White-Collar Crime

Scott Rothstein George Clooney Up in the Air.jpgIn the new movie Up in the Air — which is worth seeing, if you haven’t already — Ryan Bingham, played by George Clooney, is on a quest to rack up 10 million frequent flyer miles. That’s a heck of a lot of miles. In the Walter Kirn novel the film was based on, it was a more realistic one million miles (but, as film critic Kenneth Turan notes, “that’s product placement and inflation for you”).
To some people, however, 10 million miles — or points, the credit-card version of miles, also redeemable for free air travel and other goodies — is chump change. From the Miami Herald:

[Ponzi schemer Scott] Rothstein (inset left) racked up 20,920,701 rewards points on his Amex card — and the feds want to grab them all to help pay back his victims. Generally, American Express doles out one point for every dollar charged on the card, which can be used to buy merchandise, airline tickets, hotel rooms, restaurant meals and gift cards.

So, what did Scott Rothstein do to accrue all those points?

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Bear Stearns BSC Above the Law blog.jpgCongratulations to Williams & Connolly and Hughes Hubbard & Reed, the firms that represented Ralph Cioffi, and Brune & Richard, the litigation boutique that represented Matthew Tannin.
Ed. note: This post has been corrected; an earlier version switched the defendants around. Thanks for pointing out the mistake, commenters.
Not Guilty! [Dealbreaker]
Breaking News: Bear Defendants Found Not Guilty on All Charges [WSJ Law Blog]
BREAKING: Bear Stearns Hedge Fund Managers Not Guilty [Am Law Daily]
Bear Stearns Hedge Fund Managers NOT Guilty On All Counts [Business Insider]

Michael Kimelman Mike Kimelman Michael Kimmelman Arthur J Cutillo Arthur Cutillo Ropes Gray headshot.JPGToday the winners of Lawyer of the Day honors are obvious. Congratulations to Arthur Cutillo, Michael Kimelman, and Jason Goldbfarb, three attorneys who stand accused of involvement in the infamous Galleon Group insider trading scheme.

Both Cutillo and Kimelman have distinguished pedigrees, with ties to two top firms. Cutillo (left), a holder of an M.S. in chemical engineering as well as a J.D. (both from Villanova), was an associate at the white-shoe firm of Ropes & Gray. Kimelman (right), a partner at Incremental Capital LLC, once worked as an associate at super-prestigious Sullivan & Cromwell.

Check out Cutillo’s firm bio and Kimelman’s LinkedIn profile over here.

The third charged lawyer, Jason Goldfarb, apparently worked as a personal injury lawyer in Brooklyn. He allegedly served as a conduit of information between Cutillo and Zvi Goffer — the former Galleon employee apparently referred to as “Octopussy” at the SEC, because “he had his arms in so many insider” trading schemes.

More on our three honorees, after the jump.

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Arthur J Cutillo Arthur Cutillo Ropes Gray headshot.JPGThe news was first reported by CNBC. See Dealbreaker for more details.
We have phone calls and emails in to Ropes & Gray and are waiting to hear back. We will keep you posted on further developments.

If you have more info, please email us. Thanks.

UPDATE (10:00 AM): According to Bloomberg, the FBI has arrested Arthur Cutillo (pictured). He is no longer on the Ropes & Gray website, but you can find his bio via Google Cache. Interestingly enough, he was an IP litigator, not a corporate attorney.

CNBC is now reporting that a Ropes & Gray employee allegedly provided inside information about various “going private” transactions the firm was involved in. Some of these transactions apparently involved companies heavily dependent upon intellectual property, such as technology companies.

UPDATE (10:10 AM): In case the Google Cache entry is removed, we have posted Arthur Cutillo’s bio after the jump. He graduated from Rutgers (undergrad) and Villanova (law), and he worked at Merck before joining Ropes.

UPDATE (10:15 AM): Here is a statement from Ropes & Gray:

We are deeply disappointed to learn about this situation, which suggests an extreme breach of this person’s duty of trust to our clients and to the firm. We cannot comment in detail on an ongoing investigation but we are moving quickly to protect our clients and are cooperating fully with authorities.

UPDATE (12:15 PM): U.S. Attorney Preet Bharara (S.D.N.Y.) is giving a press conference discussing the charges. One of the other individuals charged, Michael Kimelman, once worked as an associate at Sullivan & Cromwell.

UPDATE (4:30 PM): We’ve honored Artie Cutillo, Michael Kimelman, and a third lawyer, Jason Goldfarb, as our Lawyers of the Day.
Art Cutillo’s Ropes bio and Mike Kimelman’s LinkedIn profile, after the jump.

Seven Arrested In Insider Trading Case [Dealbreaker]

double red triangle arrows Continue reading “Breaking: Arrest at Ropes & Gray in Galleon Insider Trading Case”

scott rothstein.jpgAs we’ve noted in Morning Docket for the past two days, lawyer Scott Rothstein is in all kinds of trouble in Florida. From what we understand, it’s Marc Dreier redux, the sunshine state version.

We’re still trying to wrap our heads around the story, but as the Bard would say, the sh** hath hitteth the fan this week.
The WSJ Law Blog is similarly perplexed by the scandal (See What’s Going on at Rothstein Rosenfeldt? Part I and Part II).

Scott Rothstein, a founding partner of Rothstein Rosenfeldt Adler, has been out of the country for the last few days, making this all even more confusing. He just flew back into Miami an hour ago and police have surrounded his firm. We give you context after the jump.

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Andrew Cuomo small Andy Cuomo Attorney General New York.JPGA couple of weeks ago, I asked if the mainstream media was aware of the existence of Biglaw lawyers. They’re still not, but the New York Attorney General is. Dealbook reports:

Attorney General Andrew M. Cuomo fired another shot at Bank of America on Tuesday, asking the bank to allow its lawyers to be questioned.
In a letter to the bank’s outside counsel, Lewis J. Liman of Cleary, Gottlieb, Steen & Hamilton, Mr. Cuomo wrote that “attorney-client privilege is hindering this office’s ability to make fair and fully informed decisions as to what charges, if any, to bring and whether individual Bank of America officers should be charged.”

What, does Andrew Cuomo want BOA to waive privilege to help him out? I’m not sure that this is how to run a prosecutor’s office, but it seems like a pretty effective way to run for Governor through the headlines.
Cuomo Takes Aim at Bank of America’s Lawyers [Dealbook]
Earlier: The Mainstream Media Is Aware That Law Firms Exist, Right?

Bernie Madoff Bernard Madoff.jpgYou know you want to know….
Hazard a guess. Then click on the link below.
Bernie Madoff’s Greatest Scam Of All [Dealbreaker]
Earlier: What Kind Of Package Is A Bernie Madoff Package?

Bernie Madoff Bernard Madoff.jpgOr maybe good news? It seems they’ll get to enjoy Labor Day weekend before any trouble hits.
Read more and discuss over at Dealbreaker.
Federal Prosecutors May Let Andy And Mark Madoff Enjoy Labor Day Weekend

Bernie Madoff Bernard Madoff.jpgFrank DiPascali, the former CFO — chief fraudulent officer? — for Ponzi schemer extraordinaire Bernard Madoff, pleaded guilty today to a variety of charges, including securities fraud, falsifying records, and international money laundering.
Read more and comment over at Going Concern.
Guilty Madoff CFO Update [Going Concern]

Marc Dreier courtyard.jpgA certain big-time lawyer turned big-time fraudster — Marc Dreier, aka “Mini-Madoff” — will probably spend the rest of his life behind bars. He must miss his days of house arrest, when he got to hole up in 34C — not just a great bra size, but also a great apartment — at One Beacon Court.
That apartment is no longer his. The New York Law Journal reports:

The luxury midtown Manhattan apartment of disgraced attorney Marc S. Dreier was sold at auction for $8.2 million, about $2 million less than the $10.43 million he paid in 2007.

The sale of the condominium at 151 E. 58th St. came just one week after Southern District Judge Jed S. Rakoff sentenced Mr. Dreier to 20 years in prison for orchestrating a multi-year Ponzi scheme that fleeced more than $400 million from clients of Dreier LLP and investors to whom he sold bogus promissory notes.

Forty-six bidders registered for the auction held at Southern District Bankruptcy Court. In just five minutes, the price of Mr. Dreier’s 3,000-square-foot apartment in the Bloomberg Building at One Beacon Court rocketed to $8.15 million from an initial bid of $3 million.

Eight million isn’t chump change. But look at everything the buyer is getting!

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