There are plenty of juicy tidbits in this Very Intrepid piece on Marc Nurik, but this part caught my eye:
The judge also wondered whether Nurik would submit a bill for a second deposition of Rothstein planned for this summer. Nurik loudly interjected that he would attend the deposition whether he gets paid or not.
"Mr. Nurik will be there regardless," he said. "Mr. Nurik doesn't abandon his clients."
Admirable (seriously), but I wish Marc had kept going:
"Mr. Nurik plans on not speaking soon. Mr. Nurik will stop speaking as soon as Mr. Nurik's counsel is done speaking. Mr. Nurik's counsel advises that Mr. Nurik will now return to eating his Fig Newton."
So Scott Rothstein will be brought back to Miami, to be deposed by as many as 30 lawyers who are slotted anywhere from several hours to several days for continuous "speed depos" right up until Christmas Eve?
Only in Scott Rothstein's world does something like this seem even plausible.
That's the burning question raised by Judge Cohn in his order today:
Counsel for Mr. Rothstein shall respond to the Trustee’s Expedited Motion to Amend Writ of Habeas Corpus Ad Testificandum [DE 53] by November 21, 2011, by updating the Court on his availability for the December 12 deposition, and by stating his client’s position on whether the deposition can go forward without Mr. Nurik’s presence, either with no counsel or substitute counsel;
David Brooks, typically a reductionist dodo who sees the world in two shades of binary, actually wrote an insightful column the other day on the virtues of the humanities and their application to the business world.
In particular, Brooks noted the power of analogies:
Studying the humanities will give you a wealth of analogies. People think by comparison — Iraq is either like Vietnam or Bosnia; your boss is like Narcissus or Solon. People who have a wealth of analogies in their minds can think more precisely than those with few analogies. If you go through college without reading Thucydides, Herodotus and Gibbon, you’ll have been cheated out of a great repertoire of comparisons.
I think there's some merit to this.
I put up a picture from Save the Tiger yesterday because I found echoes of Harry Stoner in Rothstein's letter and Nurik's presentation to the Court.
Save the Tiger is one of the better films to examine the tensions between business, morality, success, idealism, and manhood set amid the backdrop of the moral and ethical conflicts raging in America in the early 70s.
Harry Stoner, a WWII hero who helped liberate Italy at Anzio Beach, is an upwardly mobile garment manufacturer living the "American dream." Yet appearances are deceiving. His relationship with his wife is strained, his business is overextended and failing, and his reality is increasingly fractured by memories of his dead war buddies, the 1939 lineup of his treasured Dodgers, and glimpses of his idealistic youth, particularly his years playing baseball, drumming with a big band and listening to swing music.
The counterculture and the decaying values of Vietnam-era America meet Harry Stoner's sliding immorality head-on, as Harry is faced continually with business decisions that weaken him morally and challenge him ethically, until his fragile efforts at holding it all together rip apart at the seams.
Scott's self-described tale is similar -- from Hebrew school to playing guitar in high school to forming a firm with Stu to seventy lawyers, no business, and an ever-increasing and all-consuming Ponzi scheme, Scott faced the same choices lawyers and businessmen grapple with daily -- how to live a moral life and yet still achieve success, respect, and happiness.
Clearly Scott blew it. But like Harry Stoner, Scott's demise was the product of a million small decisions, each of them wrong.
"He forged these court orders to perpetuate the Ponzi scheme,'' the judge said. "There can be no conduct more reviled than a lawyer perpetrating a fraud on the court.''
Actually, there is conduct more reviled that lawyers could engage in -- Scott could have killed someone, for example.
In order to answer that question, we need to know the point of the sentence.
Personally, I can't figure out the relationship between crime and the sentencing guidelines -- are they punitive, rehabilitative, preventative, arbitrary, or some mix of them all?
We sentence hundreds of thousands of people to lengthy sentences for distributing various forms of Soma -- does that make sense?
I'd like to think however long Scott spends in prison, he will have an opportunity to spend a portion of his remaining years outside of a prison cell, but I can't put my finger on why I think that.
Maybe Harry Stoner put it best -- "The government has a word for survival. It's called fraud." Scott's going to learn survival first-hand.
Nurik came to the deposition with fortifications – an energy drink, a power bar and Fig Newtons – to answer questions from bankruptcy lawyers seeking to reclaim assets for creditors of the defunct Rothstein Rosenfeldt Adler law firm.
Marc Marc Marc!
These are not the weapons of a well-armed lawyer/gladiator.
What are you doing here -- preparing for an important deposition, or packing lunch for a third-grader?
You need life-affirming fortifications for mind and body -- whole grains, nuts, fresh fruit, and of course a small chilled flask of gin.
Also, I've said this before -- what kind of facacta firm was Rothstein running:
Nurik admitted he would regularly ask Rothstein for money to cover personal expenses. He testified he can’t repay the $190,000 in loans he received after he joined the law firm in October 2007. His salary was $350,000 and Rothstein promised a $50,000 loan that year. If he brought business into the firm, the loan would be converted to a bonus, Nurik said.
Nurik said he lived rent free for more than a year in a Castilla Isles home bought by Rothstein for $1.9 million and didn’t pay expenses on the home, but began paying the expenses and $2,500 in monthly rent after Rothstein’s Ponzi scheme imploded in late October.
That month, Nurik said he convinced Rothstein to raise his pay to $500,000 a year and convert the loans into bonuses. He said he has yet to pay income tax on the bonuses and didn’t consider the free rent to be income on which he owed taxes.
Bankruptcy lawyer Chuck Lichtman asserted that the $190,000 was in fact loans, and subject to return to creditors. Nurik said he would be willing to negotiate repayment to creditors to avoid a lawsuit, adding he deserved the bonuses because he brought $1.9 million in business to the firm.
So Nurik brought in to the firm the exact amount that the home he lived in rent-free cost Rothstein to purchase? Weird.
And why borrow so much? What personal expenses did he have that required him to live so far beyond his means?
The $2500 he started paying when his free arrangement become public is well below market value, obviously, plus Nurik apparently claimed homestead on a different house.
Rothstein, now disbarred from practicing law, has already said through Nurik that he thinks Nurik has no potential conflict of interest and he is willing to give up his right to appeal any conviction or sentence on those grounds.
But U.S. District Judge James Cohn scheduled the 9:30 a.m. hearing for a full airing of any concerns. Rothstein is expected to formally waive the possible conflict of interest.
"Scott will enter a waiver, and I expect that will be the end of it," Nurik said. "I have no conflicts of interest."
In other news, principled conservative and Florida AG Bill McCollum thinks Big Gov should get out of the way and let market forces set prices -- except when it comes to attorneys fees -- which of course need to be arbitrarily limited by the state:
"It's been my observation that there's been a lot of abuse around the country" by law firms that run up excessive fees working on government cases, McCollum said.
"We are in the process of finalizing a plea agreement,'' Marc Nurik, Rothstein's attorney, told The Miami Herald Tuesday. ``I can't comment on any of the details.''
U.S. District Judge James Cohn will set a date for Rothstein, 47, to plead guilty in coming weeks, to be followed by his sentencing a few months later -- capping the biggest investment fraud case in South Florida history.
Rothstein has been cooperating with authorities as they build cases against members of his inner circle and now-defunct Las Olas Boulevard law firm. Typically, defendants who provide information that results in additional prosecutions do so seeking a benefit: the possibility of a reduced sentence down the road.
So which members of the inner circle and his old law firm are next?
Oy I had to pop a few Xanax and put on some old Carpenters after reading this story about the various outstanding loans that former RRA lawyers including Marc Nurik owe RRA:
The documents for Rothstein Rosenfeldt Adler, filed late Tuesday in U.S. Bankruptcy Court, said the firm has $1.4 billion in liabilities and only $42.9 million in assets, painting a bleak picture for recovery of claims.
The documents list $34.8 million in apparent payments to various individuals between 2007 and 2009, including many of the firm’s former employees and attorneys. In some cases, those loans were partially paid back, but there’s an outstanding balance of $23.9 million in “advances to non-debtor third parties.”
Among those on the list is Steven Lippman, who is said to have received $8.9 million. Lippman was recently hired by Rice Pugatch Robinson & Schiller in Fort Lauderdale.
According to the schedules, Lippman repaid $6.5 million, leaving an outstanding balance of $2.4 million.
Lippman could not be immediately reached for comment.
The schedules were filed by Herbert Stettin, the court-appointed bankruptcy trustee in the Chapter 11 wind-down of the firm. Stettin told the court that RRA’s books are in disarray, and he does not have complete information on many facets of the firm’s finances.
Other advances shown on the schedules include:
Millions of dollars in loans or advances to Bova Group restaurants, none of which has been repaid. According to the schedules, RRA spent $117,000 on a planned restaurant called Bova Smoke, which never happened.
Stuart Rosenfeldt, co-owner of RRA, received $916,011 in loans or advances. The schedules show that Rosenfeldt, who recently formed a new law firm, repaid $474,144, leaving a balance of $441,867.
Marc Nurik received $190,000 in loans. The former RRA partner who represents Rothstein, was not repaid, according to court documents.
The bulk of that money was paid to Nurik in 2009. He told the Business Journal in November that he was not paid a retainer to represent Rothstein and that he had ensured that he was being paid from legitimate sources.
Riley [McDermott's, the restaurant purchased by Rothstein to become Bova] received $1.8 million in loans. The schedules show they have not been repaid.
Alright, it's starting to kick in...I'm beginning to feel better.....Karen's voice is just heavenly.....
The Florida Supreme Court screening committee includes Jay Cohen of the Law Office of Jay Cohen in Fort Lauderdale. The 3rd District Court of Appeal committee is chaired by Edwin Scales III of Edwin A. Scales III P.A. in Key West and includes Miami attorneys Ramon Abadin of Abadin Cook, Dori Foster-Morales of Elser & Foster-Morales, Juliet Roulhac of Julie Roulhac P.A. and Michael Higer of Higer Lichter & Givner of Aventura. The 4th District Court of Appeal committee is chaired by Cohen and includes Greg Coleman of Burman Critton Luttier & Coleman in West Palm Beach, Eugene Pettis of Haliczer Pettis & Schwamm in Fort Lauderdale, David Prather of Lytal Reiter Clark Fountain & Williams in West Palm Beach and Lisa Small of Small & Small in Palm Beach.
"We want to pick up those photos,'' Nurik said. "I don't know why his personal photos have to be auctioned off, and I'm going to talk to the trustee about that. His personal items should be returned to him.''
I don't know, I don't believe this issue was addressed anywhere in the Dreier sentencing memo.
I'll go Marc one step further -- I'd like to see an entire civilization formed exclusively upon the Dreier sentencing memo, you know like that classic Star Trek episode "A Piece of the Action," where an entire culture was built upon a book about Chicago mobsters of the 1920s.
Ok, maybe that's where Scott's head was at after all.
I've always been into having my hands manicured but either way put your hands on something worthwhile this holiday season -- you'll feel better for it.
Well I hope everyone had a warm, loving, and peaceful Thanksgiving, and is now fighting over deals at Walmart -- that HDTV screen will only be on sale for two more hours!
I wonder if any meaning can be derived by looking at who is representing who in the Rothstein saga.
"He did something that, when you think about it, is kind of extraordinary. He goes away to a country that has no extradition treaty with the U.S., reportedly, allegedly has a lot of money at his disposal, and chooses to come back and deal with this … I think because beneath it all, and not withstanding all the things that have been said about him, I believe that he is truly a decent human being, not withstanding flaws. I really do believe he did it out of, a true decent emotion to try to deal with this.''
Again, I have no problem with a public rehabilitation strategy. I just think, in the absence of other positive facts, this strategy is way too premature.
Marc would have you believe at the same time he is denying that Scott is cooperating with the feds and singing like a bird, Rothstein nonetheless has returned to "make everything right." How does that square up?
It is 289 pages long and asserts 245 counts. To be honest it reads like a placeholder, an effort to "occupy the field" and get in front of the other civil suits coming down the pike. Somebody at some point definitely needs to edit that thing.
Let's see -- Bob Josefsberg is representing Banyon COO Frank J. Preve -- what could that mean?
Bruce Lehr is representing Big Stu, Fred Haddad has Russ Adler's back, and Neal Sonnett is representing Grant Smith.
Keep heavy (borderline uncomfortable) eye contact. Speak when only there is little alternative. Learn to say things that are vague. Answer a woman’s question with a question. Make every action deliberate and noticeable, almost in slow motion. Talk in short sentences. Don’t say too much. Don’t give away too much.
Right -- there's no better way to a woman's heart than to act like a brooding, moody psychotic.
Cigar lovers, take note -- Tatuaje, a brand rolled here in Miami and named the hottest cigar in America, has settled its trademark suit with the makers of Montecristo over its use of the fleur-de-lis.
John Pacenti and the Herald report on how Scott allegedly bilked this investor just weeks before he took off for Morocco.
The purported "investment opportunity" is insultingly stupid:
The deal offered a return of eight percent per month for the following four months. It involved a purported lawsuit against California-based Dole, which Faulkner said had settled for $500 million in the face of accusations that it had overstated the percentage of pineapple in juices it sold to school districts.
So this is a secret whistleblower action -- possibly unfiled -- in which Dole forks over a half billion over mislabeling the content of its pineapple juice? And for some reason Dole wants to pay this half billion out over time?
In what imaginary world do cases like this exist?
But you know, the kids still got some juice and that's the important thing.
But Scottie says he doesn't know this particular investor and I for one believe him:
"I keep seeing names on the Internet who were alleged investors of me and I have no idea who they are,'' Rothstein told The Herald on Thursday. "There are sublayers of people doing very, very bad things to people in my name, so we shall see.''
"Not that I didn't do something wrong, and I'm back here to fix it,'' he said. "I made a decision to come back from Morocco and do the right thing. I know people are laughing and saying he can't repay these people, and they are wrong.''
Marc, why is your client still giving interviews to the Herald?
So two lawyers at Mayer Brown recently wrote about County of Nassau v. Hotels.com, where the 2d Circuit raised the issue of CAFA jurisdiction nostra sponte (take that, Latin nerds!) and remanded the case to the district court "to determine whether class certification is appropriate" in order to determine whether CAFA jurisdiction exists.
That's just a bizarre ruling, and these Mayer Brown lawyers agree. Their well-written article is here.
Prosecutors said they had probable cause to believe the properties “were acquired in connection with a Ponzi scheme conducted by attorney Scott Rothstein ... and others,” the complaint said. It was filed at the end of a day after federal agents seized Rothstein’s yacht, cars and other possessions. In the first court document laying out the direction prosecutors are heading, the complaint said Rothstein solicited investors for falsified structured settlements. The civil complaint lays out federal authority by alleging wire transfers crossed state lines and the investment vehicles were offered nationally.
Reading the complaint, it seems implausible Rothstein could generate false wire transfer receipts and other documents all by himself:
"Further, as a fraudulent inducement to investors, Rothstein and co-conspirators falsified documents which were present to investors as proof that certain some of money were contained in those bank accounts when, in fact, the bank accounts did not contain the funds."
Indeed, at several times the complaint makes reference to Rothstein "and others" who executed the alleged Ponzi scheme. Notably, the complaint alleges that the victims were instructed to wire monies to the RRA trust account.
The complaint seems at odds with Marc's comments to the SFBJ yesterday, where he asserted that the seizures were just a routine effort to preserve assets:
He said seizures of Rothstein’s cars and boats were only done to preserve the assets, and do not mean the government has a strong case.
The Herald story David links to is not even a Ponzi scheme, it's just a straight-out alleged lawyer fraud, again difficult in my mind to execute without assistance:
Ed and Carol Morse -- who were family friends with Rothstein -- sued Boca Raton decorator Jan Jones in 2006 claiming he botched their job. Rothstein told the Morses earlier this year that they had won the breach-of-contract case and that the decorator owed them $23 million, sources said.
It wasn't true. In fact, the Morses lost the case.
Rothstein also produced purported federal court orders signed by a judge, saying the Morses could claim the judgment by seizing a Cayman Islands bank account belonging to the decorator, sources said.
There were no such court orders, nor any fat bank account, court records show.
To confiscate the money, the Fort Lauderdale lawyer allegedly told the Morses they had to post a bond 2 ½ times larger than the judgment, or $57 million, the sources said. The large amount was required as a guarantee in case bank officials confiscated the judgment from the wrong account, Rothstein told them.
So the couple wired the $57 million to Rothstein in installments earlier this year, the sources said. It is not clear whether Rothstein paid any of that money back.
Forged federal court orders? Is Scott that good with Wordperfect?
On top of everything else, after allegedly taking $57 million from the Morses, Rothstein apparently settled the suit and obligated the Morses to pay the decorator $800k(!), which naturally has not yet been satisfied either.
Scott, if you are reading this, I'd like to conduct an interview.
Huh? Don't be such a narcissist.
It doesn't have to be an interview with you. UPDATE: Bob Norman is reporting that -- solely according to Scott -- Judge Zloch's brother Chuck is one of Scott's three "best friends." Not sure if that is good or bad(Ted Morse was another one).
Scott says "I am sitting here smoking cigars with Marc.'' Rothstein says he's "doing pretty good."
Although Rothstein is allegedly cooperating with authorities, Marc denies over Rothstein's background laughter that Scott is talking to them:
Rothstein said Sunday he could not disclose his whereabouts because otherwise ``Marc will break my head.'' Rothstein then handed the telephone to his lawyer, Nurik, who said that, in fact, they had not been smoking cigars.
``He is under a lot of pressure,'' said Nurik, who had worked at Rothstein's law firm but stepped down to represent him. ``I don't want anybody to think he is having a good time.''
During the brief interview with Nurik, Rothstein could be heard heartily laughing in the background.
Nurik would not disclose Rothstein's whereabouts -- a Florida location that Nurik said he -- not federal authorities -- chose.
``I have him hidden,'' Nurik said. ``I'm not going to tell anybody where, including the government. I don't know where people are coming up with this stuff. I have been discussing his case with the government as any defense counsel would under these circumstances.
``I have been in contact with the government,'' Nurik said. ``My client is at an undisclosed location of my choosing and he is talking to no one but me. He hasn't even met with his family.''
Nurik declined to discuss the case, but added that Rothstein wanted to say goodbye.
``I'm doing really good,'' Rothstein said. ``Marc is a great lawyer, a great friend. We will speak when the time is right.''
I don't know about you, but I woke up full of piss 'n vinegar today.
Maybe it was the drive in to downtown this morning.
Here's what I brought with me in my luxury hermetically-sealed personal transport vehicle:
1. Large cup of freshly-brewed Sumatran coffee; 2. Various briefs and drafts I worked on over the weekend; 3. Today's NYT (and parts of Sunday), as well as the WSJ; 4. Laptop, smartphone, and my e-book reader.
I also had the ac and Led Zep's Coda on at full-blast.
The Rothstein Rosenfeldt Adler law firm has hired prominent lawyer and former U.S. Attorney Kendall Coffey to represent it in what he called "very very difficult circumstances" caused by an imploding investment venture by the firm's president, Scott Rothstein, who is believed to be in Morocco.
"The allegations [against Rothstein] do not involve the firm's law practice, they involve an investment business that Scott Rothstein created," said Coffey, who contacted the Pulp this evening. "There are a number of allegations being made and I'm trying to assess the firm's position and what steps it may need to take."
When asked if the firm's lawyers feel victimized by Rothstein, Coffey answered simply, "Yes." It's a near certainty that victims of Rothstein's investment scheme will sue the law firm and possibly even individual lawyers -- whether on solid ground or not -- in an attempt to get their money back.
Coffey said the law firm will be open for business Monday, but said it's too early to tell if the firm will survive. Other sources say that the firm is filing for bankruptcy Monday.
Bob's prior coverage is here, the Herald's coverage is here, and the Sun-Sentinel (after love jobs like this one) finally gets to it here.
Not to be outdone, I covered high-flyer Scott's public embrace of expensive suits and his deep personal interest in the message communicated by associate facial hair here.
So Bob, that makes us even?
UPDATE:
Jay Weaver writes of the complaint filed today by Coffey and an email by Chief Judge Tobin:
The complaint states, ``It is with surprise and sorrow that the attorneys of Rothstein Rosenfeldt Adler, P.A., have learned that Scott W. Rothstein, the managing partner and CEO of the firm, has, according to assertions of certain investors, allegedly orchestrated a substantial misappropriation of funds from investor trust accounts that made use of the law firm's name.''
The case will be heard at 4 p.m. before Judge Jeffrey Streitfeld.
Rothstein's partner, Stuart Rosenfeldt, is seeking immediate judicial action to facilitate the investigation of investor funds.
The firm was founded by Rosenfeldt and Rothstein in 2002 and currently employs more than 70 lawyers.
The complaint also states that a review of the firm's records undertaken this past weekend showed various funds that were controlled by Rothstein could not be accounted for. ``Some investors allege that defendant Rothstein may have been fabricating nonexistent structured legal settlements for sale to investors,'' the claim states.
Rothstein's actions were done without any knowledge of any other attorneys at the firm. ``And, in fact, Rothstein actively endeavored to hide the existence of the scheme,'' the claim says. Rosenfeldt and other lawyers only learned about the allegations several days ago, they said.
Broward Chief Judge Vic Tobin sent an email at 6:45 a.m. to judges about the Rothstein case.
`'I learned of some very distressing news yesterday....,'' Tobin wrote. ``Whoever draws the case try to set the motion today because of the amount of clients and money involved. Also if you have a case with te firm please be patient. I don;t know if they lawyers will come or not and if they do come there is no money at this point to go forward with the case or pay firm employees.''
Tobin also write that there may be ``multiple filing of receivership motions'' and that creditors may also file a motion.
News crews were outside the law firm's Las Olas Boulevard office in Fort Lauderdale Monday. They were not allowed access to the firm's office. No one was answering the phone at the firm.
