Wednesday, 23 July 2014
Last updated 5 hours ago
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.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…