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DBR: Accountant Admits "Mistakes" in Most Popular Stories

Rothstein Ponzi
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By Bob Norman, Thu., Mar. 18 2010 @ 12:05PM Comments (185)
Election Recap
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It's Votin' Day!
When Gibraltar Bank had concerns about $15 million in suspicious wire transfers made to
Our Politicians at the Trough
the Rothstein Rosenfeldt Adler law firm back in July 2008, Scott Rothstein must have
wondered if his burgeoning Ponzi scheme was about to be discovered. Broward's Destiny Couple?

No problem. He just sent a chummy Chaitgate: Ritter Sits With Prosecutors, Glasser Got
Immunity
email to his accountant, Gary
Berkowitz, of the firm Berenfeld More Most Popular...
Spritzer Schechter Sheer, according to
Berkowitz's testimony yesterday in the
Rothstein bankruptcy case.

"Hey bro -- need to see you this Sign up for free stuff, news info & more!
afternoon about sending a nebulous
enter email
letter over to Gibraltar Bank about the
fact that I am declaring certain funds as
income to my firm ... need the letter so I
do not breach confidence on the
settlement side. Love ya, me, me and me."

Rothstein added: "Let's do this info over a cigar ... How is the SEC.....hehehehehe."

Berkowitz, without verifying the source of the funds, did as told, giving the Ponzi a new
lease on life.

We learn this from a groundbreaking report in the Daily Business Review from staff
writer Julie Kay, who attended Berkowitz's deposition yesterday. Kay's report gives us, for
the first time, insight into serious misgivings held by folks who are supposed to be
watching the store -- namely the banks and accountants involved.

As Rothstein funneled millions of Ponzi dollars into the law firm's account, he hid behind
alleged confidentiality of his phony settlement deals and, through sheer force of will and
blustery charm, managed not only to hold the watchdogs at bay but also to

have them eat from his hand.

Berkowitz, reports Kay, repeatedly acknowledged during the deposition that he made
mistakes and failed to verify the source of the funds Rothstein was moving from the Ponzi Broward/Palm Beach
account to the law firm account. He admitted he couldn't account for the $20 million jump Classifieds
in law firm revenues in 2008 and said he "noticed payroll numbers were going up, and it
didn't look like there was enough law business to justify all these salaries." buy, sell, trade (5,893) musician (1,256)

rentals (16,211) jobs (4,550)

You think?
personals (7,512) adult entertainment (16,496)
Importantly, the deposition also confirmed that Gibraltar Bank had money-laundering
concerns regarding Rothstein yet let them slide, apparently based on Berkowitz's weak
assurances. In Berkowitz's letter to Gibraltar regarding the dubious $15 million in
transfers, he admitted to the bank that the transaction had not been audited by the
accounting firm and that it made "no representation regarding the sufficiency of this Slideshows
information for any credit decision-making purposes."
B.o.B. at Revolution
Rothstein apparently even had a hand in the wording of the letter, coaxing Berkowitz to Live
take out the phrase "no proof of accuracy" and other key words.

Interestingly, Gibraltar continued to look the other way and actually accepted a $5 million
investment from Rothstein in the bank last year. The Gibraltar banker who handled
Rothstein's account, John Harris, was fired from the bank after the Ponzi imploded.
Triple 8 Lounge at
Question: Did Gibraltar look the other way on Rothstein's suspicious activity in exchange The Falcon House in
for the infusion of cash? Delray

Deeply involved in the Rothstein dealings was his chief financial officer, Irene Stay.
Berkowitz said that when his firm became concerned about the $20 million RRA influx in
2008, Stay told him she was unsure of the source of the funds and told him to ask
Rothstein. More recently, when Berkowitz had concerns about Rothstein's tax returns in Jeffree Star Crosses
the weeks before the implosion, Rothstein scapegoated Stay, saying she had made a "mess" Gender Boundaries
at Ground Control
of things.

"We didn't know what the deposits were for and how to report them," Kay quotes
2 of 3 Berkowitz as saying at the deposition. He then added that Stay's spreadsheet "made no 8/27/10 2:00 PM
sense."
More Slideshows >>
Incredibly, Berkowitz filed the tax return anyway, at Rothstein's urging.
DBR: Accountant Admits "Mistakes" in Rothstein Ponzi - Bro... http://blogs.browardpalmbeach.com/pulp/2010/03/gary_berkow...

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