Berenfeld settles Rothstein suits for $10M

Nov 3, 2010

The following article was published in the South Florida Business Journal on November 3, 2010:

Berenfeld settles Rothstein suits for $10M

By Paul Brinkman

The accounting firm that worked for Ponzi schemer Scott Rothstein has agreed to settle two malpractice lawsuits connected to the scandal for $10 million.

Coral Gables-based Berenfeld Spritzer Shechter & Sheer provided tax accounting for Rothstein, his defunct law firm, and for the top feeder in Rothstein’s $1.2 billion fraud, one of the funds led by George Levin.

The settlement amount marks the limits of Berenfeld’s malpractice insurance policies.

The agreement was filed Wednesday in the bankruptcy case of the defunct Rothstein Rosenfeldt Adler law firm.

Settling parties include the bankruptcy trustee overseeing the defunct firm, Berenfeld’s insurer Lexington Insurance Co. and investors represented by Fort Lauderdale attorney William Scherer.

Those parties have agreed to a bar against further claims against Berenfeld Spritzer.

The settlement also resolves all claims by the settling parties against Berenfeld employees Tracy Weintraub, Gary Berkowitz and Brian Leitstein, or any other employees or successors to the firm.

The agreement states that both parties still believe they have good arguments, but prefer to settle to avoid the expense and delay of litigation. It states that Berenfeld’s insurance policy is its largest asset and that its other assets are subject of a prior lien in favor of its working capital lender.

Investors, including Fort Lauderdale venture capitalist Doug Von Allmen, had alleged that Berenfeld’s role should have made it apparent that Rothstein’s money was dirty.

But the accounting firm said it did not provide traditional book audits for the firm and stopped doing RRA’s taxes in 2009, when Rothstein declined to answer their questions about the previous tax year. Rothstein’s crimes came to light a year ago, when he temporarily fled to Morocco with law firm funds. He was sentenced last summer to 50 years in prison.

Berenfeld has argued that it did not provide “substantial assistance” to Rothstein in committing his crimes.

An accountant at Berenfeld, Berkowitz, acknowledged in a deposition that the firm wrote letters to Gibraltar Private Bank, at Rothstein’s request, to help ease the bank’s concerns about money flowing in and out of Rothstein’s Ponzi scheme accounts.

A firm spokesman said the company would not comment on the agreement.

The Berenfeld firm is one of the largest independent accounting firms in South Florida with offices in Coral Gables and Fort Lauderdale.

In April, Berenfeld partner Emery Sheer called the investor lawsuit “a campaign of misinformation, misdirection and innuendo.”

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