Ponzi-Scheme Mastermind’s Law Firm Closer to Dissolution

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The bankruptcy disclosure statement for Ponzi scheme mastermind Scott Rothstein’s law firm was approved by a judge yesterday in Florida Bankruptcy Court. Judge Raymond B. Ray, who is overseeing the liquidation of Rothstein, Rosenfeldt & Adler, approved the statement and set a confirmation hearing for July and allowed creditors to vote on a repayment plan, bringing the firm several steps closer to dissolution.

Scott Rothstein is currently serving a 50-year sentence for conspiracy to commit fraud. His billion dollar Ponzi-scheme involved selling investors stakes in sex- and employment-discrimination cases that did not exist, and it unraveled in 2009, and implicated ten other people, including his wife, and Toronto-Dominion Bank, which was sanctioned in August for willfully concealing evidence relevant to a trial over whether it aided Rothstein’s scheme.

  

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The firm’s investors, however, are opposing the repayment plan proposed by current trustee Herbert Stettin.  Bloomberg reports that the terms of the settlement would prevent those involved from pursuing further action against TD Bank. The plan does require TD Bank to pay up $72 million to remove the threat of litigation, and the bank has already paid more the $250 million in investor settlements, and lost a $67 million verdict in the only case to go to trial.

One group of 80 investors is claiming an additional $228 million in losses, and Bill Tropin, the attorney for a separate group of investors, says that Settin’s plan would see his clients lose $360 million in potential claims against TD Bank.

The creditors committee, which has opposed previous plans, has put their support behind the new plan, as did several other creditors. “We just don’t understand why creditors are objecting to a plan that gives them 100 percent in a Ponzi scheme,” Michael Goldberg, the attorney for the creditors committee told Bloomberg.