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Robert Trigaux

Is Florida ground zero for Ponzi schemers just because this is where the money is?



L.T Wake up and good morning. Is it just coincidence or is Florida really ground zero for most of the nation's Ponzi schemes? Inquiring minds want to know -- and to know why. In a moment, we'll ask Latour "LT" Lafferty (photo, left), a former prosecutor now with Tampa's Fowler White law firm, who says "white collar crime is a boom industry in Florida."

But first, let's look at the recent string of Ponzi schemers:

Bernardmadoff1. Bernie Madoff, Ponzi kingpin, was based in New York but his Palm Beach intake of money from mostly older, fellow Jewish investors there is already legendary. U.S. authorities in Florida this month auctioned off Madoff's 55-foot restored 1969 Rybovich fishing boat -- perfectly named "Bull" -- for $700,000, along with his "Sitting Bull" 38-foot 2003 Shelter Island Runabout and his "Little Bull" 23-foot Maverick.

Artnadelvalhalla2. Art Nadel 

skimmed hundreds of millions in a Ponzi scheme while acting as an investment adviser in Sarasota. Hedge funds managed by Nadel and associates attracted nearly $400 million from investors before collapsing in January as nearly worthless. Nadel, how sits in a New York jail, has been charged with 15 fraud counts tied to the six hedge funds he ran in Sarasota.

LouPearlmanmugshot3. Lou Pearlman, Orlando "boy band" music group promoter, scammed hundreds of millions from (mostly) Floridians. Here's a reminder of his exploits. He was sentenced to 25 years in prison.

AllenstanfordponziAP4. Allen Stanford, whose $7 billion Ponzi scheme was based offshore in the Caribbean but whose many unwitting customers -- including Tampa Bay Rays first baseman Carlos Pena -- are in Florida and Stanford funneled funds through Miami. Why? Because, according to this investigative story, Florida state regulators gave Stanford special permission to move money offshore that other businesses were not allowed to do. What's up with that, Florida?

Scottrothsteinponzi 5. Scott W. Rothstein, a politically prominent South Florida attorney,

whose Ponzi game may top $1 billion. Investors, law partners and clients accuse him of running an investment scam that was a massive Ponzi scheme and wiping them out for what could be hundreds of millions of dollars. Over the span of six years, the Miami Herald reports, Rothstein's net worth soared from at least $160,000 to tens of millions of dollars -- including opulent waterfront homes, a fleet of foreign sports cars, flashy watches, a stake in the former Versace mansion in South Beach and a restaurant group, court records show. He also owned multimillion-dollar homes in Rhode Island and New York, as well as a black Rolls-Royce Phantom convertible, and multiple Lamborghinis and Ferraris.

There are other Ponzi scamsters in Florida but we'll stop here. You get the idea. And we asked Fowler White's Lafferty why this is happening so often and so brazenly in Florida. He makes several key points:

* After Sept. 11, 2001, there was a massive shift of resources, notably FBI agents, away from white collar crime to focus on the terrorism threat. That created a void for years when the ability to investigate and prosecute white collar crime, including Ponzi schemes, was lacking.

* Florida has a high concentration of high net worth people who migrated to the state for nice weather, cheap housing and a lack of a state income tax. Says Lafferty: "They are willing to engage in riskier investments than standard institutional investing. And that (willingness) attracts unscrupulous hedge fund managers or financial advisers willing to exploit those individuals."

* Remember when robber Willie Sutton was asked why he stole from banks? "That's where the money is." And that holds true for Florida, Lafferty says.

Lafferty calls white collar crime "a boom industry" in Florida. "It will always be there as long as there are profits to be made in cheating and stealing and robbing," he says. So, too, will there always be people out there fighting for resources to investigate and prosecute it "We will see more and more of it," Lafferty says.

(Photos: AP and St. Petersburg Times files.)

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 11:26am]


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