Four Rothstein associates charged in Miami with conspiracy in connection with Ponzi scheme

On May 27, 2011, the U.S. Attorney Miami filed charges against four individuals in connection with the Scott Rothstein’s fraudulent Ponzie scheme. Rothstein has already pled guilty and sentenced to 50 years for operating the fraudulent operation from 2005 through November 2009, through his law firm, Rothstein, Rosenfeldt, and Adler, P.A. (RRA), in Ft. Lauderdale, Florida. Rothstein and others fraudulently obtained approximately $1.2 billion from investors through bogus investment and other schemes. Rothstein and co-conspirators used RRA to fraudulently induce investors to: (1) loan money to non-existent borrowers based upon promissory notes and requests for short-term bridge loans for business financing; and (2) invest funds based upon anticipated pay-outs from purported confidential civil settlement agreements. The four charged all worked for Rothstein’s firm.

The information filed against Howard Kusnick alleges that, while an attorney at RRA, Kusnick engaged in a scheme to defraud two clients of RRA by authoring a letter purporting to settle pending litigation in the clients’ favor. In fact, no such litigation had been instituted and no such settlement existed. Rather, the purpose of the letter was to lull the clients into believing that RRA was pursuing litigation on their behalf when, in fact, the clients’ funds had been used to pay off earlier investors and to further the investment fraud scheme.

In this aspect of Rothstein’s Ponzi scheme, Rothstein settled a lawsuit in favor of the defendant and against his client, without the clients’ knowledge, thereby obligating the clients to pay $500,000 to the defendant in the civil lawsuit. To perpetuate and conceal the fraud, defendant Rothstein and these co-conspirators created a false federal court order, purportedly signed by a U. S. District Judge, stating that the clients had won the lawsuit and were owed a judgment of approximately $23 million. The false court order also stated that the defendant in the civil suit had transferred the funds to the Cayman Islands to avoid paying the judgment. Rothstein and these co-conspirators falsely advised the clients that to recover those funds, the clients were required to post bonds. In this way, Rothstein caused the clients to wire transfer approximately $57 million to a trust account he controlled, purportedly to satisfy the bonds.

The Information filed against Stephen Caputi alleges that Caputi at times acted as both a purported banker and plaintiff during meetings with potential investors. For example, the Information alleges that Caputi, posing as an official from TD Bank, provided investors with fraudulent bank statements that reflected purported balances of trust accounts at TD Bank. In this way, Caputi lulled the investors into believing that the account balances were sufficient to fund their investments. On another occasion, Caputi posed as a plaintiff during a meeting with potential investors who had requested to meet with plaintiffs. Caputi pretended to be a plaintiff who had purportedly executed a $10,000,000 settlement agreement, thus raising potential investors’ confidence in the deal.

According to the Information filed against Curtis Renie and William Corte, these defendants worked at RRA’s IT Department as chief of information technology and as a document management specialist, respectively. Renie and Corte created a fictitious web page copying the legitimate web page of TD Bank. At Rothstein’s direction, the defendants posted false account balances on the fictitious web page to make it appear as if the accounts were well-funded. On one occasion, the defendants modified the phony TD Bank web site to reflect that RRA held between $300 million and $1.1 billion on deposit at TD Bank. In fact, however, no such funds were in the accounts. The false account balances were shown to investors to induce them to invest into the fraudulent investment scheme.