« Charlie Crist visits Jewish assisted-living center in Miami | Main | The Rick Scott Solantic boomerang »

Rothstein accountants center of court complaint

Updated below with a response from the accountants:

Berenfeld Spritzer Schechter and Sheer, the accountants who handled the books at Rothstein Rosenfeldt Adler, are at the center of a legal complaint filed in bankruptcy court Wednesday.

The Berger Singerman law firm, working on behalf of the bankruptcy trustee, is trying to stop BSSS from getting the nearly $38,000 claim it filed for unpaid RRA bills.

Emery Sheer, BSSS managing partner, sent a written response Thursday disputing the lawsuit. Sheer described the lawsuit as an effort to "shake down all 'deep pocketed' defendants who have been tangentially linked to the case. ... [BSSS] conducted its duties professionally, conscientiously and in good faith."

The complaint describes how lawyer Scott Rothstein and Tracy Weintraub, a partner in the accounting firm, were longtime close friends since elementary school and professed love for each other. As adults, Rothstein led many of his clients to BSSS and the accountants prepared tax returns and compiled financial statements for RRA.

"Unfortunately, BSSS became captivated by Rothstein's illusory wealth and the prospect of receiving lucrative engagements from Rothstein's personal corporate empire and his clients," states the lawsuit.

The gist of the complaint: since BSSS had access to the financial records, it should have known something was amiss but looked the other way. Rothstein directed BSSS to withhold financial information from all but a few at the firm -- even blocking RRA president Stuart Rosenfeldt.

"BSSS knew that RRA was hemorrhaging cash because it extensively reviewed and reconciled RRA's operating and trust bank accounts, saw RRA's overdraft positions, and obtained actual knowledge of its NSF (not sufficient funds) bank charges," states the lawsuit.

Other red flags that BSSS ignored: it saw that the law firm was not generating enough income but had credit card bills as high as $22 million, trust accounts did not reflect the amount listed on the books and cash balance were repeatedly overdrawn.

But Jane Moscowitz, BSSS's lawyer, responded in a written statement:

Trustee Herbert Stettin alleges that Berenfeld prepared tax returns for Rothstein's law firm, RRA, using inaccurate and incomplete information without ever stating what he well knows -- that Berenfeld refused to file RRA's return because it was not satisfied with the information Rothstein provided. 

The essence of the complaint is that RRA was harmed because Berenfeld did not discover and inform it about Rothstein's Ponzi scheme.  But the trustee, who stands in the shoes of RRA, has stated in sworn pleadings that RRA and Rothstein were alter egos, that Rothstein was RRA and that Rothstein used RRA as his instrumentality to commit his fraud. What the complaint states, therefore, is that Berenfeld is at fault for not finding out and telling Rothstein what Rothstein was doing.

This highlights another fatal flaw in this complaint.  No one could hurt or cause legal damage to RRA because it had already killed itself.  

 

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.