Three months ago, Rothstein fled the US for Morocco in late October after wiring $16 million dollars overseas. Federal agents were closing in on his scam, and there were suggestions he might commit suicide. But he returned to south Florida soon after.
A month after he returned, he was arrested. Federal agents seized as much of his assets and property as they could locate. These included the cars, waterfront homes, an 87-foot yacht, 304 pieces of jewelry, bank accounts, and equity stakes in a long list of companies, including local restaurants. Agents even seized Rothstein’s American Express rewards points: 20,920,701 of them.
Federal agents are estimated to have found assets valued at about $100 million. That’s a long way from $1.2 billion.
“The rest of the money is in the Ponzi scheme,” said William Scherer, a local lawyer who has filed a lawsuit to recover money for Rothstein’s victims. “And he probably spent a large amount – living large and all that.”
Prosecutors say Rothstein specialized in selling investors a stake in confidential settlement agreements. The settlements were said to involve sensitive pre-litigation negotiations in embarrassing sexual harassment cases or whistle-blower cases that the parties wanted to keep quiet. The investments could be purchased at a discount and would be repaid to investors at full value over time.
But sometimes there were no settlement agreements and no real clients. Rothstein and others allegedly created false statement agreements, bank statements, assignments of settlement agreements and personal guarantees.
In one fraud, a counterfeit court order
In one instance, according to federal prosecutors, Rothstein defrauded actual clients who had hired his firm to file a lawsuit. Unbeknownst to the clients, Rothstein settled the suit, obligating the clients to pay $500,000 to the defendants.
