Gibraltar Pays $65M to Settle Rothstein Ponzi Claims

Gibraltar Pays $65M to Settle Rothstein Ponzi Claims

FORT LAUDERDALE, Fla. - (Mealey's) The trustee for a bankrupt feeder fund and the trustee of convicted Ponzi schemer Scott W. Rothstein's law firm have agreed to an amended $65 million settlement with Gibraltar Private Bank and Trust Co., a bank Rothstein is alleged to have used in his scam, according to a document the trustees filed Sep. 17 in a Florida bankruptcy court (In re:  Banyon 1030-32 LLC, No. 10-bk-33691, Chapter 7, S.D. Fla. Bkcy.).

Robert Furr, the Chapter 7 trustee for bankrupt feeder fund Banyon 1030-32 LLC, and Herbert M. Stettin, the Chapter 11 trustee for the defunct law firm Rothstein Rosenfeldt Adler, filed a notice of motion to approve the settlement in the U.S. Bankruptcy Court for the Southern District of Florida.  The settlement is subject to the approval of Bankruptcy Judge Raymond B. Ray. 

According to the filing, the settlement provides for a $15 million cash payment to the Rothstein bankruptcy estates and an assignment of claims to the estates with a potential value of more than $50 million.  Under terms of the proposed settlement, the trustees have agreed to an injunction enjoining and permanently barring them from any claims against Gibraltar and its directors and officers in connection with the Rothstein Ponzi scheme, according to the filing.

Ponzi Scheme

Rothstein is alleged to have used accounts at Gibraltar in the fraud with the assistance of the bank's directors and officers.  The bank previously reached a $70 million deal with the trustees, to which investors objected, saying they lost a total of $160 million in the fraud.

Rothstein is serving a 50-year sentence in federal prison after pleading guilty to five felony charges related to the $1.2 billion Ponzi scheme.

Furr is represented by Russell M. Blain and Scott A. Stichter of Stichter Riedel Blain & Prosser in Tampa, Fla.  Stettin is represented by Jesus M. Suarez of Genovese Joblove & Battista in Miami.  Gibraltar is represented by Eugene E. Stearns, Harold D. Moorefield Jr. and Andrew E. Stearns of Stearns Weaver Miller Weissler Alhadeff & Sitterson in Miami.

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