Date of Action: June 30, 2014
Type of Action: Default Judgment & Order
Name(s) of Defendant(s): Scott W. Rothstein
Allegations: On or about Jan. 1, 2006, Scott Rothstein Rosenfeldt Alder P.A., a former law firm based in Fort Lauderdale, Fla., established a RRA 401(k) Profit Sharing Plan for the benefit of its employees. The plan was funded through employee contributions, which were withheld from employee participants’ pay. The investigation by the U.S. Department of Labor’s Employee Benefits Security Administration determined that a total of $13,127 in employee contributions was withheld from employee participants’ pay but never remitted to the plan during the period from Dec. 1, 2006 through Oct. 30, 2009. In November 2009, RRA ceased operations following one of its named partners and the plan’s trustee, Scott W. Rothstein, being charged with racketeering conspiracy for allegedly victimizing investors in a more than $1 billion Ponzi scheme. On Nov. 10, 2009, RRA’s creditors filed for an involuntary Chapter 11 bankruptcy proceeding against RRA. Rothstein was subsequently removed as the plan’s trustee and M. Larry Lefoldt was appointed as independent fiduciary for the plan. On Aug. 8, 2013, the $13,127 in delinquent employee contributions and $1,809.47 in associated lost earnings were restored to the plan. On June 24, 2014, a motion for default judgment was filed against Rothstein for additional lost earnings incurred through June 24, 2014, as well as the fees associated with Lefoldt’s administration and termination of the Plan.
Resolution: In the judgment the court ordered that Rothstein be enjoined from violating the provisions of Title I of Employee Retirement Income Security Act and permanently enjoined from acting as a fiduciary, trustee, agent, or representative in any capacity to any employee benefit plan, as defined by ERISA. Rothstein was also ordered to pay the plan a total of $1,775.56 in additional post judgment interest and a total of $79,384.50 in reasonable fees and costs incurred by Lefoldt, as the plan’s independent fiduciary. Lefoldt was further instructed to offset these amounts from Rothstein’s individual plan account.
Court: United States District Court for the Southern District of Florida
Docket Number: 12-cv-62428-RNS
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