Lawsuits abound as yet another Ponzi scheme unfolds here in South Florida. Scott Rothstein seems to be another to fall of this cliff and one has to wonder what goes on the in the minds of some of these folks. One particularly has to wonder what goes on in the minds of investors and in particular why people fall for this stuff and with big bucks involved.
This one is a minor humdinger in the grand scope of recent schemes but $1.2 billion is no chump change, penny anti thing. Now people want their money back but the twist in the tale (tail) is that more than likely all but a little of the money is gone and the recourse will be to get the money back from those he paid, level the field and try and give everyone something back, although at a fraction. Unfortunately it will take years as Mr. Rothstein seems to have been a major league spender.
Even in my small home town of Westhampton (yes the Hamptons) in New York we have our own version of this. George Guildi, a local attorney got into the mortgage fraud business in a big way for such a little town (he is actually a neighbor of mine). He and some of his friends including the owner of Magic's Pub (if you remember Breslin's book on Son of Sam and the recount of him driving to the Hamptons for a victim and spotting some potentials at an outdoor restaurant, that was Magic's) went around buying houses with straw buyers and pocketing a lot of the fees and rents. We are talking $50 million in real estate here and in a town of 1600 full time residents, that is a mess in the local streets. I guess 50 mil in a small town equates to 1.2 billion in Ft. Lauderdale but I still am constantly amazed that folks think that they can get away with this for any extended period of time. Mr. Ponzi should be proud of his idea. As we say in advertising, it has legs.