Los Angeles Times

Attorney can remain on case in Rothstein lawsuit, judge decides

A financial adviser being sued for his alleged role in Scott Rothstein's $1.2 billion Ponzi scheme failed Thursday to have the attorney suing him thrown off the case.

Lawyers for Michael Szafranski, a Miami-Dade investment adviser, were trying to prevent attorney Bill Scherer from representing investors who say they lost more than $100 million in the Ponzi scheme. Scherer's clients are suing Rothstein, bank officials and some of the other investors, including Szafranski.

Rothstein, 47, pleaded guilty to five federal charges of racketeering, money laundering and fraud last week, admitting he sold investors huge legal settlements that did not exist. He awaits a May sentencing.

Szafranski purportedly worked as an "independent verifier" to ascertain that Rothstein had legitimate legal cases and settlements, according to Scherer's suit. But at the same time, Szafranski was in business with Rothstein, pooling more than $32 million to invest with him, according to court records.

The investment adviser wanted Scherer thrown off the case because they had a phone conversation in early November. Szafranski claimed that established an attorney-client relationship, which should prevent Scherer from suing him.

Scherer asserted that Szafranski was involved in the Ponzi scheme, an allegation Szafranski's attorney declined to address.

"He didn't tell me he had a big-time criminal problem," Scherer said.

Broward Circuit Judge Jeffrey Streitfeld determined that Scherer could remain as plaintiffs' attorney.

A bankruptcy trustee filed suit Wednesday against Szafranski, alleging that payments Szafranski received on the $32 million investment are subject to so-called clawback to benefit all the investors who lost money.

Peter Franceschina can be reached at pfranceschina@SunSentinel.com or 954-459-2255.

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