U.S. Bankruptcy Judge John K. Olson gave lawyers and accountants some holiday cheer in the Rothstein Rosenfeldt Adler law firm bankruptcy case, awarding them nearly $3 million in fees.
The fees cover work done from July 1 to Oct. 31 by law firms and accounting firms employed by Herbert Stettin, the court-appointed trustee tasked with unraveling Ponzi schemer Scott Rothstein’s defunct law firm and collecting money for victims.
Rothstein is serving a 50-year prison sentence for masterminding the $1.2 billion fraud from his opulent Fort Lauderdale office.
Stettin and his team have been paid well over $10 million since they began work on the case three years ago. Although Stettin’s team has collected $146 million in settlements, nothing recovered in the bankruptcy case has been distributed to victims while Stettin’s attorneys fight with prosecutors on appeal for control over the money.
The biggest payday Wednesday went to Berger Singerman, one of Stettin’s two primary law firms, which was awarded $1.4 million — 80 percent of its fee request. The firm also received $78,632 in expenses.
“We appreciate the court’s recognition of what every creditor in the estate has acknowledged — that we have received material results of which we are very proud,” said Charles Lichtman, a partner with Berger Singerman in Fort Lauderdale.
Genovese Joblove & Battista, Stettin’s other primary law firm, was awarded $596,509 in fees plus $28,726, also 80 percent of what the firm requested.
Stettin was awarded $420,117, his full request.
Other awards went to Akerman Senterfitt, counsel for the creditors’ committee, $167,468; accounting firm Berkowitz Pollack Brant Advisors, $176,180; Jason Mazer and his law firm, Ver Ploeg & Lumpkin, special insurance counsel for the trustee, $61,123; Mesirow Financial Consulting, confidential litigation consultants for the trustee, $22,842; and Joseph J. Luzinski and Development Specialists Inc., $11,548.
“I think Akerman’s fees are very reasonable for the services rendered,” Akerman Senterfitt partner Michael Goldberg said in an email.
Fort Lauderdale attorney William Scherer, who is representing Rothstein investors, had no comment on the fees.
“It’s expensive to practice high-quality matters,” he said. “People don’t like to pay fees. I haven’t paid any attention at this stage. That analysis will come at the end of the case.”
Scherer of Conrad & Scherer has achieved multimillion-dollar settlements against TD Bank and Gibraltar Private Bank & Trust in state court.
“Victims are being compensated all the time by private settlements with TD Bank,” he said. “Those are continuing and will continue on over the next year or so. We’ve made significant recoveries of more than half of the victims money-wise. My cases are before (Broward) Judge Jeffrey Streitfeld in state court. He moves his cases fast.”
Scherer defended Stettin, saying he’s not surprised at the lack of distributions.
“It is a complex case,” Scherer said. “There are appeals going on and contested matters, and it’s hard. I don’t think they want to make a partial distribution. They haven’t even filed a plan yet.”
Paul Singerman, a partner with Berger Singerman, said he doesn’t know when a distribution plan will be filed.
“We are working hard on a plan,” he said. “We do not have a firm date for filing at this time.”
In other Rothstein news, the U.S. Labor Department filed suit against Rothstein, his firm and its 401(k) plan in Fort Lauderdale federal court last week under the Employee Retirement Income Security Act. The suit alleges $13,127 withheld from RRA employees from 2006 to 2009 was never segregated from RRA’s assets and forwarded to employees.
The suit also seeks to enjoin Rothstein from serving as “fiduciary, administrator, officer, trustee, custodian, agent, employee, representative, or having control over the assets of any employee benefit plan subject to ERISA.”
Lichtman said he was at a loss to explain the lawsuit, which he was not served.
“I don’t know why three years and one month and 10 days into this Rothstein saga, the government decided to file an ERISA-based lawsuit over $13,000, but I promise we are going to look into it and take it seriously,” a sarcastic Lichtman said.
Also this week, Stettin reached a settlement with the Levy family, including controversial hotelier Shimon Levy, who were partners with Rothstein in Renato Watches. The settlement calls for the Levy family to pay $150,000 in cash and to waive $5.6 million in unsecured claims against the RRA estate.
The proposed settlement pending before Olson said the Levy family invested $50.6 million in the Ponzi scheme and received $49 million back for a $1.6 million loss.