 was used to purchase the $430,000 condo on NE 5th Court in May 2009, “a mere five months before the Ponzi Scheme was revealed and subsequently exploded.” In the aftermath of the revelations surrounding Scott Rothstein’s $1.4 billion investment fraud scheme in the fall of 2009, Alu was a constant presence at the side of Kim Rothstein. He chauffeured her around in a black Cadillac Escalade and stood guard outside the gated Rothstein compound on Isla Bahia, even as Scott Rothstein dropped out of sight and was secretly cooperating with federal prosecutors. He was thrust into the media limelight, with his bulging, tattooed arms and his sometimes pithy quotes. And he defended Scott Rothstein, who hired him in September 2008 to protect his wife. "I don't abandon my friends because they make mistakes,” Alu told the Sun Sentinel earlier this year. "Or I'd have no friends left. He never did anything to hurt me, ever. ... I'm sorry some people led Scott astray to do some bad things. I don't think it's Scott's fault." Alu said Friday that he has been making monthly mortgage payments, which are being held in escrow by his attorney. He said he is a victim of a dispute between the bankruptcy attorneys and federal prosecutors over Rothstein's assets. "I don’t care who I pay the money to. They can fight among themselves over the money. I just want to get out of this mess," he said. He was still working as a Plantation police officer in 2008 when Rothstein hired him to guard his wife, and Alu retired from the force that fall, after a 21-year career. He told the Sun Sentinel he had known Scott Rothstein for 20 years, after they met in Plantation when Rothstein had an office there and represented the police union. More than two dozen clawback suits have been filed in the bankruptcy case, seeking tens of millions of dollars. The suit against Alu was filed on Thursday. Rothstein, 48, is still cooperating in the federal investigation and is serving a 50-year prison term in an undisclosed location after helping bring down a reputed Mafia figure.

Rothstein bank hit with $60 million clawback suit

Tue, 07 Dec 2010 15:05:09 -0500

By Peter Franceschina Staff Writer The trustee for the Scott Rothstein bankruptcy case has filed a clawback suit seeking nearly $60 million from Gibraltar Private Bank & Trust, alleging the bank aided the Fort Lauderdale attorney in running his massive Ponzi scheme. More than two dozen clawback suits have been filed in the Rothstein Rosenfeldt Adler law firm bankruptcy. Gibraltar also is the target of a civil lawsuit filed by a group of investors that allegedly lost more than $100 million. Rothstein bought roughly a 5 percent interest in the Coral Gables-based bank, which has offices in downtown Fort Lauderdale. The clawback suit, filed Monday in U.S. Bankruptcy Court, alleges that “from the outset, Rothstein utilized the cooperation of Gibraltar in order to give birth to and to perpetuate the life of his Ponzi scheme.” “Gibraltar gained actual and/or constructive knowledge of Rothstein’s criminal conduct by monitoring and questioning the high volume, high velocity flow of funds between RRA and/or Rothstein accounts, as well as the substantial, recurring overdrafts which were clearly indicative of money laundering, tax evasion, and other criminal conduct,” the suit alleges. Thomas Tew, an attorney for the bank, said Gibraltar would contest the suit. Tew said the bankruptcy trustee doesn’t have standing under the law to bring claims that the bank was implicated in the fraud scheme, because Rothstein used his law firm as a criminal enterprise. “If you’re a crook, you can’t turn around and sue someone else for your wrongdoing,” he said. Tew also said the clawback claims are a form of “double dipping” because it was money from the investors who are suing Gibraltar in the civil case that Rothstein used to cover millions of dollars in overdrafts at the bank. A judge is now considering a Gibraltar motion to dismiss the bank as a defendant in that case. John Genovese, an attorney for the bankruptcy trustee, said only the trustee could bring certain claims against Gibraltar. He said the bank has to demonstrate it received the money from Rothstein in good faith and had no knowledge of the fraud. “We have alleged there are significant badges of fraud that would have put them on notice that Rothstein was engaged in a fraud. These claims could not be asserted in state court,” he said. “We feel fairly certain that given that they failed to follow their own policies and practices, that they can’t demonstrate they acted in good faith.” Rothstein's $1.4 billion fraud scheme collapsed in the fall of 2009. Rothstein, 48, is still cooperating in the federal investigation and is serving a 50-year prison term in an undisclosed location after helping bring down a reputed Mafia figure.

Rothstein's former COO cooperating extensively with feds

Fri, 03 Dec 2010 11:34:18 -0500

Whatever secrets Ponzi schemer Scott Rothstein's chief operating officer held, the federal government likely knows them now. Debra Villegas, who was at Rothstein's side for 17 years, has provided extensive cooperation in hopes of getting her 10-year prison sentence reduced for her role in the largest financial fraud in South Florida history, said her attorney at a Friday court hearing. Villegas has met with federal authorities 13 times for a total of 35 hours, answering their questions, said defense attorney Robert Stickney. In addition, she has participated in six phone conferences with authorities and spent 24 hours reviewing about 15,000 e-mails, pulling aside 60 that she said were important. The revelations about Villegas' cooperation came as her attorney asked a federal magistrate to appoint him as her counsel because she no longer has the money to pay him. Villegas testified she is on unemployment, which is set to run out later this month. U.S. Magistrate Robin Rosenbaum found Villegas couldn't afford an attorney, but if she received a court-appointed attorney, it wouldn't be Stickney. In response, Stickney withdrew the request for Villegas to receive a court-appointed counsel and announced that he would represent her for free. Villegas, 43, has remained free since her October sentencing so she can continue cooperating with the government. She admitted to forging signatures on phony legal settlements that Rothstein used to draw investors into his Ponzi scheme. Villegas is the only other person besides Rothstein charged in the fraud so far. Rothstein is serving a 50-year prison sentence after pleading guilty to five charges stemming from the scheme.

Rothstein's right-hand woman asks for court-appointed lawyer

Tue, 16 Nov 2010 11:44:11 -0500

The former chief operating officer of Ponzi schemer Scott Rothstein's law firm is now asking for a court-appointed attorney. Debra Villegas, who was at Rothstein's side for 17 years, has submitted paperwork to U.S. District Judge William Zloch indicating that she can no longer afford legal representation. She has been represented by private criminal defense attorney Robert Stickney. Villegas, 43, was sentenced last month to 10 years in federal prison after admitting she forged signatures on phony legal settlements that Rothstein used to lure investors. Villegas, a mother of four, has remained free since her sentencing as she continues to cooperate with FBI and IRS agents investigating Rothstein's $1.4 billion Ponzi scheme--the largest financial fraud in South Florida history. She is set to start serving her prison time on June 24. Stickney wrote in court documents filed Sunday that Villegas needs to have continued legal representation because she anticipates federal prosecutors will file paperwork to have her sentence reduced. So far Villegas is the only one of Rothstein's cohorts who has been charged in the Ponzi scheme. Rothstein is serving a 50-year prison sentence after pleading guilty to five charges related to the fraud.

Rothstein sting: Alleged Mafia go-between sentenced to four years

Wed, 03 Nov 2010 09:57:18 -0500

A Miami Beach man with alleged Mafia ties was sentenced Wednesday morning to four years in federal prison after he got caught up in a government sting set in motion by Ponzi schemer Scott Rothstein. Wine seller Roberto Settineri's arrest in March had been hailed by U.S. and Italian authorities as a blow to a violent Sicilian mob family. Italian authorities described him as a conduit between the Santa Maria di Gesu crime family and the Gambino crime family in New York. Settineri, 42, had been on the radar of authorities for months with the FBI getting their big break when Rothstein began cooperating in November 2009, immediately after his massive investment fraud was discovered. Rothstein had known Settineri through the restaurant at the Versace Mansion and used that connection to initiate contact with Settineri. Rothstein covertly recorded conversations with Settineri and two other men, asking them to destroy documents and help launder money. Settineri's co-defendants--Enrique Ros and Daniel Dromerhauser--both took plea deals in the case, each getting house arrest. While federal authorities and the Italian National Police held a press conference in March hailing Settineri's arrest as a major development, Settineri has not been charged with any other crimes. Italian authorities have not filed paperwork seeking his extradition. Settineri's attorney, Jeffrey Weiner, said he has heard no indication that his client will be charged there. Settineri, a U.S. citizen born in Italy, did not speak during the brief sentencing hearing before U.S. District Judge James I. Cohn. Watching the proceedings were his parents, his ex-wife and his current wife.

Tony Villegas remains incompetent to stand trial in Rothstein law partner's murder

Tue, 02 Nov 2010 17:44:17 -0500

The man charged with killing one of Scott Rothstein’s law partners remains incompetent to stand trial, a judge ruled Tuesday. Tony Villegas, the ex-husband of Rothstein’s chief operating officer, Debra Villegas, has been charged with the March 5, 2008, murder of Melissa Britt Lewis, his former wife’s best friend. Villegas, 47, was first declared unfit to proceed in May and transferred to a state mental health facility. Two mental health experts testified Tuesday he is still incompetent because he gets so emotional he couldn't adequately assist his attorneys if he went to trial. Broward Circuit Judge William Haury ordered Villegas be transferred back to a state hospital. Under Florida law, a criminal defendant is deemed incompetent to proceed if a judge determines the defendant lacks the ability to assist in his or her defense or lacks a basic understanding of the court proceedings. The state has five years to restore a defendant's competency or the case must be dropped. Villegas, a train conductor, was arrested a week after Lewis' body was found dumped in a Plantation canal. She had been strangled. Court documents indicate DNA taken from Lewis' jacket is a 1 in 30 billion match with Villegas. The jacket had been found in her abandoned Cadillac SUV hours after she was reported missing. Tuesday's court hearing offered no major surprises. While two forensic psychologists testified he was incompetent, a third said he was competent. Prosecutor Al Ribas argued that the only reason Villegas is currently incompetent to proceed is that he refuses to take medication while he is housed at the Broward County Jail. The mental health experts indicated Tuesday that if he is on his medication, he could be fit for trial. Villegas could face the death penalty if he's convicted of first-degree murder.

Former Rothstein law partner, Russell Adler, sits for attorneys' questions

Wed, 27 Oct 2010 17:31:01 -0500

One of Ponzi schemer Scott Rothstein's former law partners faces questioning this morning by attorneys picking through the wreckage of Rothstein's $1.4 billion investment fraud. Russell Adler -- one of the named partners of the Rothstein Rosenfeldt Adler law firm -- is being sued by the firm's bankruptcy trustee for about $1.2 million in payments and loans he received. Part of that money was used to pay for a New York City apartment that Adler forfeited earlier this month to the federal government. When Rothstein's other named partner -- Stuart Rosenfeldt -- sat for bankruptcy attorneys' questions in July, he invoked his Fifth Amendment right against self-incrimination more than 700 times. UPDATE:10:30 a.m. Adler began testifying at about 9:45 a.m. with veteran criminal defense attorney Fred Haddad by his side. He appears relaxed, often leaning back in his chair. So far he has been questioned about his legal background prior to joining RRA. Adler said that when Rothstein, a friend from Nova Southeastern University law school, offered him a job, he insisted Rothstein put his name on the law firm's door. "And look where it's gotten me," he said. Adler said Rothstein promised him 20 percent equity in the law firm if he met certain performance goals. He met those goals, but Rothstein never delivered on his promise, Adler said. UPDATE 1 P.M. A theme that emerged from Adler's answers this morning: He trusted Rothstein and he had no idea Rothstein was selling the structured legal settlements that lured investors into handing him millions. "I never knew anyone was investing with Scott," Adler said. Adler said that while he was listed as the firm's vice-president and as a shareholder, those titles were largely ceremonial and he never saw the firm's financial records. Unlike Rosenfeldt, Adler did not invoke his Fifth Amendment right against self-incrimination once. Adler seemingly came into the deposition relaxed, but he became increasingly irritated with some of the questions posed to him by Charles Lichtman, one of the attorneys representing the bankruptcy trustee. He repeatedly accused Lichtman of trying to make the deposition "a memory game"--asking questions that he believed documents obtained by the bankruptcy attorneys have already answered. When Adler attempted to ask Lichtman a question, Lichtman responded, "Excuse me, I'm asking the questions" and told Adler to stop giving speeches. Adler countered that Lichtman "should start trying to ask better questions." The back-and-forth escalated to the point that Haddad, who sat silent for almost the entire morning session, threatened to walk out with his client. The confrontation quickly subsided. The deposition will continue this afternoon. Check with the This Just In blog for updates.

Rothstein’s cousin hit with bankruptcy clawback lawsuit

Tue, 26 Oct 2010 10:52:24 -0500

By Jon Burstein One of Scott Rothstein’s cousins has been hit with a bankruptcy clawback lawsuit accusing her of pocketing more than $620,000 as her relative ran South Florida’s largest financial fraud ever. Rothstein paid off the mortgage on Robin Kempner’s Pompano Beach home, as well as employing her at his law firm—Rothstein Rosenfeldt Adler, according to the lawsuit filed Monday. The firm was paying her $100,000 annually. “The (bankruptcy) trustee challenges the reasonableness of the payments made to Kempner as salary for 2008 and 2009,” according to the lawsuit. “The amounts are challenged as being overpayments of compensation for the two-year period subject to this lawsuit because they were unreasonable and improper.” “Kempner and Rothstein regularly exchanged e-mail, not just on business issues, but also of a very personal nature where they mutually addressed each other with ‘love’ and in which, Kempner referred to Rothstein as ‘Little Scott,’” wrote Charles Lichtman, one of the attorneys representing bankruptcy trustee Herbert Stettin. Kempner is the second of Rothstein’s relatives to face a clawback lawsuit as attorneys try to recover money he stole in his massive Ponzi scheme. Kim Rothstein, Scott Rothstein’s wife, has been sued by Stettin, and was set to be deposed last week until attorneys indicated that she may be reaching a settlement. Rothstein was sentenced in June to 50 years in prison after pleading guilty to five federal charges.

Rothstein clawback suit targets cruise line executive for $8.7 million

Fri, 15 Oct 2010 17:41:31 -0500

By Peter Franceschina Sun Sentinel The clawback suits continue to roll out in the Scott Rothstein Ponzi scheme bankruptcy. The latest was filed Friday and seeks to collect $8.7 million from Albert Peter, Rothstein’s partner in what was to be a European cruise line venture called Jewel River Cruises based in Switzerland. The suit also names Peter’s wife, Iris, and Tatiana Yoel as defendants. The suit alleges that Rothstein, at Peter’s request, paid Yoel $400,000 for “unknown reasons.” The suit says that Rothstein and Peter became close friends several years ago when Peter hired Rothstein to do legal work for a cruise line he operated in South Florida. Peter allegedly invested roughly $2.1 million in Rothstein’s fraudulent investment scheme and made a $1.5 million profit, and was paid another $403,000 in salary. The suit also seeks to collect $4.3 million that Rothstein paid from his law firm, Rothstein Rosenfeldt Adler, to support Jewel River. Neither Peter nor Yoel could immediately be reached for comment Friday. The suit provides some insight into the close relationship between Rothstein – now serving 50 years in prison for his $1.4 billion fraud – and Peter: “The strength of the personal relationship between Rothstein and Peter is established by certain facts,” the suit says, “including that: (a) the Peters regularly socialized with Rothstein and his wife, Kimberly Rothstein (‘Kim’); (b) Peter and Rothstein spoke frequently about personal matters and they socialized together regularly for drinks and cigars, independent of their spouses; (c) the Peters discussed purchasing a home next door to the Rothsteins; (d) Rothstein became Peter’s personal legal counsel; (e) Rothstein ‘employed’ and pad at least $403,845.00 to Peter for unknown reasons, using RRA funds; (f) Rothstein went into business with Peter by forming Jewel River Cruise Lines, US, LLC, Jewel GmbH and Jewel Holdings; (g) Rothstein used his relationship with Mark and Robin Levinson, to enable Peter to buy jewelry from Levinson Jewelers at a discount; (h) Rothstein shared private matters with Peter, such as sensitive health situations involving himself and Kim; (i) Peter and Rothstein regularly, often times daily, exchanged e-mail not just on business issues, but also of a very personal nature where they mutually addressed each other with great fondness including referring to each other as ‘brothers;’ and (j) Rothstein often provided Peter with ‘men favors’ by supplying false ‘alibis’ for Mrs. Peter, providing cover for Peter’s personal time spent with Yoel.”

Rothstein co-conspirator faces 10 years in prison at October sentencing

Mon, 13 Sep 2010 10:48:56 -0500

By Peter Franceschina Sun Sentinel Federal sentencing guidelines for Ponzi schemer Scott Rothstein’s right-hand woman, Debra Villegas, call for more than 10 years in prison. Villegas, 43, pleaded guilty to a single count of money laundering conspiracy in June. While the felony carries a maximum sentence of 10 years in prison, a pre-sentence report completed by federal probation officials set out recommended guidelines that call for more than 10 years, according to a court document filed over the weekend. Villegas’ attorney, Robert Stickney, filed objections to the pre-sentence report on Saturday. He did not spell out the exact number of years in prison that are being recommended to the judge in the report, but he wrote that it was more than 10 years. He declined to be more specific in an interivew Monday. Federal probations officials apparently reached their recommended sentence by considering a number of aggravating factors, including that Villegas was part of a sophisticated money laundering operation. Villegas rose from being a paralegal for Rothstein to being his chief operating officer during his $1.4 billion investment fraud. Villegas, who remains free on bond, is scheduled for sentencing Oct. 8 before U.S. District Judge William Zloch. Stickney wrote in his objections that the sentence is capped at 10 years by law, regardless of the guidelines, and suggested that Villegas deserves a break on her prison time because of her cooperation with federal agents and prosecutors. Stickney said the judge has the discretion to reduce a potential 10-year sentence. "He can award her a departure downward from the statutory maximum to reward her for acceptance of responsibility," he said. A spokeswoman for the U.S. Attorney's Office in Miami said any response from prosecutors would come in the form of a court filing. Prosecutors can choose to oppose or support Stickney's argument for a break on Villegas' sentence. Rothstein, 48, pleaded guilty to racketeering, money laundering and fraud and is currently serving a 50-year prison term in an undisclosed location.

Rothstein investment groups hit with $23 million in clawback suits

Fri, 03 Sep 2010 16:53:14 -0500

By Peter Franceschina and Jon Burstein Sun Sentinel Eight of Ponzi schemer Scott Rothstein’s investment groups were hit with bankruptcy clawback suits Friday seeking repayment of $23.4 million. The investment groups put $26.5 million in during what turned out to be the waning days Rothstein’s $1.4 billion investment fraud scheme, before it imploded last fall. The investment groups were supposed to receive $37.8 million over a period of several months in return, according to the suits. Because the Ponzi collapsed, they only received $23.2 million. The extra $200,000 being sought by the bankruptcy trustee includes interest payments Rothstein made to a few of the investment groups. The trustee made demands on the investment groups to return the money, but the suits say they refused. Here is a breakdown of the investment groups and the numbers, according to the suits: Caro Group LLC Put in: $5,330,000 Clawback demands: $2,980,000 Exito Investment Group LLC Put in: $2,310,000 Clawback demands: $1,674,000 Marmarser Investment LLC Put in: $1,210,000 Clawback demands: $1,115,000 MTG Holdings LLC Put in: $1,000,000 Clawback demands: $350,000 New Miami Group LLC Put in: $1,320,000 Clawback demands: $600,000 Pirulin Group LLC Put in: $2,650,000 Clawback demands: $1,125,000 OPMonies 2 LLC Put in: $1,375,000 Clawback demands: $875,000 Wak Boys LLC Put in: $11,380,000 Clawback demands: $14,690,571