Most victims of Scott Rothstein’s $1.2 billion Ponzi scheme are still waiting to get their first penny back, but seven law and accounting firms have filed requests for another $4 million in fees and costs.
The firms were all hired by Herbert Stettin, the court-appointed trustee overseeing the bankruptcy case of Rothstein’s defunct law firm and responsible for collecting money for the victims. Since being hired about 2½ years ago, the professionals have received more than $10 million.
The seven firms filed applications for compensation Tuesday for work done from February to June.
Paul Singerman of Berger Singerman, Stettin’s primary law firm, is seeking the largest payday — $2.63 million in fees and $115,000 in costs. John Genovese of Genovese Joblove & Battista in Miami, Stettin’s secondary counsel, is seeking $911,717 in fees and $36,800 in costs.
Others filing applications for compensation include:
• Akerman Senterfitt partner Michael Goldberg, who represents the creditors committee, who is seeking $289,000 in fees plus $19,739 in costs
• Jason Mazer of Ver Ploeg & Lumpkin in Miami, special insurance counsel, who is seeking $198,818 in fees plus $3,867 in costs
• Richard Pollack, an accountant with Berkowitz Pollack Brant in Miami, who is seeking $196,057 in fees plus $323 in expenses
• James Feltman of Mesirow Financial Consulting in Miami, special counsel, who is seeking $59,000 in fees plus $1,700 in costs
• Joseph J. Luzinski of Development Specialists Inc. of Miami, a bankruptcy consultant, who is seeking $24,121 in fees
While Stettin’s team has sued numerous adversaries and collected $70 million for victims so far, they have not yet made any distributions. The federal judge in Rothstein’s criminal case ordered nominal restitution payments to a handful of victims.
The U.S. attorney’s office was set to distribute $30 million to $50 million obtained through the sale of seized assets but was blocked by an appeal. The U.S. Court of Appeals for the Eleventh Circuit will hear arguments on distributions in November.
Genovese said it’s not unusual for victims to wait years to get restitution in a Ponzi case.
“In a Chapter 11, you can’t do distribution outside of a plan of reorganization or liquidation,” he said. “There are all sorts of issues that need to be worked out, but we anticipate very positive results.”
Asked whether fraud victims have been growing impatient or asking when they will get their money, Genovese said, “There are no bankruptcies in which creditors are not impatient.”
He said he cannot give them any ballpark figure for payments. Genovese noted that another Ponzi case he is assisting on — the case of Orlando music mogul Lou Pearlman — has been chugging along since 2007 with no payments to victims yet.
“These can take months, in some cases years,” he said. “There is no general rule.”
Victims of the Bernard Madoff’s fraud have gotten some of their stolen money back. About 1,230 victims received checks totaling $312 million, representing 4.6 cents for every dollar they invested. The checks went out last October, less than three years after the scheme collapsed.
The Rothstein Rosenfeldt Adler appeal is set for arguments around the third anniversary of the collapse of the law firm chairman’s settlement financing fraud.