Michael Szfranski, an investment advisor who approved million of dollars of his clients' money for placement in Scott Rothstein's bogus court settlement Ponzi scheme, has been indicted on twelve counts of Wire Fraud, in US District Court in Fort Lauderdale. He is the twenty-ninth individual charged in the Rothstein $1.4bn Ponzi case, which sold interests in phantom legal settlements to investors, and promised them high rates of interest.
Szfranski's function: he acted as the "independent verifier" of Rothstein's legal settlement investments, on behalf of third parties. His specific duties and responsibilities included:
(1) Review of all relevant contracts and documents, to verify the validity of each investment.
(2) Review of Rothstein Rosenfeldt Adler TD Bank trust accounts, to confirm that the funds exists.
(3) Meeting with the plaintiffs and defendants who were parties to the settlements, which were allegedly for sexual harassment, age discrimination, and workplace torts.
(4) Physically examine the parties' government issued identification, to verify their identities.
Obviously, since none of the above existed, as the "investments" were totally fictitious, with fraudulent supporting documents, including forged court orders, and bogus settlement agreements. Szfranski allegedly earned millions of dollars for vetting the bogus investments, because at the same time he was taking money secretly from Rothstein, when he was performing his "duties" as verifier for the hedge funds. He was also paid by the hedge funds and investors he advised about the quality of the Rothstein legal settlements. As of 2010, he was listed as an officer or registered agent of fifteen investment entities and hedge funds.
Initially, Szfranski acted on behalf of hedge funds and investment funds that he was assisting, but later he actively sought out investors, to feed Rothstein's urgent need for fresh investor cash, which was used to pay off older investors, in a classic Ponzi pattern. He has been released on bond, and his attorney has stated that his client intends to plead not guilty, and demand a jury trial.