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New victims of the Rothstein Ponzi scheme



Now-disbarred attorney and shanda-fur-die-goyim Scott Rothstein is in prison awaiting trial for defrauding investors in a $1.2 billion Ponzi scheme that told investors they were buying shares of future litigation settlements. Press attention has focused on light-hearted aspects: Rothstein regularly firing his attorneys in an effort to delay trial; Rothstein admitting in a deposition that he discouraged a marijuana-dealing scheme (but not the use of an escort service) in his office for fear it would draw attention to the Ponzi scheme. Rothstein funneled "payouts" to investors through his law firm's TD Bank account; he also faked a TD Bank website and put together a fake TD Bank office (with the help of, according to Rothstein, a bribed TD Bank vice president) to facilitate the scheme. This was, said one disgruntled investor, TD Bank's fault, and a Texas federal jury in Corpus Christi has awarded $67 million, over half of which is punitive damages, against the bank, which has not been charged criminally. But when it comes to assigning fault in the civil justice system, deep pockets are more important than culpability. It's not clear if Rothstein is telling the truth about the vice president, who denies ever receiving money from Rothstein, but the now-fired vice president's invocation of the Fifth Amendment 160 times surely made an impression on the jury, to the detriment of his ex-employer. A different set of investors is about to proceed in Florida state court on the same theory. [ABAJ; Bloomberg; Business Week; Sun-Sentinal]

Before Rothstein was caught, he was one of the larger abusers of SLAPP threats, which makes you wonder what other lawyers who threaten libel suits on a dime are hiding.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.