I wanted to take it easy, but I feel compelled to link Bill Scherer's amended complaint for the diehards.
News never sleeps, etc. So
What's special about it is that it provides more behind-the-scenes drama. Sure we knew about some of Scott Rothstein's B.S. emails and texts, and we have the scene at Bova Prime where Richard Pearson confronts Rothstein and Frank Spinosa about a missed payment. But in the new complaint, Scherer writes that after Rothsein fled to Morocco, a meeting was held at the Rothstein Rosenfeldt Adler law firm. There partners put the pressure on Rothstein's financial officer, Irene Stay (who, in fact, stayed around). When the lawyers asked Stay to confirm there was $1 billion in the firm's accounts, she stalled before she "relented and began inconsolably crying, repeating the phrase, 'I
don't want to go to jail.'"
Can you feel that?
But remember that Scherer put that detail in there to build a case against Stay, whom he named today as a defendant. He writes that Stay furnished "investors with falsified bank account statements and wire transfer confirmations... despite having actual or constructive knowledge that the investments were a Ponzi scheme."
Scherer says he had a staff of ten people working around the clock for two weeks to produce the original complaint. It shows. He learned of a meeting of "investor-victims" on November 1, that Sunday when I was breaking this thing on this blog. At the meeting was Mel Lifshitz, Ted Morse, Ed Morse, Richard Pearson, A.J. Discala, Dean Kretschmar, Ira Sochet, Mac Melvin, Mark Nordlicht, Jack Simony, Steve Jackel, Laurence King, Frank Preve, Barry Bekkadam, Michael Szafranski, and Steve Levin, and his father the whale, George Levin.
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Here's what the lawsuit says happened (and pardon the blue type):
[D]uring that same meeting, Levin informed the group that he reached out to
Rothstein in Morocco letting him know that Banyon stood ready to
provide shortfall financing if he was having trouble making payments.
Astoundingly, Levin's revealing admission took the group by surprise
because one of the core "deal" tenants insured against any possible deficit
by requiring a putative defendant's settlement to be funded prior to an
investors lump sum purchase. Thus, any shortfall, even the smallest one,
is patently contrary to the investment structure and obvious evidence that
the monies are either being misused or are a part of a Ponzi scheme.
Plaintiffs now believe that Levin's statement was a thinly-veiled attempt
to cover his tracks after Rothstein rejected Levin's last-ditch efforts to
persuade Rothstein to keep the Ponzi scheme going. In support, Plaintiffs
rely on a October 31, 2009 email from Preve to Rothstein stating that "We
[Levin and Preve] understand that the shortage is now 300m which is still
manageable if we have your cooperation. Let me know," to which
Rothstein responds, "[t]hat is not the shortage . . . . . that is the amount of
money needed to give the investors back their money. I really just need to
end it frank. It will make it easier for everyone." (emphasis added). The
attempt to try and "manage" the hole created now presumes that Levin and
Preve had knowledge of a prior deficit and serves as an unwitting
admission of their involvement in the perpetuation of the Ponzi scheme.
Levin wants to fund the shortfall of $300 million, but Rothstein basically tells him it's bigger than that and says, "I really just need to end it, Frank. It will make it easier for everyone."
Not sure anything about this is going to be easy.