It has been said that: “Money doesn’t talk . . . . it screams!” Apparently, the massive amounts of stolen funds that Scott Rothstein threw around to various people managed to create an impression of a man who appeared far more intelligent then he actually was. One example of this is found in the recent comment of the CEO of Qtask, a company which Rothstein invested $7 million of stolen investment funds with.
The Miami Herald reports that attorneys for the bankruptcy trustee for Scott Rothstein’s $1.2 billion Ponzi scheme subpoenaed records from a California company, Qtask. In addition to investing millions of dollars with Qtask, Rothstein and various lawyers with his now defunct Fort Lauderdale law firm, Rothstein, Rosenfeldt and Adler, used the company’s server to chat among themselves and with others. Qtask bills itself as maintaining a secure computer server designed to house confidential communications. Apparently, Rothstein was concerned about the privacy of his e-mails.
The Rothstein communications that were subpoenaed by the trustee from Qtask might disclose some of his partners in crime. Despite being subpoenaed in December,Qtask still has not produced any records, according to a motion filed in federal bankruptcy court in Fort Lauderdale, Florida, by the attorneys for the trustee.
Russel Mix, chief executive of Qtask, claims that he is trying to comply with the subpoena, but found it hard to believe that Rothstein could be so stupid as to use Qtask’s system to engage in criminal chat. “If there was [illegal activity], then these would be the dumbest criminals of all time,” Mix said. “Whatever you put in [the Qtask server] becomes permanent.”
Mix, it appears, is attributing to this disbarred lawyer far more street smarts than he deserves. Maybe it was the $7 million Rothstein invested in his company, Qtask, that made him believe that Rothstein was something other than “dumb.” Although Rothstein implemented a grandiose Ponzi scheme, it appears that his criminal plan was myopic at best. How long did Rothstein really think he could continue to make the payments that he promised to his investors when he outsourced ridiculous amounts of cash on whatever crazy idea “came across his desk?” Tens, perhaps hundreds of millions of dollars, were blown on restaurants, cigar bars, watch companies, charities, and not one, but two Bugatti automobiles — each priced at over a million dollars.
Had Rothstein, the grand Ponzi schemer, just been a little bit more discriminating in the way he spent his newly found stolen money, he might have stayed out of the cross-hairs of law enforcement. Rothstein should have realized that he could not afford to throw away millions of dollars on any whimsy that struck his fancy, even if he could continue to find new investors for his Ponzi scheme. For appearances sake, if nothing else, Rothstein needed to maintain some semblance of cash on hand in order to continue to make the monthly payments that he promised to return to his investors. Given the number of people he duped, these payments were substantial and if these payments were even one day late, suspicion would be aroused.
At the end of the day, and contrary to what Mr. Mix apparently believes, Rothstein may well have have been one of the “dumbest white collar criminals of all time.” If not “all time dumb,” then at least one of the dumbest by Broward County standards. Even the most mediocre of criminal minds (and Rothstein was certainly one of them) had to be thinking about some sort of “exit strategy” or at a minimum, a way to delay detection or to flee. Unlike Bernie Madoff, however, Rothstein simply didn’t have the brains to fend off discovery of his Ponzi scheme for more than just a few years.
Getting back to the communications subpoenaed from Qtask, maybe as Mr. Mix has suggested, these will all be benign and nothing new will be discovered. Then again, given Rothstein’s “brilliance,” he may well have been dumb enough to memorialize his scheming on the Qtask server. Only time, and the communications from Qtask, will tell.
Rothstein’s ingenious escape plan was to fly to Morocco on a private Gulfstream jet, then return to South Florida where he quickly surrendered to federal authorities. He then plead guilty to five federal charges and is looking at up to 100 years in prison, which will be determined at his upcoming sentencing hearing this May. For his brief stint as the “most popular” guy in Fort Lauderdale, Rothstein will be waking up every morning for the rest of his life to the same glorious view — the concrete walls of his jail cell.
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