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Written by 1:51 pm Blog, Securities Fraud

Michael Szafranski reaches $6.03 million settlement

As reported in the Sun-Sentinel, a Miami-Dade County financial adviser has reached a $6.03 million settlement with attorneys handling the bankruptcy of Scott Rothstein’s massive Ponzi scheme.

Michael Szafranski, 32, invested tens of millions of dollars with Rothstein at the same time he was supposed to be “verifying” that the legal settlements Rothstein was selling to investors were legitimate, according to court documents. The settlement agreements never existed.

When questioned by attorneys sifting through the wreckage of Rothstein’s $1.4 billion fraud scheme, Szafranski invoked his Fifth Amendment right against self-incrimination more than 1,000 times.

The bankruptcy attorneys had sued Szafranski for $32.8 million in payments he and his investment companies received from Rothstein.

In a settlement agreement filed this week in U.S. Bankruptcy Court, Szafranski agreed to pay $4.7 million within two days of a judge approving the deal with the rest of the money being paid out over a two-year span.

The $6.03 million represents about 86 percent of Szafranski’s total assets, according to court records.

Rothstein was sentenced last month to 50 years in federal prison for running the largest fraud scheme in South Florida history.

In addition to Szafranski, former Rothstein law partner Steven Lippman reached a $700,000 settlement with attorneys representing bankruptcy trustee Herbert Stettin, according to court documents filed Thursday.

The $700,000 constitutes “a large percentage of the Lippmans’ non-exempt net worth,” wrote Charles Lichtman, one of the attorneys working for Stettin.

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