More criminal defendants likely in Florida’s largest-ever fraud case

Four new defendants were added today, and more are expected, in the federal investigation against participants in the alleged Rothstein Ponzi scheme, the largest fraud case in Florida’s history. The complex fraud scheme allegedly involved a prominent Fort Lauderdale attorney, an unknown number of employees at his law firm, and several business associates. The group is claimed to have defrauded investors in civil lawsuits through a complex series of ruses intended to assure the investors that the investment accounts were brimming with money. In actuality, the government claims, it was a Ponzi scheme.

The prominent attorney and the chief operating officer of the law firm have been convicted of leading the fraud scheme. The 48-year-old attorney is serving a 50-year sentence after negotiating a plea agreement. The chief operating officer was convicted of conspiracy and money laundering, and is serving a 10-year sentence. The pair was held responsible for losses totaling $363 million for more than 300 investors.

When the fraud scheme came to an end in 2009, federal authorities said that they were determined to discover any co-conspirators, although law enforcement had not charged anyone until now. Four men, three employees of the law firm and one a business associate of the reputed leader of the fraud, were charged today with conspiracy to commit wire fraud in connection with the alleged scheme. U.S. Attorney Wifredo Ferrer also made it clear that he expects to make more arrests.

Defendants, peripheral to the securities fraud scheme, likely have made plea bargains

The four men accused today included one of the leader’s law partners, two technology specialists for the law firm, and the leader’s business partner in a Pembroke Pines nightclub. According to the South Florida Sun-Sentinel, all four appear to have made deals with the prosecution, as they were charged through a process called an “information” rather than being indicted by a grand jury. Only one of the men’s criminal defense attorneys has said that his client would plead guilty, however.

The law partner has been accused of providing bogus legal information to the leader of the fraud scheme, which was used to trick one investor out of $57 million.

The technology specialists are accused of setting up a fake webpage that appeared to belong to TD Bank, so that the leader of the scheme could convince investors that his bank account contained millions of dollars.

The business partner of the alleged lead fraudster is accused of impersonating law firm clients in some cases in order to dupe investors into putting up large sums of money to fund a potentially lucrative civil lawsuit. In another case, the FBI claims, he pretended to be a representative of TD Bank and presented investors with fraudulent bank statements.

Two of the men appeared in court today, wearing handcuffs and leg shackles. They were released on $100,000 personal surety bonds. If convicted, the maximum sentence the four new defendants could face is up to five years in federal prison.

Source: South Florida Sun-Sentinel, “Charges against 4 new defendants in Rothstein Ponzi scheme,” Peter Franceschina, May 27, 2011