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TD Bank Ordered to Turn Over Records to Embattled Law Firm's Receiver
Daily Business Review
November 09, 2009
Broward Circuit Judge Jeffrey Streitfeld has given TD Bank until noon today to turn over its records on embattled law firm Rothstein Rosenfeldt Adler and its ousted chairman Scott Rothstein, who investors say fleeced them out of more than $400 million.
The firm's court-appointed receiver, retired Miami-Dade Circuit Judge Herbert Stettin, told Streitfeld on Friday that the bank has "stonewalled" his request for records.
Stettin said he is "handicapped to the point where we can't really do much in way of financial investigations" because federal agents seized all of the firm's financial records in a raid last week. Stettin said the firm's trust accounts and operating accounts have shrunk, but he didn't offer a figure for what they were at their height.
TD Bank is listed in an FBI inventory of records seized at the firm, and Commerce Bank, TD's predecessor, is named in documents given by a prospective investor to the Daily Business Review to illustrate Rothstein's financial pitches. Greenberg Traurig shareholder Mark Schnapp, who represents TD Bank, was not at the hearing.
TD Bank spokeswoman Rebecca Acevedo said the bank's attorney received the order Friday after the hearing.
"This is the first communication our counsel has received from the law firm Rothstein Rosefeldt & Adler or the receiver," she said. "We are reviewing the order and, given the limited time for production of voluminous material, will make every effort to comply in good faith."
The firm's other bank, Gibraltar Private Bank & Trust, has been cooperating with all requests, said Stettin, who was appointed Tuesday to oversee finances when the firm was placed in receivership.
Gibraltar attorney Thomas Tew of Tew Cardenas in Miami said the bank has readily made account information available to the firm.
Investors have claimed TD Bank improperly disbursed funds without authority in recent weeks. Walter "Skip" Campbell of Krupnick Campbell Malone Buser Slama Hancock Liberman & McKee said he has been contacted by an investor interested in filing an action against TD Bank.
The hearing before Streitfeld capped a week of turmoil for the law firm. Rothstein was in Morocco when his partners realized there was trouble. He returned Tuesday but remained incommunicado and was cooperating with federal investigators.
The firm's operations have been teetering, notably since the nighttime federal raid left the firm without e-mail and access to client records. The firm was entirely paperless, and the FBI and Internal Revenue Service seized servers vital to the firm.
Coffey said the firm has been in contact with the FBI and the U.S. Attorney's Office in hopes of having the servers restored.
The firm is operating with just $300,000, including $200,000 that arrived last week when the Florida Democratic Party returned a donation, Stettin said. He told the court that he set up a new bank account and trust account for the firm, and all checks require his signature.
With a dearth of money, Stettin asked the entire staff to work without pay for two weeks. He would guarantee health insurance, parking expenses and office supply costs.
Stettin said he may ask for increased authority but declined to provide much more information about the firm, noting it is "in a state of flux."
Coffey said he did not know how many lawyers have left the seven-year-old firm, which at its height boasted 70 lawyers.
RRA partners Grant Smith and William Berger, a former Palm Beach Circuit judge, flanked Coffey and the sole remaining equity shareholder, Stuart Rosenfeldt, at the hearing.
Streitfeld also appointed forensic accountant Richard Pollack to assist Stettin.
"I think a terrible situation is going to be managed in the best way possible," Coffey told the judge.
Streitfeld set the next hearing for 1 p.m. today to reassess the situation. He said he may enter orders to get the firm's e-mail and document systems restored.
