It seems like only yesterday that many thousands of people were being scammed by Ponzi schemers with elaborate stories and fake investment schemes. I guess that's because it was yesterday, and every other day, except now it is mostly done with federal bailout money. Every now and then, though, somebody will get too greedy and must take the fall.
At the moment, that is Scott Rothstein. Rothstein is, or was, a lawyer who has been called, among other things, "the Bernie Madoff of South Florida." (Other Madoff-related nicknames apparently include "Mini-Madoff," and "Madoff on Crack," although those seem inconsistent to me.) His version of a Ponzi scheme was to bring investors into his law firm and tell them that he had clients who would assign the rights to settlement agreements that paid over time, in exchange for getting a lump-sum now. The investors would profit from the difference, later, assuming that they put up their money now. And they did. Put up their money, that is, to the tune of maybe $1.2 billion. They did not profit, because there were no settlement agreements, no clients, and no cases. But prior investors were paid with new investors' money, the classic Ponzi arrangement.
Would you buy a watch from this man?
Huge amounts of money were turned over, because there were absolutely no warning signs of any kind that Rothstein might be a crook. Who doesn't know a lawyer who owns three Bentleys and up to 20 other luxury cars that he keeps in an air-conditioned warehouse? (At the moment I only have two Bentleys, but I have not been a partner that long.) Also, many's the time that our staff has thanked me and our other partners for "shower[ing] gifts on all of them, including exotic cars, jewelry and boats." It's just the way lawyers operate. And I object especially to the suggestion that you should suspect a man of fraud just because he has gold-plated toilets.
Okay, seriously -- if your lawyer or investment manager has a gold-plated toilet, first, DO NOT GIVE THAT PERSON ANY MORE MONEY. THEY HAVE ENOUGH. And you should also officially be on notice at that point that further inquiry is suggested as to how that person came by gold-plated-toilet money to begin with. In my experience, people who made their money honestly do not plate their toilets with it.
Okay, in all fairness, it was just the toilet lids. But on the other hand, he had two of them:
When news of the Ponzi scheme broke, someone sent [Bob] Norman [a reporter covering the story] a photo of Rothstein's his-and-hers toilets. The lids were gold-plated, each estimated to cost $25,000.
Norman said one of Rothstein's investors told him: "I was lulled into believing this myth that he created. I really believed he had a golden touch. What better way to perpetuate that myth than by having a golden toilet?"
So, let me see if I understand. You thought the man's golden toilet was evidence that he had the Midas touch? But you didn't ask him to sit on anything else to prove it? And is it too late for me to ask you for money?
Rothstein pleaded guilty last month, probably in part because it is difficult to come up with an innocent explanation for why you "wired $16 million to an offshore account and fled to Morocco in a private jet" if you haven't been up to something. He faces up to 100 years in jail, where the toilets are stainless steel. Although maybe putting his ass in jail will change that.
Link: CNN
