New York Hedge Funds Fight Back In Rothstein Ponzi Suit

Feb 15 2011 | 8:40am ET

Two New York-based hedge funds named as defendants in a lawsuit launched by victims of Scott Rothstein’s $1.2 billion Ponzi scheme are fighting back.

Platinum Partners Arbitrage Fund and Centurion Structured Growth invested with Rothstein and are named as defendants in a 2009 suit launched by a group of Rothstein investors headed by Fort Lauderdale entrepreneur Doug Von Allmen. The lawsuit seeks damages of $280 million.

The funds, according to the South Florida Sun Sentinal, are already contesting settlement agreements reached by the trustee for Rothstein’s bankrupt law firm, Rothstein Rosenfeldt Adler. They are also suing one of Rothstein’s banks (TD Bank) and Rothstein’s largest feeder, Fort Lauderdale businessman George Levin.

Now Platinum Partners has filed a counterclaim in the state case, alleging the funds lost over $20 million thanks to their investments with Rothstein and that Von Allmen and other investors have overstated their own losses by not accounting for returns received from Rothstein. The counterclaim suggests the investors have overstated their losses by $120 million.

The funds also claim that they did not solicit investments for Rothstein but that Von Allmen did:

“By thus joining Rothstein's conspiracy, it is Von Allmen and those who conspired with him who have rendered themselves liable under Florida law to all victims of Rothstein's scheme, including the Fund Defendants and those Plaintiffs who did not join in Von Allmen's conspiracy,” the counterclaim alleges.

Fort Lauderdale attorney Bill Scherer, who represents the investors, denied that, telling the Sun Sentinal:

“They essentially took the allegations that we have made against them for aiding and abetting the Rothstein Ponzi and flipped it around, and said our victims did what we accused them of doing,” he said.

Rothstein is serving a 50-year prison sentence after pleading guilty to racketeering, money laundering and fraud.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR