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Judge names receiver for Rothstein's firm - South Florida Business Journal

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Sign In / Register South Florida Business Journal - November 3, 2009 /southflorida/stories/2009/11/02/daily45.html
Tuesday, November 3, 2009 | Modified: Wednesday, November 4, 2009
Judge names receiver for Rothstein's firm
South Florida Business Journal - by Paul Brinkmann
Broward County Circuit Court Judge Jeffrey Streitfeld on Tuesday approved the appointment of a third-party receiver, former judge Herbert Stettin, over the financial accounts of the Rothstein Rosenfeldt Adler law firm. The appointment comes as firm President Stuart Rosenfeldt said former CEO Scott Rothstein had returned to the U.S. amid allegations that Rothstein misappropriated hundreds of millions of dollars from accounts he oversaw. The judge said Rothstein had relinquished his control and role with the firm by failing to appear, and Rosenfeldt was now the president and CEO, with all legal control. View Larger
Earlier in the day, members of Scott Rothstein's law firm called the Fort Lauderdale Police Department over "safety concerns" amid rumors Rothstein was returning to the United States. Rothstein has been reported to be out of the country since last week as he faces allegations of skipping town with up to $185 million from firm accounts. Attorney Kendall Coffey, representing Rosenfeldt, said Rothstein had returned to the U.S. Tuesday. "The most persistent rumor is that he is meeting with federal authorities somewhere in negotiations," Coffey said. Rosenfeldt and other attorneys with the firm said they had only $500,000 left in general accounts, with a payroll of $400,000 for staff only. The firm agreed to set aside $50,000 so Stettin can begin his work unraveling thousands of accounts overseen by Rothstein. Stettin will oversee all accounts of the firm and have access to all records. Streitfeld said he had reconsidered his earlier comments on Monday that Rosenfeldt could take over as a receiver, after realizing that Rosenfeldt could face questions about his role in running the firm. The judge said that he was concerned about Rosenfeldt's statement to reporters Monday that "although he's been 50 percent owner... he's clueless about the finances" of the firm. "I need to make sure that no improprieties are aimed at me during this process," the judge said. "I want someone independent to come in and take control of the situation." Coffey said the scope of the missing money and investigation into Rothstein's affairs grew worse "by the hour." Rosenfeldt told reporters Monday the missing money was between $100 million to $185 million, but he was quoted in the Wall Street Journal Tuesday as saying the firms accounts had $500 million in them recently and next to nothing soon after. An attorney in the courtroom was overheard saying he represented clients who are missing $100 million. Attorney Mark Raymond, managing partner of the Broad and Cassel law firm in Miami, said he was contacted by potential clients from New York with $36 million in claims. Raymond said one of the problems at this point is simple confusion over what entities Rothstein may have created to hold the accounts. Raymond predicted that the RRA firm would face many lawsuits in the coming months. Attorney Jeffrey Sonn of Sonn & Erez in Fort Lauderdale said he is preparing a possible securities lawsuit against the firm. Sonn said Rothstein developed his network of investors chiefly by sponsoring and attending charity events and by making political donations. A spokesman for the Banyan investment group in Fort Lauderdale has confirmed that it contacted the U.S. attorney's office in South Florida after suspecting Rothstein of misappropriating its funds, but declined to comment on how much.
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