Russell Adler, a name partner in convicted lawyer Scott Rothstein's former Fort Lauderdale firm, was sued Monday for more than $1.2 million by bankruptcy attorneys who claim the money was the fruit of Rothstein's massive investment scam.
The bankruptcy complaint accuses Adler and his wife Katie of using $475,000 of that money to buy a Manhattan co-op apartment in August — two months before Rothstein's Ponzi scheme imploded, the firm collapsed and federal authorities launched a criminal investigation.
The complaint claims the defunct firm of Rothstein Rosenfeldt Adler made salary "overpayments'' totaling nearly $580,000 to Adler and an additional $655,000 in "unpaid loans'' to him and his wife, who live in Fort Lauderdale.
Adler, who has said he was unaware of Rothstein's $1.2 billion investment racket, declined to comment. One of his attorneys, Fred Haddad, said Adler would "vigorously'' fight the bankruptcy suit.
"Russell earned everything he was paid and was worth every penny of it," Haddad said. "The mortgages were 100 percent legitimate. Russell had no knowledge of any alleged improprieties by Rothstein."
That assertion doesn't matter to the attorneys for the firm's bankruptcy trustee, Herbert Stettin. In the complaint, they called the firm's transfers between 2006 and 2009 "fraudulent'' and are seeking to recover the payments and loans to Adler and to seize the co-op to repay Rothstein's victims.
"They enjoyed the fruits of it by a dramatic overpayment of compensation, especially compared to what his business generation was and how the firm was doing," lawyer Charles Lichtman, whose firm, Berger Singerman, is handling the bankruptcy case, told the Miami Herald. "Law firms aren't in the business of buying condos for their partners."
During his tenure with the firm, Adler and his wife Katie also gave about $185,000 to state and federal politicians. Among them: former New York Mayor Rudy Giuliani for his presidential bid and later John McCain, when he became the Republican nominee for the White House.
Previous court documents filed by the bankruptcy lawyers have listed several other former RRA employees who received large salaries and loans from the 70-attorney firm — including the other name partner, Stuart Rosenfeldt.
Rosenfeldt, who co-owned the firm with Rothstein, received more than $6 million in total compensation in 2008, according to a court record. But Rosenfeldt, through his lawyer, disputed that he earned that much.
The bankruptcy complaint follows Rothstein's guilty plea in late January to five counts of racketeering, fraud and money laundering stemming from his sale of fabricated legal settlements to investors. Rothstein faces up to 100 years in prison at his May 6 entencing.
Federal prosecutors plan to charge others associated with Rothstein's scam, saying some former RRA employees "do have apparent criminal culpability." They have not identified any employees under investigation.
In the bankruptcy case as well, other employees are expected to be served with complaints similar to that filed against Adler.
"I've got probably an estimated eight more from RRA personnel that we are focused on," Lichtman said.
Lichtman declined to identify those other employees, but described them as "people who certainly appeared to be close to Scott and were well paid."