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Howard Kusnick and imprisoned Ponzi scam artist Scott Rothstein go way back.
They became law partners in the 1990s at the labor and employment firm Kusnick & Rothstein in Plantation. Those were the salad days before Kusnick followed the brash power broker to 70-attorney Rothstein Rosenfeldt Adler in Fort Lauderdale.
Now Kusnick could follow Rothstein to prison.

Kusnick was one of four men charged Friday with playing side roles in Rothstein’s $1.2 billion financing scheme founded on bogus settlements. Kusnick is accused of defrauding two clients of Rothstein Rosenfeldt Adler by writing a letter purporting to settle pending litigation in their favor on a home construction project that turned sour.

“In fact, however, no such litigation had been instituted, and no such settlement existed,” federal prosecutors said.

The clients are not named in the criminal charge, but the description matches claims by auto dealership owner Ed Morse and his wife, Carol, who named Kusnick as a defendant in a malpractice lawsuit against Rothstein and RRA. Morse’s son, Ted, was a close friend of Rothstein’s, and the Morses claimed $57 million in investment losses from the law firm chairman’s fraud.

After months of speculation about others who might be charged, prosecutors ended serving up an appetizer with promises of more to come. Sources close to the investigation have said prosecutors are working on an omnibus racketeering indictment that could be ready this summer.

The U.S. attorney’s office is looking, among other things, at investment money that was funneled to political campaigns through loans or bonuses to Rothstein’s law partners, sources say.

“The investigation is continuing, that is for sure,” U.S. Attorney Wifredo Ferrer said. “The house of cards supporting Scott Rothstein’s elaborate Ponzi scheme continues to crumble.

Fraud Help

The four men were charged Friday with one count of wire fraud conspiracy. The method of charging them by criminal information usually indicates the defendants plan to plead guilty. The charge carries a maximum five-year sentence.

Stephen Caputi of Lauderhill, Rothstein’s business partner in the Cafe Iguana nightclub, was accused of portraying a banker and plaintiff at meetings with potential investors, according to the information.

The other two defendants, William Corte of Plantation and Curtis Renie of Fort Lauderdale, worked in the law firm’s information technology department.

Until the latest charges, only Rothstein and RRA’s former COO Debra Villegas had been charged. Rothstein is serving a 50-year sentence, and Villegas received a 10-year prison term.

With the new charges, prosecutors are painting a picture of a rogue law firm that was rotten from top to bottom.

“One thing is clear, Rothstein was able to deceive investors because of the participation by others,” said John V. Gillies, special agent in charge of the FBI in Miami.

The new defendants were charged with participating in the scheme in their own separate ways.

Word that Kusnick would be criminally charged leaked last year at a hearing in a state court lawsuit brought by cheated investors. Prosecutors charge he wrote a fraudulent settlement letter purporting to resolve non-existent litigation under the false letterhead, “Howard Kusnick and Associates.”

The recipients were two RRA clients, ostensibly the Morses, who hired Rothstein to pursue litigation against a general contractor and subcontractors on a home project. The Morses sued over a kitchen renovation.

Rothstein settled the lawsuit in 2009 without the consent or knowledge of the Morses, agreeing they would pay $500,000 to the general contractor, prosecutors say.

Rothstein then instructed Kusnick to tell the clients they had won a settlement worth about $20 million but would have to post a bond worth 2.5 times that amount to collect it.

Banker or Client

The information paints Caputi as a character actor who played the role of either a TD Bank employee or a plaintiff who received one of Rothstein’s bogus settlements — depending on what the crooked lawyer needed to fool potential investors.

As the bogus banker, Caputi allegedly told investors in a TD Bank conference room that he would perform due diligence. As a fake plaintiff, the charge said Caputi falsely told two potential investors in 2009 that he had entered into a $100,000 settlement.
Greenberg Traurig attorneys representing TD Bank did not return phone calls for comment.

Rothstein worked his Ponzi scheme by telling investors that plaintiffs were willing to accept discounted lump-sum payments from investors, who in turn would get payments owed from the negotiated settlements, prosecutors say.

A big part of Rothstein’s scam was showing investors how much money others had fed into his venture’s bank accounts. That’s where the RRA IT specialists came into play.

Rothstein paid Renie and Corte $5,000 to copy the TD Bank website to the law firm’s file server, the information states. Everything looked like the real site, except the stock ticker didn’t function.

“Renie would manually update the stock ticker and the clock on the copied website to make it appear to be the actual TD Bank website,” the information states.

The website would falsely reflect RRA held $300 million to $1.1 billion on deposit at TD Bank, the information states.

Caputi and Corte made their first appearances before a magistrate judge Friday. Kusnick and Renie were expected to surrender next week.

John Pacenti can be reached at (305) 347-6638.

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