MPRE this Saturday: Is Rothstein classic “bad” lawyer?

Many UM Law students will take the MPRE this Saturday.  As we diligently study the rules of professionalism and ethics, we have to wonder if attorneys like Scott Rothstein give the profession a bad name.  Nevertheless, all allegations are just that – allegations, and nothing has been proven.  However, The Miami Herald reported today the following:

Federal agents raid Scott Rothstein’s law offices

Federal authorities turned up the heat on Fort Lauderdale lawyer Scott Rothstein as he sought to cooperate with prosecutors investigating his alleged multimillion-dollar investment scam.

scott-rothstein

BY AMY SHERMAN AND JAY WEAVER

jweaver@MiamiHerald.com

Dozens of federal agents on Wednesday night raided the Fort Lauderdale law offices of attorney Scott Rothstein, a swaggering lawyer under investigation for allegedly masterminding an investment scam that could reach hundreds of millions of dollars.

FBI and IRS agents seized documents, computer files and other records from Rothstein Rosenfeldt Adler’s 16th-floor offices, 401 E. Las Olas Blvd.

“I just made sure they knew where everything was,” partner and firm co-founder Stuart Rosenfeldt told The Miami Herald. “I signed the consent to search for things not in the warrant. I gave them full access to the entire office. The safe, I unlocked it.

“I found the keys for all but one door to a room [where] I honestly suspect things were damaging to my partner. I gave authorization to remove the lock.”

Rothstein, 47, has been accused by his investors and law partners of wiping them out. He is cooperating with federal investigators and identifying others who may be involved in the alleged Ponzi scheme, sources familiar with the probe said Wednesday.

People in Broward County legal circles have wondered how Rothstein — a man-about-town who lived large and donated millions to charities and politicians — could have pulled off the alleged scheme without colleagues at the law firm knowing about it.

Investigators are looking into allegations that Rothstein bilked investors by selling them falsified lawsuit settlements, and that he stole from client trust funds and operating accounts at his 70-attorney law firm, the sources said.

Rosenfeldt has repeatedly said that he didn’t know about Rothstein’s alleged wrongdoing before news broke last week.

“When we established a partnership we delegated responsibilities: He was the money man. I was the law man,” Rosenfeldt, a 50 percent co-owner ofthe firm, told The Miami Herald on Wednesday. “I trusted him with my life. He controlled everything when it came to money.”

Rosenfeldt’s name, however, is included in a Toronto Dominion Bank letter addressed to Rothstein in early October that allows either lawyer to approve the distribution of settlement payments to Rothstein’s investors. A Toronto Dominion branch in Fort Lauderdale held some of Rothstein’s accounts for investors claiming he bilked them.

“I never saw that letter,” Rosenfeldt told The Herald. “I am finding he used my name a lot when I didn’t know it.

“I didn’t know I had control over the distribution of the [investment] funds,” he added. “I don’t know if that letter is real. I don’t know if he communicated with [the bank] about my authority. I was a signatory on a host of accounts.”

Rothstein returned from Morocco on Tuesday after leaving Fort Lauderdale on Friday, just as the news began leaking out. On Saturday, he texted his law colleagues apologizing for “letting you all down.”

The message continued: “I am a fool. I thought I could fix it but got trapped by my ego and refusal to fail and now all I have accomplished is hurting the people I love.”

Russell Adler, the firm’s third name partner, has hired Fort Lauderdale criminal defense attorney Fred Haddad. Adler could not be reached for comment.

Rothstein and his defense attorney, Marc Nurik, have disclosed details of his alleged scheme to prosecutors, FBI agents and IRS agents at the U.S. attorney’s office in Fort Lauderdale, sources said.

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So my question to all future lawyers is, how do we prevent this from happening?  How can we ensure that our profession meets the highest standards of ethics without having a select few, like Rothstein, ruin it all for the rest of us?

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