Scott W. Rothstein (Ponzi scheme)

Scott W. Rothstein (Ponzi scheme)

Introduction

Scott Rothstein's name is known primarily for one of the biggest fraud cases in 2002 that left thousands of families ruined and multiple institutions damaged. This scandal, known as “The Enron Scandal” has plagued the corporate world involving a corporate giant like Enron Company and Chicago based Arthur Andersen. In October 2001, this scandal came to limelight as a money hoarding scheme, merely to amass money from investors by promising them fake returns. There are several theories as to how Rothstein was able to get away with such a massive fraud. While some of this is attributed to his personality and ability to convince friends and colleagues alike, his social status and wealth too was able to win him esteem and enabled him to lure investors from the corporate world. This paper shall aim to shed light on the money laundering scheme and also on how Rothstein was able to maintain his mask through the period of 4 years. His case revealed a series of criminal offences ranging from corruption to bribery and drug trafficking.

Discussion

Introducing Scott W. Rothstein

Scott W. Rothstein, born in 1962 is the former CEO of Rothstein Rosenfeldt Adler law firm. His role as a shareholder and chairman of this business entity has raised severe concerns in the realm of financial frauds. There is little doubt behind the fact that he enjoyed a luxurious lifestyle; one that was based on multiple frauds and fake financial statements. For researchers and for readers alike, the personality of this shrewd man is indeed a great interest as he was able to convince the world that Enron Corporation had reached new zeniths of success under his leadership. The company was infact known as one of the most successful energy corporation of the world. The Ponzi scheme was used for a period of 4 years during which Scott along with his partners was able to lure investors into loaning money to clients from his company. This way he was able to sell confidential agreements at a discounted rate and also by promising a certain face value to these investors. The company was obviously majorly dependant on external finance sources for its operations.

Revealing the Ponzi Scheme

When Enron collapsed in 2001, a massive financial crisis and turmoil came to light that left multiple ruined and laundered under this fraud. It appeared that despite the success of this company; its foundation was built on an accounting fraud and corruption. Not only was this an end for the company but also for multiple corporate leaders who lost their reputations and social status. The case however brought to light not only the evil genius of one mastermind but also reflected on the need for cooperate ethics in the country (Peter & Ross, 2002).

The main success factor that contributed to the success of Enron was its creation and marketing of its offshore entities and business united the main purpose of which was to enable tax reduction and increase the ...