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Lawyer's pitch was too good to be true

FORT LAUDERDALE — To attorney and developer Alan Sakowitz, something just didn't sound right about the sales pitch from high-profile lawyer Scott Rothstein, now under federal investigation for possible financial wrongdoing involving lucrative investments in legal settlements.

For one thing, Sakowitz said, everything was a secret. He couldn't get access to attorneys involved in the supposed settlements. Still, promised a profit of $240,000 in three months time, Sakowitz said he kept listening even as his concerns grew about the deal's legitimacy.

"I'm always looking for an opportunity," Sakowitz said recently. "We were always looking for a way to show this was real, and we couldn't find it."

Sakowitz contacted the FBI in September about Rothstein, who hobnobs with sports stars and celebrities, raises millions of dollars for politicians, drives around in luxury cars, owns three homes and in August purchased the former Gianni Versace mansion in South Beach. Now Rothstein is suspected by his law partner of fabricating the settlement business, hiding the scheme from the firm's other attorneys and keeping millions of dollars for himself.

Rothstein also had visible ties to the Florida Panthers professional hockey team, most notably with the Ice Dancers, a group of scantily clad women dancers who perform during home games at the BankAtlantic Center and carried the name of his high-end Bova restaurants.

Sakowitz of Bay Harbor Islands is a real estate attorney and commercial developer. He said he and some friends were approached in August by Rothstein, who was offering a sweet investment in an out-of-court settlement.

It worked this way: Rothstein said his firm had negotiated a $900,000 settlement that would pay out over several months. The person who won the settlement needed money right away and was willing to "sell" the rights for $660,000. Under the deal, Sakowitz and his friends would pocket the $240,000 profit in just three months.

Rothstein told the group that his firm does 3,000 such settlements a year without ever filing a lawsuit, mainly by using private investigators and surveillance tactics to build airtight cases in areas such as workplace sexual discrimination and corporate malfeasance that defendants immediately seek to settle. For example, photographs of a senior manager having an affair with a worker.

Michael Goldberg, an attorney who has been appointed a receiver in numerous Ponzi schemes, said such scams all share similar hallmarks: promises of unrealistic returns on investment, secrecy and hidden financial books, and people willing to suspend disbelief in pursuit of a big payoff.

"They are all variations on the same themes," Goldberg said. "We've got to ask questions. We can't just bury our heads in the sand."

Lawyer's pitch was too good to be true 11/05/09 [Last modified: Thursday, November 5, 2009 10:08pm]
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