How Rothstein Swindled Morse

This one is a bit of a game changer.

It seems Scott Rothstein wasn't just ripping off investors in a Ponzi scheme; he was also swindling friends in his work as a lawyer. Or at least one friend, wealthy car dealer Ted Morse, and Morse's parents, Ed and Carol. We knew that the Morse family had lost close to $60 million to Rothstein; we just didn't know how he got the money.

Well, the Miami Herald lifted the Morse veil, and what's behind it is not pretty, especially when you consider that Rothstein and Morse were very close (Rothstein once told me that Morse was his very best and most loyal friend). Basically, Rothstein cooked up faulty legal documents in a lawsuit in which he was representing the elder Morses and then ensnared them with a con game, a 

basic bait and switch. The basics reported by the Herald:

Ed and Carol Morse -- who were family friends with Rothstein -- sued Boca Raton decorator Jan Jones in 2006 claiming he botched their job. Rothstein told the Morses earlier this year that they had won the breach-of-contract case and that the decorator owed them $23 million, sources said.

It wasn't true. In fact, the Morses lost the case.

Rothstein also produced purported federal court orders signed by a judge, saying the Morses could claim the judgment by seizing a Cayman Islands bank account belonging to the decorator, sources said.

There were no such court orders, nor any fat bank account, court records show.

To confiscate the money, the Fort Lauderdale lawyer allegedly told the Morses they had to post a bond 2 ½ times larger than the judgment, or $57 million, the sources said. The large amount was required as a guarantee in case bank officials confiscated the judgment from the wrong account, Rothstein told them.

So the couple wired the $57 million to Rothstein in installments earlier this year, the sources said. It is not clear whether Rothstein paid any of that money back.

We don't know if Rothstein used the swindled money to keep the Ponzi scheme going or to keep his own high-rolling lifestyle intact. Another kick in the teeth is that the Morses apparently still have an $800,000 judgment to pay the decorator in the case manipulated by Rothstein. The whole thing started over a dispute on a $2 million interior decorating job at the Morse homes in Fort Lauderdale and Maine.  

No wonder Ted Morse was seen with his son, Teddy, walking angrily through Bova Prime two Fridays ago looking for Rothstein, who was already in Morocco. A waiter at Rothstein's restaurant told me that Morse's behavior was extremely unusual; the car dealer normally sat out in front of the restaurant relaxing on Fridays with his wife, Patti; a cigar; and a bottle of red wine. 

The brazenness of Rothstein's manipulation of the legal process in the case is pretty breathtaking, just as was his ploy involving billionaire Jeffrey Epstein in the Ponzi scheme. 

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