Feds Seize Alleged Ponzi Scammer's Assets In Florida

Nov. 24, 2009 — -- Scott Rothstein, the Florida lawyer accused of running a mini-Madoff Ponzi scheme that cost investors a cool billion, has not yet been charged with any crime, but on Monday federal authorities filed court documents to seize assets that hint at the lavishness of his lifestyle. Among the items named were 20 luxury cars, 15 real-estate properties, an 87-foot yacht, 304 pieces of jewelry and $12 million stashed in Moroccan banks.

In a new civil suit, a group of three-dozen Rothstein investors alleges that TD Bank helped Rothstein run his scheme, and seeks more than $100 million in damages from the Canadian firm.

Read the civil suit, in its entirety, by clicking here. Click here to read the amended complaint for forfeiture, as filed by federal authorities on Monday.

"The Ponzi scheme would never have worked without the bank's cooperation and blind eye of the senior management at TD Bank to what was going on there given the tremendous amount of my clients' money that was flowing through trust accounts in that bank," William R. Scherer, an attorney representing the investors, told ABC News.

In a statement, TD Bank denied any wrongdoing.

"It is best not to jump to conclusions on our involvement or speculating on the total dollar loss, if any, or any amounts held in our bank," said Rebecca S. Acevedo, public relations manager at TD Bank. "The claims are solely allegations and not evidence of any wrongdoing on the part of TD Bank."

Calls and e-mails to Rothstein's attorney, Marc Nurik, were not returned. In an interview with the New York Times, plaintiffs' attorney Scherer suggested that Rothstein must be cooperating with the federal government in order for authorities to inventory his assets in such detail. "He's clearly singing like a bird," said Scherer.

Rothstein, 47, was the managing shareholder, chairman and CEO of Rothstein Rosenfeldt Adler, a Fort Lauderdale law firm that once had 70 attorneys. He is also alleged to have run a covert investment fund out of the law firm.

In late October, Rothstein flew to Morocco without his wife. The Florida Sun-Sentinel reports that four days later, he texted partners at his law firm, saying he wouldn't see them again. "Sorry for letting you all down," he wrote. "I am a fool. I thought I could fix it, but got trapped by my ego and refusal to fail, and now all I have accomplished is hurting the people I love. Please take care of yourselves and please protect [my wife]. She knew nothing. Neither did she, nor any of you deserve what I did. I hope God allows me to see you on the other side. Love, Scott."

While Rothstein was out of the country, a Florida newspaper confirmed that investors had contacted federal prosecutors about his investment business, and that his law firm had contacted outside counsel.

Rothstein returned from Morocco on Tuesday, Nov. 3 and apparently met with federal prosecutors. Local investors filed their first lawsuit the same day, alleging losses of $3 million. The FBI and the IRS raided the offices of his law firm on Wednesday, Nov. 4. Documents filed by the IRS on Nov. 9 alleged a Ponzi scheme dating back to 2004. The FBI would later say the figures might exceed $1 billion.

Former partner Stuart Rosenfeldt has filed a civil suit alleging that Rothstein ran a covert investment scheme on the side and may have walked away with "substantial sums'' put up by investors. Rothstein attracted investors by promising huge returns and selling legal settlements he said he had reached, but at least some of those settlements did not exist, according to Rosenfeldt's suit.

Before his trip to Morocco, Rothstein was an important figure on the South Florida social and political scene. Rothstein was a major contributor to the Republican Party, as reported by ABC News earlier this month. The political contributions, which went to both state Democratic and Republican parties and individual politicians, have been returned. Rothstein gave $9,600 to Republican Gov. Charlie Crist's campaign for the U.S. Senate and $6,000 to Democrat Alex Sink's gubernatorial campaign.

Rothstein gave big to charitable organizations and hospitals as well. All together, he donated $1.8 million to two Ft. Lauderdale hospitals -- $800,000 to Joe DiMaggio Children's and $1 million to Holy Cross.

Alison W. Lehr, assistant U.S. Attorney in Florida's Southern District, filed the amended complaint for forfeiture on Monday. A spokesperson for the office, Alicia Valle, declined comment.

Those who say they were victimized by Rothstein's alleged fraud will benefit from the seizures. Scherer said, "It will greatly help my clients start to get some of their money back."

Scherer said his clients have suffered $100 million in losses. He said that other alleged victims he is not representing have lost another $400 million and expects the total dollar amount to grow. The Florida-based attorney also says that Rothstein and TD Bank associates weren't the only ones involved. He said, "I think that others will be included [in the suit] as we learn more."

FBI and IRS investigators continue to collect information on the case, sources close to the investigation told ABC News.

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