Photo: Miami HeraldScott Rothstein had an uncanny knack for knowing who could be bought.
Scott Rothstein: Expert at corruption
Five years ago, as Halloween approached, a lawyer named Scott Rothstein boarded a private jet with $16 million and fled for Morocco as one of the greatest Ponzi schemes in Florida’s storied history of fraud exploded.
The $1.4-billion Ponzi itself is a Florida record. But what stands out in retrospect is how successful Rothstein was at corrupting Fort Lauderdale and Broward County. His free spending of illegally obtained money won him recognition, friendship and praise from charities and politicians. Then-Gov. Charlie Crist appointed him to a body that chooses judges.
Here’s a contrast observed by Chuck Malkus, a Fort Lauderdale public relations firm owner who wrote a book — “The Ultimate Ponzi” — about Rothstein: The Ponzi of Bernie Madoff, whose $65-billion scheme fell apart about 10 months before Rothstein’s debacle, resulted in about a halfdozen people convicted on criminal charges in addition to Madoff himself. The count of criminal charges from the Rothstein case as of August stood at more than two dozen people. The conventional wisdom holds that more people will be charged before the five-year statute of limitations runs out this month.
Says Fort Lauderdale attorney William Scherer, who has been busy the last five years pursuing recoveries for Rothstein victims, “His ability to size up somebody and see whether they were corruptible or not was pretty uncanny. He had the ability to sort out the people who were on the edge and he corrupted them. He talked about that in his deposition.”
The corruptibles ranged from Rothstein law partners and legal staff to Broward sheriff’s deputies, who moonlighted as Rothstein thugs. In one case, a Broward lieutenant, the then sheriff’s executive officer, had the innocent ex-wife of a lawyer arrested outside her kid’s school by a detective on trumped up charges, strip searched and jailed to give her ex an edge in a child custody dispute. Lt. David Benjamin earned $185,000 from Rothstein; he ended up with five years in prison.
Benjamin also had cops lean on an escort to get out of state after her boyfriend threatened to expose her sexual services to Rothstein law partner Stuart Rosenfeldt.
Talk to people now in Broward and they will tell you they always had suspicions about Rothstein. The clues were there: First and foremost, how unlikely it was that a law firm the size of Rothstein’s could generate the revenue Rothstein claimed and finance his flamboyant display of wealth, his outsized donations and the high pay to those at the firm.
Rothstein’s donations bought him legitimacy, and the nonprofits — whose recognition of his generosity earned him trust he could use to scam others — were loathe to refuse his money. The same non-profits suffered through layoffs and cuts in services when they had to return the money after Rothstein’s scam blew up.
Rothstein, now serving 50 years while he helps prosecutors nail those who supported him, claimed he had a pipeline to secret settlements that corporations had paid to settle whistleblower, sexual harassment and other claims. The winners in those cases supposedly were willing to trade the payments they were to receive over time for lesser money immediately. Rothstein’s investors, suckered by everything from forged judges’ signatures to bankers who lied about what was in Rothstein’s accounts, invested with Rothstein to pay those fictional claimants in return for big returns.
“The takeaway from a community that got so devastated by this crook is kind of that we should be perhaps a little bit circumspect with people who are throwing their money around,” Scherer says. “I think the charities, I think everybody, is going to be a little more suspicious. There’s going to be more cynicism in the right sort of way.”