'Ultimate Ponzi' chronicles Scott Rothstein's rise and fall
By John Pacenti
January 16, 2013

A book due out this month about Scott Rothstein's rise to become one of the most notorious and corrupt attorneys in the country claims he stole $300,000 from a drug-addicted client nearly a decade before the lawyer's $1.2 billion Ponzi scheme collapsed.

The money possibly was used to start the law firm Rothstein Rosenfeldt Adler In which the disbarred lawyer, now serving a 50-year prison sentence, would run his investment scam based on forged court settlements, author Chuck Malkus said.

"It certainly appears now having $300,000 that he was in a position to start a law firm," Malkus said. "$300,000 can certainly be seed money to get a law firm going."

Malkus' book, The Ultimate Ponzi: The Scott Rothstein Story, appearing Jan. 30 from Pelican Publishing Co., details Rothstein's rise from a relatively unknown Bronx-born attorney prone to braggadocio to the free-wheeling spender and political kingmaker he became before his 2009 downfall.

The Daily Business Review received an advance copy of the book from Malkus. Malkus runs Malkus Communications Group and is heavily involved in Broward County charities as co-founder of Neighbors 4 Neighbors with WFOR-TV, the CBS affiliate, to help disaster victims and the needy. He was suspicious of Rothstein from the start despite the lawyer's largesse. "It just didn't seem right that this guy is an overnight philanthropist," Malkus said. "He was spending lots of money, but he wasn't spending any of his time in the boardroom. Most philanthropists dedicate time."

Malkus said several law firms also suspected Rothstein's money was not coming from legal work."In my investigation, there was one firm who had a partners' meeting, and it was simply asked if there was anybody in the room that was on the other side of an RRA case, and there wasn't anyone in the room that had a case against RRA," Malkus said. The 70-attorney, 150-employee firm also seemed to be absent from courthouses, Malkus said.

Kept In The Dark?

A major player in the book is Stuart Rosenfeldt, Rothstein's only equity partner in the firm. Rosenfeldt, under investigation for nearly 3 1/2 years, has not been charged and maintains he knew nothing of the four-year settlement financing despite spending $1 million on luxury goods from designer suits to exotic turtles.

Malkus said he interviewed Rosenfeldt on several occasions. "Many people in South Florida are skeptical of Stuart's claim that he was kept in the dark about Scott's illegal and fraudulent deals and knew nothing about the Ponzi scheme," Malkus writes. "But after spending more than two years of investigating, I believe his assertions are accurate."

Rosenfeldt maintained he and Rothstein split duties. He would handle the law side and Rothstein the financial.

"Stuart was going to burst so he insisted on sitting down with him. I have not yet read the book so I can't tell you how it relates to Rothstein's testimony," said Rosenfeldt's attorney, Bruce Lehr, a partner Lehr Fischer & Feldman in Miami. "Sitting down did allow Stuart to express his version."

Despite saber-rattling by federal prosecutors, Malkus thinks Rosenfeldt won't be indicted. "The feds need to be focused on achievable wins and co-conspirators," Malkus said.

Alicia Valle, a spokeswoman for U.S. Attorney Wifredo Ferrer, said the office had no comment.

'Fists Full Of Money'

The book's first real revelation, touched upon briefly in Rothstein's deposition with civil attorneys last June, blames him for the theft of $300,000 from a client's settlement.

If true, that would contradict his mitigation letter to U.S. District Judge James I. Cohn, who sentenced Rothstein in 2010. the Fort Lauderdale judge has the power to reduce Rothstein's sentence for additional cooperation with prosecutors and bankruptcy attorneys trying to recoup money for his victims.

Being caught in a lie wouldn't help Rothstein's chances with Cohn. Attorney Mark Booth, a partner at Rogers, Morris & Ziegler in Fort Lauderdale, told Malkus in 2007 that he had a client who fathered an illegitimate child and was looking to gain custody.

Both he and the mother fought drug addiction, according to Malkus' book. The client told Booth that the mother had won a $300,000 settlement in a sexual harassment lawsuit.

"The problem was that Rothstein settled the case and received the money without bothering to tell his client," Malkus wrote.

"Booth said his client told him the parents went to Rothstein's office after learning about the unpaid settlement and threatened to turn him into The Florida Bar. Rothstein would hand over fists full of money which they then would go use [for drugs]. When they ran out of money, they would go back and get more," Booth told Malkus.

The attorney did not return phone calls for comment.

Booth said he saw the settlement document, and it was about a decade old. Rothstein, in his mitigation letter, told Cohn that he didn't start breaking bad until he had trouble making RRA's payroll around 2006 and started kiting checks.

'Arrogant Side'

Booth said the settlement money was stolen in 1999 or 2000. Malkus won't identify the couple at the heart of the harassment and custody cases. He said the mother has disappeared.

But Rothstein's June deposition indicates the mother is Tammy Parent. A Tammy Parent is listed on a social media site as a Fort Lauderdale and former Hollywood resident, but there is no phone listing for her. Rothstein doesn't deny when asked that Parent threatened to report him to The Bar for taking her settlement. Nor does he deny giving her "thousands of dollars" because he felt bad for her and demanded receipts to show the money was spent on her children. Rothstein told attorneys to check the email traffic between him and Rosenfeldt.

Marc Nurik, Rothstein's criminal defense attorney, said he was unaware of Parent or any accusation that RRA was started with stolen seed money. He said he had no comment on Malkus' book because he has not read it.

"The only thing I can say that he wrote the book so early in the Rothstein saga, it would be like reporting on an NFL football game at the end of the first quarter," Nurik said.

RRA was founded in 2002 after Rothstein was fired from Philips Eisinger Koss & Rosenfeldt for ethical lapses. Lead partner Gary D. Philips told Malkus that a client phoned to discuss a complaint Rothstein was handling but, when Philips went to look for the file, he found it didn't exist. "He told the client he had already filed the motions," Philips told Malkus.

Rosenfeldt said Rothstein won him over with charisma, but he wishes he stuck with his instincts when he first met him at a law conference in Fort Lauderdale.
"I didn't like him. He had an arrogant side," Rosenfeldt told Malkus. "Cocky I think is the best word. Just better than anyone else. I wish I had stayed with my instincts."

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