Update, 4:25 p.m.: The post has been changed to reflect that the line of questioning was specifically about Preve and did not involve Levin.
Last month, the Securities and Exchange Commission filed charges against George Levin and Frank Preve, who they say used their firm, Banyon Investments, to shovel millions of dollars into Scott Rothstein's Ponzi scheme. They say they had no idea it was a scheme -- but Rothstein called bullshit on Wednesday, according to a lawyer involved with the deposition.
Though the transcripts of Wednesday's deposition testimony won't be released until next week, lawyer Jim Silver of Conrad & Scherer says there was a "very interesting line of questioning" about Levin and Preve's alleged involvement in the scheme, which we've been documenting since 2009. The questions reportedly came from Preve's lawyers.
"There were some very tense moments in the deposition," Silver said, "where they were really going after Rothstein and attacking Rothstein. And Rothstein just came back and said, 'You want to know how your client knew it was a Ponzi?' and just rattled off 15 things."
Preve ran the day-to-day operations of Banyon Investments, owned by Levin. The SEC complaint includes an alleged email Preve sent to Rothstein as the scheme was falling apart:
"I can't show anyone that I am a complete idiot by sending out millions of dollars with nothing to show for it except some e-mails that say 'Hey, Guido, send me 5 Mill..........I have such a deal for you,'" Preve allegedly wrote.
After the scheme collapsed, Levin sent out a letter to investors blaming TD Bank for misleading him about the legitimacy of the scheme, allegations that have been echoed in civil complaints against the bank. Rothstein discussed TD Bank's alleged complicity in his December deposition, and a jury found that the bank was culpable for millions of dollars in damages. In addition, the South Florida Business Journal reported today that new TD Bank internal emails have come out indicating that the company was concerned about bank executives who were allegedly complicit in the scheme; the messages seem to indicate pretty clearly that the bank, or at least some of its employees, knew what was going on.
Banyon has insisted it was a victim of the scheme just like the others, and TD Bank's alleged involvement gave them something to try to hide behind. But once Rothstein's Wednesday testimony is released, we'll know more about whether it will be enough cover.