Authorities Charge Two South Florida Lawyers For Aiding Rothstein Ponzi Scheme

[This article originally appeared on Forbes.com on Friday, August 30, 2013]

Two South Florida lawyers were arrested today and charged with fraud-related charges for allegedly participating in the massive Ponzi scheme run by disgraced Florida attorney Scott Rothstein.  The arrests of Chrstina M. Kitterman and Douglas L. Bates by Internal Revenue Service agents are sure to add new life to continued speculation that Rothstein was not alone in taking in more than $1 billion in a giant Ponzi scheme that would later bankrupt his 70-attorney law firm.  Kitterman and Bates made their first appearances in federal court, and details remain sparse concerning the charges each will face.  Both attorneys were previously named by Rothstein in deposition testimony as having provided assistance in perpetrating parts of his fraud.

Rothstein was arrested in December 2009 after his return from Morocco, where he had been since October after learning the country refused to extradite criminal suspects to the U.S.  Upon returning, Rothstein was charged with operating a $1.2 billion Ponzi scheme that involved the sale of discounted stakes in high-dollar pre-suit settlements of sexual-harassment and whistleblower lawsuits.    While investors were told that they could collect the full amount when the case settled, the reality was that there were no such cases.  Instead, Rothstein masterminded an elaborate Ponzi scheme that catapulted him into a position as a powerful lawyer in the south Florida community, and he flaunted this newfound wealth by buying expensive cars, real estate, and boats.

After his arrest, Rothstein quickly changed his not-guilty plea to a guilty plea, and began cooperating with authorities.  While Rothstein hoped that this cooperation would result in a lighter sentence, a Florida federal judge latersentenced sentenced him to a 50-year term – 10 years more than prosecutors’ recommended sentence.   The sentence was the longest for any Florida Ponzi schemer, and ranked below only the 150-year sentence given to Bernard Madoff and the 110-year sentence handed down to Allen Stanford – both of whose schemes were multiple times larger than Rothstein’s.

In an effort to reduce his sentence, Rothstein continued to cooperate with authorities after the sentence and promised to name those who had provided him assistance.   Indeed, Rothstein painted a tantalizing picture for prosecutors by fingering other lawyers and law enforcement officers.  At several depositions, Rothstein readily offered up others, including Kitterman and Bates.  Kitterman, who formerly worked at Rothstein’s firm, Rothstein Rosenfelt Adler (“RRA”), was said to have impersonated an official of the Florida Bar during discussions with an investor in Rothstein’s scheme.  Rothstein also testified that Bates agreed to sign his name to a letter threatening a discrimination action against a company Rothstein represented in order to inflate his legal bills.

In addition to Kitterman and Bates, Rothstein has also implicated several other RRA lawyers as well as a vice-president at TD Bank.