Rothstein Associate to Plead Guilty

According to the Miami Herald, another guilty plea is expected today in the $1.4 billion ponzi scheme masterminded by Scott Rothstein in south Florida.  This comes following the Government's efforts to block Rothstein's deposition, saying this would jeopardize the ongoing criminal investigation in which further criminal charges are expected.

William Corte, 38, of Plantation, Florida, was expected to enter a guilty plea today to charges of wire fraud, which carries a maximum sentence of five years in federal prison.  Corte was charged on May 27, 2011 with one count of conspiracy to commit wire fraud.  In that filing, prosecutors alleged that Corte, along with Curtis Renie, created a fake website designed to duplicate TD Bank and providing ivnestorswith false account information.  Corte and Renie were both employees of Rothstein Rosenfeldt and Adler, the now-defunct Fort Lauderdale, Florida law firm of Rothstein.  

Corte is the first of the four charged on May 27 to plead guilty.  All are expected to enter guilty pleas and continue cooperating with authorities.  In opposing Rothstein's deposition, prosecutors had promised a fresh wave of indictments within the next several months as they moved to indict more of Rothstein's accomplices.

In Case of Sarasota Couple Accused of Running Ponzi Scheme, Husband Pleads Guilty but Wife Refuses

John and Marian Morgan, accused of playing leading roles in an alleged $27 million ponzi scheme uncovered in 2009, have decided to take markedly different legal strategies with a September trial date looming.  

The Morgans, accused of running Morgan European Holdings as a ponzi scheme ultimately taking in $27 million for a fictitious bank-to-bank trading program, rose to notoriety when they fled the United States to Switzerland after failing to show up for a federal court hearing rather than face jail for contempt.  Later arrested in Sri Lanka, the Morgans have remained in custody since being extradited back to Sarasota.  

Last week, John Morgan agreed to plead guilty and testify at the upcoming September trial, although he will not be forced to testify against his wife.  Following that development, it was speculated that Marian Morgan would also change her plea to guilty when a change-of-plea hearing was noticed for later this week.  However, it was announced today that Ms. Morgan still plans on fighting the charges.  

Also facing trial in September with Ms. Morgan is Eli Heckscher, the Denmark-based attorney who coordinated the movement of investor funds.  Currently jailed in Denmark, it is not anticipated that Heckscher will be extradited in time for the September trial.  Along with the cooperation of John Morgan, prosecutors have also secured the cooperation of Stephen Bowman, who recently pled guilty to funnelling nearly $13 million to Morgan European Holdings.

Marian Morgan faces a large amount of incriminating evidence, including a collection of emails purportedly written by her in which she cautions investors against contacting the SEC, saying that such a move would jeopardize return of the money.  Several examples of these emails appear in documents filed by prosecutors, including:

"Marian I. Morgan warned in an email to investors dated February 9 2007 that an 'SEC/FBI investigation' will cause the powers that be to FREEZE all funds and years and years will go by before they complete their investigation. When they are done they will CONFISCATE all funds as fees for their services and the participants will get one big GOOSE EGG, NADA, NOTHING, ZERO,"

$500k Ponzi Scheme exposed in Pittsburgh

An information filed today in a Pittsburgh federal court alleged that a Pittsburgh-area man orchestrated a Ponzi scheme that stole nearly $500,000 from investors.  Daniel Bull operated Venture Advisors, a company that purported to assist companies backed by venture-capitalists save on insurance and retirement plans. 

Bull told investors that he had made millions after selling three businesses, and convinced investors to entrust nearly $800,000 to him.  Bull then paid returns on their investments, totaling $281,000, to lend the scheme credibility.  Authorities allege that fifteen investors were involved in the scheme.  

Another Guilty Plea in $200 Million Minnesota Ponzi Scheme

Another of the principals in a failed $200 million currency arbitrage Ponzi Scheme pled guilty Tuesday in a Minneapolis federal court.  Christopher Pettengill, 54, pled guilty to charges of securities fraud, wire fraud, and money laundering as part of his role in the failed scheme.  The alleged mastermind of the scheme, Trevor Cook, was sentenced in August to 25 years in prison and ordered to pay restitution of $155 million to the identified victims.

While Pettengill faces a maximum of twenty years under the charges, prosecutors are asking for a sentence of 15 - 19 years based on federal sentencing guidelines.  Pettengill's lawyers argue that the appropriate range is 12-15 years; sentencing has not yet been scheduled.  The ultimate length of the sentence may be reduced, as authorities have indicated that Pettengill has been cooperating since January.  Other associates of the firm have denied wrongdoing.

Beginning in 2006, Pettengill and his associates pitched a currency arbitrage strategy in which investors were promised steady annual returns ranging from 10.5 to 12 percent with virtually no risk.  Originally called Universal Brokerage Services, the entities involved were renamed to various funds with the word "Oxford" in their names after a trademark infringement lawsuit from UBS Bank.  In his plea agreement,Pettengill admitted that investors were provided with fictitious account statements that bore no relation to the actual fund performance.  

Unbeknownst to investors, Pettengill and associates had invested some portion of the asset pool with Crown Forex SA in Switzerland.  Yet, when Crown Forex began having financial problems, Pettengill and associates worked to keep the news quiet.  The Oxford entities eventually collapsed during the height of the financial crisis in late 2009.  Cook and radio host Patrick Kiley were charged in November 2009.

See the SEC Litigation Release here and the SEC Complaint here.

More Arrests Expected in Rothstein Scheme

The investigation of the $1.2 billion Ponzi Scheme run by Scott Rothstein, a former Florida lawyer who pled guilty in January 2010, continues to move forward, with prosecutors disclosing in a filing late last week that a fresh round of indictments is expected in the coming months.

Rothstein, who admitted using the pretense of selling nonexistent legal settlements to investors to rake in over $1 billion, has been cooperating extensively with investigators since his arrest and guilty plea.  He was sentenced to 50 years in prison for his role, although prosecutors are expected to ask for a reduction based on the fruits of Rothstein's efforts in cooperating.

The latest disclosure comes as the trustee marshalling assets for the benefit of defrauded investors seeks to depose Rothstein, after receiving approval from United States Bankruptcy Judge Raymond Ray.  The decision will ultimately be up to District Judge James Cohn, who will take up the matter at a hearing on July 1st.   Prosecutors said in a filing opposing the deposition that

"It is anticipated that a deposition of Rothstein would disclose the evidence which forms the basis of the government’s proposed case to putative defendants and other targets of the criminal investigation, some of whom are parties to this action. It is further feared that such a disclosure of information, at the present time, would enable coconspirators to obstruct the grand jury’s investigation and to corruptly tailor their statements and statements of other witnesses to falsely exculpate themselves."

In lieu of deposing Rothstein, prosecutors have offered to provide the trustee, Herbert Stettin, with information he may need to go forward with pursuing clawback lawsuits, in light of the two-year statute of limitations applicable in bankruptcy proceedings.

Already, five Rothstein associates have been charged, including the chief operating officer of the now-defunct firm.  According to the recent filing, prosecutors expect to file indictments for a broad array of crimes, including mail and wire fraud, campaign finance fraud, tax fraud, extortion, payments of unlawful gratuities, bank fraud, and money laundering.