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Gibraltar Bank’s role in Rothstein scheme under scrutiny

(c) South Florida Business Journal

Although the largest amount of money in Scott W. Rothstein’s alleged Ponzi scheme flowed through TD Bank, attorneys investigating the case said there are more unanswered questions about the smaller bank in the case, Gibraltar Private Bank & Trust.

“We need to get to the bottom of Gibraltar quickly,” said William Scherer, the attorney for some investors in Rothstein’s scheme. “I think TD Bank was his main bank, but Rothstein had Gibraltar stock and had accounts there. The accounts are being turned over, and we are going to analyze them.”

Gibraltar has been at the forefront of the Rothstein scandal since federal authorities raided Rothstein’s offices at his defunct law firm, Rothstein Rosenfeldt Adler. The feds seized several documents related to Gibraltar, including a folder marked “shred.”

Gibraltar has repeatedly said it is cooperating with investigations. But, attorneys, who are trying to piece together the books, recently confirmed they are still seeking documents from Gibraltar.

“We’ve gotten cooperation. But, we are still owed documents,” said Paul Singerman, the attorney for bankruptcy trustee Herbert Stettin, who is currently in charge of RRA in its Chapter 11 wind-down.

Rothstein is in jail, awaiting a Jan. 11 trial on charges of racketeering and money laundering, to which he has plead not guilty.

The alleged mystery surrounding Gibraltar is compounded by the fact that it occupies an odd place in the landscape of the Rothstein scandal for the following reasons:

  Rothstein actually owned a small percentage of Gibraltar through a limited liability corporation. On Nov. 9, Gibraltar said it froze Rothstein’s interest in the bank after receiving a civil warrant requested by the U.S. attorney’s office.

  Singerman disclosed to the bankruptcy court that he owns a small interest in Gibraltar, as an individual, along with several other attorneys from the Berger Singerman law firm. When asked recently if this presented any conflicts, Singerman said: “Berger Singerman has always represented Gibraltar in limited unrelated matters. For those reasons, not for any conflict, we are not involving ourselves in any matters involving Gibraltar Bank in the bankruptcy.”

  Stettin, the bankruptcy trustee overseeing RRA now, is a senior judge who has heard many cases involving Gibraltar in the past. Stettin was originally chosen as a receiver in the RRA case by Broward Circuit Court Judge Jeffrey Streitfeld, and later asked to stay on as chief restructuring officer by Stuart Rosenfeldt, Rothstein’s chief partner at the firm.

At one point in the case, the U.S. bankruptcy trustee’s office objected to the way that Stettin had arrived at his position with RRA, partly because Rothstein’s law partner had supported Stettin’s role. But, those objections were set aside when creditors in the case supported Stettin’s appointment as a bankruptcy trustee.

In one of Stettin’s recent cases as a senior judge, Gibraltar was foreclosing on a loan to Miami businessman Leonardo Gomez. Stettin ruled in favor of Gibraltar Bank and Gomez appealed.

In his appeal, Gomez alleged that Stettin was assigned to the case in an unorthodox way, in order to make a favorable ruling for Gibraltar. The appeal was denied.

Gomez’s attorney, George Evans, said he is still concerned about how Stettin was assigned to his client’s case. Evans alleges that Circuit Court Judge Jeri Beth Cohen, and not an administrative judge, assigned Stettin to the foreclosure case.

“It’s my opinion, but he [Stettin] wanted to stay on this case for some reason, and he gave a very quick judgment against my client and for the bank,” Evans said.

Evans said Gibraltar did not provide some of the documents he requested in that case.

Singerman, representing Stettin, dismissed any allegations against Stettin in the matter.

“As a sitting senior judge, he [Stettin] didn’t control the cases assigned to him,” Singerman said.

Ivan Reich, a bankruptcy attorney with Gray Robinson, said Stettin’s reputation in the legal community is “above reproach” and Stettin is sought out because he is known for resolving disputes quickly.

Stettin has filed motions with the federal judge in the criminal case against Rothstein, seeking to have federal authorities turn over bank accounts from both TD Bank and Gibraltar. Singerman said Stettin has been working as fast as possible on the remaining questions about Gibraltar.

A spokesman for Gibraltar Bank, Peter Whalen of Thorp & Co., said the bank had no comment on allegations regarding Stettin. | (954) 949-7562