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Thursday, October 17, 2019

SEC charges two in South Florida Ponzi scheme

By Michael P. Tremoglie | May 23, 2012

WASHINGTON (Legal Newsline) - The Securities and Exchange Commission on Wednesday charged two individuals who raised more than $157 million from 173 investors in less than two years in what has been described as one of the biggest Ponzi schemes in South Florida.

The SEC alleges that George Levin and Frank Preve, of the Fort Lauderdale area, used investor funds to purchase discounted legal settlements from a former Florida attorney Scott Rothstein. But the Rothstein settlements were bogus, and the plaintiffs and defendants did not exist, the SEC says

Rothstein created a Ponzi scheme to make payments to other investors and support his lavish lifestyle. The Ponzi scheme collapsed in October 2009. Rothstein is currently serving a 50-year prison sentence.

The SEC alleged that Levin and Preve misrepresented to investors that they had procedural safeguards in place to protect investor money when, in fact, they often purchased settlements without first seeing any legal documents or doing anything to verify that the settlement proceeds were actually in Rothstein's bank accounts.

When the Ponzi scheme dissolved and Rothstein stopped making payments, Levin and Preve allegedly sought new investor money falsely claiming the continued success of their investment strategy. But their plot disintegrated with Rothstein's, the SEC says.

"Levin and Preve fueled Rothstein's Ponzi scheme with the false sense of security they gave investors," said Eric I. Bustillo, director of the SEC's Miami Regional Office. "They promised to safeguard investors' assets, but gave Rothstein money with nothing to show for it."

According to the SEC's complaint, filed in federal court in Miami, from July 2008 to October 2009, Levin and Preve defrauded investors by raising funds to purchase purported legal settlements from Rothstein.

Rothstein perpetrated a massive Ponzi scheme through the sale of fake discounted settlements utilizing his law firm Rothstein, Rosenfeld and Adler. Levin and Preve sold promissory notes and created a feeder fund to funnel investor capital to Rothstein, ultimately becoming his largest source of capital, the SEC says.

The SEC's complaint seeks disgorgement of ill gotten gains, financial penalties, and permanent injunctive relief against Levin and Preve to enjoin them from future violations of the federal securities laws.

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