Financial Adviser is Sentenced in $1.2B Rothstein Ponzi Scam

Michael Szafranski, the financial adviser of Ponzi mastermind Scott Rothstein, has been sentenced to two-and-a-half years in prison for wire fraud. Szafranski, who pled guilty, had already paid $6.5M of restitution to victims of the $1.2B financial fraud through the trustee handling the bankruptcy of Rothstein’s law firm Rothstein Rosenfeldt Adler.

The indictment against Szafranski referred to him as the “independent asset verifier” of the scam. He is accuse of persuading investors to put over $200M into the Ponzi scheme.

Meantime, Rothstein, an attorney, was sentenced to fifty years behind bars in 2010 for money laundering, wire fraud, and racketeering. He was accused of selling discounted stakes in bogus settlements of whistleblower and sexual harassment cases that ranged from hundreds of thousands to millions of dollars. Investors were told they would get the proceeds when the lawsuits were resolved. Instead, their money was used to bankroll his firm, pay for his expensive lifestyle, and purchase political influence. Rothstein would take newer investors’ money to pay older investors. He and co-conspirators allegedly generated bogus bank statements, settlements, and personal guarantees.

Also, according to InvestmentNews, Rothstein directed employees of his law firm to give some of the money to the campaigns of certain state, local, and federal politicians. These employees were told to do this in a way that allowed him to avoid limits on these types of donations while concealing where the money was coming from. After the allegations against Rothstein became known to the public, many of the campaigns returned the funds.

He also used criminal proceeds to purchase property and homes in different parts of the country, as well as bought expensive cars, a lot of jewelry, and sports memorabilia.

Also convicted over the Ponzi scam were over two dozen other people, including TD Bank regional vice president Frank Spinosa who recently entered his guilty plea. The U.S. Securities and Exchange Commission charged him with making misstatements and omissions to investors so that the scam could continue. Prosecutors say that he used his position at the bank to make false assurances to investors to give them the impression that Rothstein was keeping their money safe. Spinosa is facing up to five years behind bars.

Our Ponzi scam fraud lawyers would like to offer you a free case consultation if you suspect your investment losses are a result of wrongdoing or negligence by your financial representative or firm. Contact us today.

Rothstein Ponzi scheme: ‘Asset verifier’ Szafranski sentenced, BizJournals, October 28, 2015

Ex-banker pleads guilty in $1.2B Rothstein Ponzi scheme, SFGate, October 8, 2015