Massachusetts Mutual Life Insurance Co. has taken alleged Ponzi schemer Scott Rothstein to court in an attempt to rescind a $15 million life insurance policy.
Massachusetts Mutual Life Insurance Co. has taken alleged Ponzi schemer Scott Rothstein to court in an attempt to rescind a $15 million life insurance policy.
MassMutual filed suit against Mr. Rothstein in the U.S. District Court for the Southern District of Florida on Wednesday. According to suit documents, he applied in January 2008 for a life insurance policy that would have paid out $14.8 million. On the application for the policy, he said that he earned $8 million in annual income as a trial attorney and from running his firm, Rothstein Rosenfeldt Adler PA. Mr. Rothstein also said that his net worth was at least $12 million.
But the attorney appears to have lied on his application, and the insurer never would have issued the policy, or it wouldn't have done so at the same premium rate, MassMutual alleged.
Mr. Rothstein, who is now facing federal charges for helming a $1.2 billion Ponzi scheme, apparently had no legitimate income, and his net worth seems to be based on his ill-gotten gains, MassMutual claims.
The policy had monthly premiums of about $30,000, and some $570,000 was already paid into the policy. The insurer wants to deposit those premium dollars into the court's registry to pay the creditors or the government, which may have claims on the attorney's funds.
Meanwhile, Mr. Rothstein faces criminal charges of racketeering, money laundering, and mail and wire fraud.
He pleaded not guilty this week to charges that he sold investors stakes in fake legal settlements. In an agreement with acting U.S. attorney Jeffrey Sloman in Miami, Mr. Rothstein signed away his assets, including real estate in Florida, a pair of Ferraris and an investment account that's worth more than $1.2 million.
MassMutual spokesman Mark Cybulski declined to comment.
