Thursday, December 10, 2009
Parsing the Epstein v. Rothstein Suit
Palm Beach lawyers Robert Critton and Michael Pike have filed suit on behalf of Palm Beach billionaire Jeffrey Epstein against Rothstein and former RRA attorney Bradley J. Edwards in Palm Beach state court.
You can read the complaint here.
Much of the suit is a rehash of the Ponzi scheme allegations, and how Rothstein would talk up all the victims his firm represented that were reaching settlements with Epstein, except for some reason Epstein always had to pay out over time, even though the victims wanted the money right now.
In actuality, according to the suit, RRA only represented three victims in pending litigation -- one in federal court, and two in state court. The complaint alleges that Epstein has been harmed in his defense of these suits, for a number of reasons.
In particular, the suit really goes after Edwards, alleging that he knew or should have known that Rothstein was using the existing cases for purposes of promoting the Ponzi scheme. The complaint alleges that the RRA "Litigation Team" served discovery that was unrelated to the three claims they were handling but with the sole purpose of "pumping" the Ponzi Scheme and luring new investors.
Specifically, the complaint alleges that RRA went after records of flights aboard Epstein's private jet where high-profile celebrities were allegedly on board when sexual assaults supposedly took place, and that the Litigation Team sought the depositions of these celebrities.
Edwards allegedly took unnecessary depositions of the pilots, and asked inflammatory questions allegedly for the purpose of "pumping" the attractiveness of the Ponzi scheme.
The witnesses allegedly on Edwards' deposition list included The Donald, Alan Dershowitz, Bill Clinton (of course), Tommy Mottola, and illusionist David Copperfield(?). Allegedly Rothstein would then go on to tell potential investors that Epstein is settling all these cases in order to protect his high-profile friends.
The complaint goes on to detail other alleged discovery irregularities, including a deposition of Epstein (in which Russell Adler was in attendance), where lots of inflammatory questions were allegedly asked so the video of the deposition could be shown to new investors.
The complaint also alleges that Edwards went overboard at hearings, and wildly overstated the extent of Epstein's alleged crimes again just to pump the scheme. Further, the complaint alleges that confidential client files of the three existing RRA cases against Epstein were shown to potential investors to induce them to invest, and that as a result the attorney-client privilege has been waived.
The claims sound in Florida RICO, fraud, abuse of process etc.
What to make of all this?
Since the alleged discovery abuses occurred in the context of pending civil suits, Epstein's complaint raises the obvious question why the presiding judge in those cases should not be dealing with the alleged lawyer misconduct?
Moreover, the allegations against Edwards all involve serving allegedly outrageous discovery, making outrageous statements in court hearings, or doing outrageous things in pleadings. That places the allegations of the complaint at odds with the traditional protections afforded attorneys in the performance of their legal duties.
I have no idea whether the allegations against Edwards are meritorious, or perhaps Epstein is trying to leverage the Rothstein revelations to assist him in defense of his pending suits.
Either way the case is likely not going very far, and Epstein probably will have to seek his remedies if any in the pending cases where the alleged discovery misconduct took place.
The more interesting jurisprudential question is what remedy, if any, could investors (as opposed to Epstein) have if they were induced to invest as a result of the lawyer activities detailed in the complaint?
When you step back, the entire Rothstein saga, with its many sad and pathetic twists, should cause the courts and policymakers to define a bit more clearly the extent to which lawyers should be afforded protection when they practice law -- which in the normal circumstance certainly makes sense -- as opposed to allegedly misusing and abusing the law and a Bar license in order to execute an incomprehensibly massive (not to mention illegal) moneymaking fraud.