Bloomberg News

Second Rothstein Associate Pleads Guilty in Investment Scam

June 15, 2011

(Updates with defendant’s remarks in fifth paragraph.)

June 15 (Bloomberg) -- A second associate of convicted fraudster Scott Rothstein admitted to his role in a $1.2 billion investment scheme involving fake lawsuit settlements.

Stephen Caputi, a 53-year-old nightclub manager, pleaded guilty today to one count of conspiracy to commit wire fraud before U.S. District Judge William Zloch in Fort Lauderdale, Florida. Howard Kusnick, formerly of Rothstein’s law firm, entered a guilty plea to the same charge yesterday in West Palm Beach, Florida.

Rothstein pleaded guilty last year to five counts of racketeering, money laundering and wire fraud, admitting he sold investors interests in bogus settlements in sexual-harassment and whistleblower suits. He was sentenced to 50 years in prison.

Caputi attended meetings with potential investors in the scheme, posing as a banker or a plaintiff in the phony suits, federal prosecutors said.

“Mr. Rothstein had asked me to do those things, and I had been a friend of his for 17 years, and I had various business interests with Mr. Rothstein,” Caputi told Zloch. “I did not want to compromise my relationship with him.”

The U.S. said Kusnick wrote a letter claiming to have settled a pending case in a client’s favor when the case had never been filed and no settlement existed. Both Kusnick and Caputi initially entered not guilty pleas before changing their pleas this week.

‘Remorse and Regret’

“I have a lot of remorse and regret for what I’ve done,” Caputi told the judge. “I want to get this behind me and get on with my new life.”

Caputi faces a maximum term of five years in prison at his sentencing, which is set for Aug. 24. Prosecutors agreed to take his cooperation in their investigation into account when making a sentencing recommendation, Zloch said.

Hy Shapiro, Caputi’s attorney, declined to comment after today’s hearing. Assistant U.S. Attorney Jeffrey Kaplan also had no comment.

Curtis Renie and William Corte, information technology employees of Rothstein’s firm, both pleaded not guilty to conspiracy to commit wire fraud in May. They have change-of-plea hearings set for later this month.

Renie and Corte created a Web page designed to look like it belonged to a bank so investors would think Rothstein’s law firm held as much as $1.1 billion in trust accounts, prosecutors allege.

The cases are U.S. v. Kusnick, 11-60125, U.S. v. Caputi, 11-60124, U.S. v. Renie, 11-60123, U.S. District Court, Southern District of Florida (Fort Lauderdale).

--Editors: Andrew Dunn, Fred Strasser

To contact the reporter on this story: Susannah Nesmith in West Palm Beach, Florida, at susannahnesmith@yahoo.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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