Rothstein's $5 Million Mistake
Flickr: rubber rat productions
It's a good thing Scott Rothstein isn't a more diabolical criminal mastermind. On Tuesday, I pulled county documents that show how he transferred several Fort Lauderdale properties -- whose total value came to about $13 million -- into the hands of individual private corporations registered in Delaware, which happens to be the state that most closely guards the identity of a corporation's owners. It stands to reason that these maneuvers aimed to protect those assets from seizure in the inevitable event that his scheme was discovered.
But if that was the reason, it seems Rothstein overlooked the most obvious means for protecting his own Fort Lauderdale home: the Florida homestead exemption.
Records show that Rothstein took out a $4.5 million private mortgage
on his 7,500-square-foot home at
29 30 Isle Bahia Drive, which is currently valued at about $4 million. If there's truth to the allegations against Rothstein, that home will go back to the mortgage holder.
Had Rothstein paid cash for the home -- and there's little doubt that he had plenty of available cash to do so -- then he would have owned it free and clear, and the homestead exemption would have allowed him to hold on to that asset. Besides being a comfortable place to chill during a stressful criminal trial, it may have also been a valuable means of paying his legal bills after other assets were seized.
Of course, the exemption doesn't apply if the money was dirty, but then, to refute that allegation, Rothstein could argue that he purchased the home with clean money -- and surely, he could demonstrate that of his vast fortune, $5 million of it was earned legitimately. In fact, that might otherwise be a reason he didn't ensconce himself in an even more palatial estate: It would have been far easier for him to argue $5 million in legitimate earnings than $25 million.
Add it to the Rothstein enigma. On one hand, he appears to have planned meticulously for the day when he was found out: He was out of the country, in a nation with no extradition policy, with a duffle bag full of millions, and with assets worth millions more tied up in corporate entities. On the other hand, he came back from Morocco, and considering the likelihood he'll lose his house, it's anyone's guess where he'll be staying while federal prosecutors decide his fate.
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