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259 victims of Rothstein fraud are owed $279 million, prosecutors say - South Florida Su…¶
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sun-sentinel.com/news/broward/fl-rothstein-restitution-victims-20100802,0,4241578.story¶
South Florida Sun-Sentinel.com¶
259 victims of Rothstein fraud are owed $279 million, prosecutors say¶
Disbarred lawyer’s seized assets are far too little to cover restitution¶
By Peter Franceschina, Sun Sentinel¶
7:03 PM EDT, August 2, 2010¶
Federal prosecutors have determined Scott Rothstein had more than 250 victims of his massive investment fraud scheme who are entitled to upward of a quarter-billion dollars in restitution.¶
Whether investors who lost money in Florida’s largest Ponzi scheme will ever recover a substantial share of their funds remains unclear — the legal process in bankruptcy court could go on for several years.¶
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As far as restitution in Rothstein’s criminal case, the sum of ill-gotten gains recovered so far by the government doesn’t come anywhere near covering the amount prosecutors now say should be returned to his victims. Investors will still have a chance for recovering at least some of their money in the Rothstein Rosenfeldt Adler law firm bankruptcy case.¶
U. S. District Judge James Cohn, who is overseeing the staggeringly complex restitution operation, has said he hopes to complete the process by the end of this month. Prosecutors filed a report late Friday to update the judge on the status of the government’s restitution efforts, and Cohn on Monday adopted the prosecution’s guidelines for determining who will get restitution.¶
Prosecutors determined 97 potential victims — representing $120 million in claims — aren’t entitled to the amounts they claim, either because they don’t qualify for restitution under federal law or they failed to provide sufficient documentation of their claim. Prosecutors will continue to review those claims and update the judge.¶
Another 116 potential victims could not be found, prosecutors reported. Some potential victims did not complete restitution paperwork or declined to participate in the restitution process, prosecutors said. Prosecutors are still reviewing a dozen claims.¶
The 259 people or corporate entities whose claims were approved in total or in part are entitled to $279 million in restitution, prosecutors said.¶
http://www.sun-sentinel.com/news/broward/fl-rothstein-restitution-victims-20100802,0,539… 8/3/2010¶
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259 victims of Rothstein fraud are owed $279 million, prosecutors say - South Florida Su…¶
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The investors are identified not by name in the court filings, but by a seven-digit identification number. Cohn ordered prosecutors to refile their report with the individual and corporate names by Friday.¶
“In calculating the recommended amount of pecuniary loss to be awarded as restitution to the investor-victims, the government has employed the ‘cash-in/cash-out method,’ whereby the total amount invested by a victim during the scheme is reduced by the amount which the victim received as payments during the scheme, thus yielding a net loss to the victim as the determined restitution amount,” prosecutors wrote in their report.¶
The assets seized from Rothstein — his homes, luxury cars and yachts, cash, jewelry — are not worth anything near the $279 million overall restitution figure, so victims will likely be getting pennies on the dollar. Rothstein’s cars and yachts sold for $5.8 million in June, and prosecutors are no longer trying to obtain title to four of his Fort Lauderdale properties because they were heavily mortgaged.¶
The law firm bankruptcy trustee and prosecutors have been wrangling over Rothstein’s seized assets. Two dozen of Rothstein’s investors and three dozen law firm clients have filed claims to those assets. Prosecutors said that law firm clients who lost funds held in escrow are as entitled to seek restitution as people or companies that lost money in Rothstein’s investment swindle.¶
The judge will hold a series of hearings before entering final restitution payments to the victims. People who have disputed claims will have a chance to make their case before Cohn. Prosecutors did not say how much they have available to repay the victims.¶
Rothstein, 48, a disbarred Fort Lauderdale attorney, is serving a 50-year prison sentence after pleading guilty to racketeering, money laundering and fraud.¶
Peter Franceschina can be reached at pfranceschina@sunsentinel.com or 954-459-2255.¶
Copyright © 2010, South Florida Sun-Sentinel¶
http://www.sun-sentinel.com/news/broward/fl-rothstein-restitution-victims-20100802,0,539… 8/3/2010¶