Rothstein Associate Gets 42 Months in $20M Fraud

FT. LAUDERDALE, FL – Another cog in Scott Rothstein’s infamous Ponzi machine is headed to federal prison. Frank Preve, 71, of Coral Springs, was sentenced today to 42 months behind bars, followed by two years of supervised release, for his role in the multi-million dollar fraud that crippled the law firm Rothstein, Rosenfeldt and Adler, P.A. (RRA). The sentencing, handed down by U.S. District Judge James I. Cohn, marks another step in cleaning up the wreckage of one of South Florida’s biggest financial scandals.

The case dates back to 2009, when the house of cards built by RRA Chairman and CEO Scott W. Rothstein began to collapse, revealing a massive Ponzi scheme built on the sale of entirely fictitious confidential settlements. Preve wasn’t at the top of the pyramid, but he was a key player in keeping the grift afloat. According to court documents, Preve worked for a network of companies known as “the Banyon Group,” tasked with luring lenders and investors into Rothstein’s fraudulent scheme.

Between July 9, 2009, and October 31, 2009, Preve knowingly defrauded investors, failing to disclose critical information about the rapidly deteriorating financial situation within the Rothstein empire. He concealed the fact that Rothstein had stopped making payments owed to the Banyon Group, that investor funds were locked up in frozen bank accounts, and that essential paperwork wasn’t being processed. Crucially, he failed to verify investments as promised in the private placement memorandums circulated to potential investors – all while continuing to solicit funds.

The deception worked, at least for a time. Preve admitted in a factual stipulation filed with the court that his misrepresentations and omissions resulted in investors handing over more than $20 million to the Banyon Group. While Rothstein himself received a lengthy prison sentence, the fallout continues to ensnare those who aided and abetted his criminal enterprise. Preve’s sentence sends a clear message: complicity in a Ponzi scheme carries serious consequences.

U.S. Attorney Wifredo A. Ferrer praised the collaborative investigative work of the Internal Revenue Service, Criminal Investigation (IRS-CI), led by Special Agent in Charge Kelly R. Jackson, and the Federal Bureau of Investigation (FBI), under the direction of Special Agent in Charge George L. Piro. The prosecution was handled by Assistant U.S. Attorneys Lawrence D. LaVecchio, Paul F. Schwartz, and Jeffrey N. Kaplan – a team dedicated to untangling the web of deceit spun by Rothstein and his associates.

Court documents related to the case can be found on the U.S. District Court for the Southern District of Florida website at http://www.flsd.uscourts.gov and through the PACER system at http://pacer.flsd.uscourts.gov. This case serves as a stark reminder of the devastating impact of financial fraud and the ongoing efforts to hold perpetrators accountable.