Above is a photograph of former Scott Rothstein confidante Michael Szafranski taken yesterday in court. Don't ask why it's on YouTube; it's one of those blog issues (but it does create sort of an eerie effect).
Szafranski lost in his bid to have lawyer Bill Scherer disqualified from the civil suit in which he has been named a defendant. The only other photograph out there is the one you may have seen here of Szafranski with Rothstein and gubernatorial candidate Alex Sink at a fundraiser at what Szafranski called the Rothstein castle. Channel 7 got him on video last night too (another Rosh Lowe special).
Szafranski was at ground zero of the Rothstein implosion. In the those final frantic emails filed in court by Scherer, Szafranski comes across as Igor to Rothstein's Dr. Frankenstein, at one point even replying "Yes, master" to a Rothstein demand. Rothstein, of course, famously called him Mikey and Szafranski often reminded Rothstein that he loved and missed him.
But what do the emails really prove?
Well, clearly Szafranski knew there were catastrophic problems with the investment funds and it's equally clear that he wasn't interested in dealing with the root problems. He asks for a loan to cover his own investors, writing, "I don't want to have to give them the explanation and they will freak if
payments are not sent. i will repay you or the oper acct when we resume but I need this..... i don't want my clients to go crazy..."
Let's see, paying off investors with short-term money from another source to keep them happy and keep the scheme going. That's sounds pretty Ponzi to me. And that's one of the main themes running through his emails to Rothstein in Morocco: He repeatedly asked for money to pay off his own investors -- and he didn't seem to care where it came from so long as he could keep them happy. When Rothtstein wrote that he was going pay off investor Coquina Investments of Corpus Christi to make "Barrie" happy (I'm still not sure that's really a reference to Barry Bekkedam), Szafranski write, "I'd rather you pay me off part of it to get me through any rough patch."
Even worse is the implication in his emails that he knew that the whole thing was a scam. When he writes about Mel Lifshitz threatening to take Rothstein to court, Szafranski seems to know full well that such an action would trigger the collapse of the scheme. He urges Rothstein to call "Melly" or there will be "bigger prbs." His last email might be the most damning of all. He writes:
"I have spoken to melly. He is planning on meeting with florida counsel on sunday and going into court on monday morning. He will be going after you, the firm. Everything. I was not able to dissuade him."
That's a dire tone, no? Then comes the kicker: If Rothstein can pony up $37 million to hold them at bay for a few more weeks, it's possible George Levin, the chief investor in the scheme, would pay off all the investors. Szafranski ends the email, "Please make this happen or we are all done."
That sounds so crooked, it's not funny. Again, he's employing the Ponzi principle. Reading these things again, the biggest shock is that the guy would even write them, knowing that they could easily become evidence in a case against him or Rothstein. That might be his greatest defense actually: If he knew it was an illegal scheme, why would he incriminate himself so badly in emails.
That's not a very good position to be in, though, and we haven't even gotten into the fact that Szafranski was the official "independent verifier" of the totally bogus settlement deals. How he verified nonexistent deals is going to be interesting to see.