MIAMI (CBSMiami/AP) – As nearly three dozens lawyers question former Ft. Lauderdale attorney Scott Rothstein about his $1.2 billion Ponzi scheme, a new suit has been filed against him and an alleged co-conspirator.
According to the suit filed Tuesday, Rothstein crowed repeatedly to an alleged wealthy accomplice about the fraud’s huge success, calling himself “banker and pimp” and bragging that he operated the “International Bank of WOW!”
“Have I told you how much I loveeeeeeeeeeeeeeee this business … and how much I love the color green,” Rothstein said in one of many emails to the alleged accomplice, auto magnate Edward J. “Ted” Morse Jr.
“The punk … with a bad reputation … like yours,” Rothstein signed off another email.
The suit, filed in Broward County Circuit Court, claims that Morse helped Rothstein keep the Ponzi scheme afloat by injecting tens of millions of dollars into it between 2006 and its fall 2009 collapse. Rothstein used that money to pay earlier investors in classic Ponzi fashion, keeping up the illusion of legitimacy, and used other investors’ money to repay Morse in full with fat interest rates up to 235 percent.
“Ted Morse knew that Rothstein was running a fraudulent scheme and provided substantial assistance to it,” says the lawsuit, filed on behalf of more than two dozen wronged investors by Fort Lauderdale attorney William Scherer. “Rothstein has confirmed that Ted Morse was fully aware of Rothstein’s scheme and was one of his main co-conspirators from the beginning.”
Morse’s attorney did not immediately respond to an email Wednesday seeking comment. In the past, the Morse family has portrayed themselves as victims of Rothstein and insisted anything he says cannot be trusted. Their auto empire, Ed Morse Automotive Group, dates to 1946 and now boasts 13 dealerships in Florida and Alabama and has about 1,000 employees, according to the company website.
Rothstein, a 49-year-old disbarred lawyer, pleaded guilty in 2010 to orchestrating the fraud scheme, which involved investments in fake legal settlements. His once high-flying Fort Lauderdale law firm, Rothstein Rosenfeldt Adler, is defunct. He is serving a 50-year prison sentence and has been cooperating extensively with prosecutors in hopes of cutting down his long sentence.
Rothstein and seven others have been charged with crimes so far, and investigators say more indictments involving high-level players are expected.
Wednesday marked the third day of two weeks of sworn, closed-door testimony from Rothstein in the many civil cases that have followed the Ponzi scheme’s collapse. Transcripts from those sessions will be released beginning next week and are expected to name many others suspected in the fraud.
The new lawsuit claims that Morse, his wife Patti and the Morse auto company gave Rothstein at least $36.5 million between February 2006 and March 2009, reaping more than $13 million in interest when the money was paid back. The emails Rothstein sent to Morse are filled with giddiness and braggadocio as other investors kept pouring in the cash the two would divvy up.
“It’s the fastest 300k you have ever made,” Rothstein said in one email. “Enjoy your ill gotten booty. My job is to match your salary this year with deals, won’t be easy, but I am up to the challenge.”
Rothstein refers to himself repeatedly as “banker boy from Da Bronx” or “the little Jewish banker” and seems in some emails to allude to the illegal nature of what he and Morse were doing.
“See you for a ceeeeeegar after you do your dastardly deed,” Rothstein said in one message.
“Man oh man I love this business,” he said in another.
When he pleaded guilty in the criminal case, Rothstein admitted concocting a fake court order from U.S. District Judge Kenneth Marra, who sits in West Palm Beach, as part of the scam. The lawsuit claims Morse was involved in that, as well as an unusual meeting with a Fort Lauderdale federal magistrate judge that led to a second faked court order. The magistrate, Barry Seltzer, is not accused of wrongdoing, and the lawsuit said his signature was forged.
The scam also used money from Morse’s father, Ed Sr., and mother Carol, according to the lawsuit. As the Ponzi scheme began to unravel in September 2009, Carol Morse sent an email to Rothstein questioning whether he was acting ethically and demanding bank records involving their money.
“Everyday I can see the effect of the stress on Ed of losing his wealth,” Carol Morse’s email said. “I would feel negligent if I did not point out that the stress is slowly killing the man.”
Rothstein wrote back: “I will not let Ed lose one penny.”
Rothstein and Ted Morse did provide Ed Sr. and Carol with records from their TD Bank account, according to the lawsuit. They were fake too.
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