Corrupt Florida Lawyer Mistakenly Called Most Crookedest Ever

US Marshals Tracking Down Crookedest Lawyer Ever's Loot

The Daily Business Review by John Pacenti - November 9, 2010

MIAMI, NY - The federal government knows where a former U.S. bankruptcy trustee panelist funneled $1 million earmarked for the victims of Ponzi schemer Scott Rothstein and has filed a lawsuit to get it back. Marika Tolz is a Hollywood real estate broker who became one of South Florida’s most prolific trustees and receivers in recent years. She was ousted from the U.S. trustee’s panel in May after she tried to cover a shortfall in a bankruptcy case with a Rothstein donation to Holy Cross Hospital, according to court documents. The U.S. government sued Tolz’s successor handling the account where the $1 million allegedly landed. But an FBI inquiry goes beyond the Rothstein funds and tracks money moving among various cases where she served as a court-appointed receiver or trustee. The FBI mailed letters to Tolz’s successors, notifying them they may have been victims of fraud. So far, questions have been raised about $5.3 million in at least five cases handled by Tolz, and sources say financial improprieties have been found in two other cases. In another lawsuit, trustee Robert C. Furr, who succeeded Tolz in a bankruptcy case, alleges she falsified financial books submitted to the court and the U.S. trustee’s office and created red-herring bank accounts to pilfer $1.5 million from a personal bankruptcy case. Tolz expanded from a real estate career by serving as a caretaker for seized assets starting in 1987. She has served as a trustee in bankruptcy matters, a personal representative on estates and a receiver for businesses and proprieties that ran aground. One of her many companies, State Wide Realty, was hired in April by the U.S. Marshals Service to safeguard $1 million retrieved for the fraud victims of disbarred lawyer Rothstein. Instead, she moved the $1 million a day after receiving it to cover a shortfall in a Chapter 7 case under scrutiny by the U.S. trustee’s office, according to Marshals Service lawsuit filed Oct. 18 and Furr’s complaint filed last week. Joel Tabas, one of the many trustees who inherited Tolz’s cases, told a bankruptcy judge in September that trying to figure out where all the money went was akin to dissecting a bowl of spaghetti, and says it will take forensic accountants months to figure out exactly how much is missing. An FBI form letter was mailed Oct. 14 to Seth Heller, who succeeded Tolz as receiver in two Miami-Dade Circuit Court cases, telling him his name was forwarded to the federal victim assistance program "as being a possible victim of a federal crime." "This case is currently under investigation," the letter stated. "This can be a lengthy process, and we request your continued patience while we conduct a thorough investigation." Assistant U.S. Attorney Grisel Alonso, who is handling the Marshals Service case, referred questions to office spokeswoman Alicia Valle, who had no comment. "The federal government is about to do something," said Heller, managing partner of Heller & Co. "I think everybody who has anything to do with Tolz got this letter." Tolz has not been charged. Her attorney, Ben Kuehne of Miami, confirmed Rothstein’s $1 million has not been returned to the government as requested months ago. Tolz and Kuehne, who was traveling Tuesday, did not respond to requests for comment. The Justice Department has focused on the bankruptcy case of James Driscoll to get back the money.

Follow The Money

Fort Lauderdale’s Holy Cross Hospital returned the tainted donation from Rothstein, who is serving a 50-year prison sentence for running a $1.2 billion settlement financing scheme. Federal marshals hired Tolz in April to hold the money until a final order of forfeiture was signed by the judge in Rothstein’s criminal case. Holy Cross wired the $1 million to the Marika Tolz General Trust Account at First Citizens Bank & Trust in Hollywood on May 20 for a total balance of $1,000,390. The next day, the account balance was $133,300, according to an exhibit attached to the federal lawsuit seeking $967,856 plus court costs and attorney fees. The Rothstein money was moved to a Bank of America account for the personal bankruptcy of James P. Driscoll of Fort Lauderdale, according to the adversary complaint. "Upon discovery of the withdrawal of the diverted funds from the First Citizens account, the marshals made demand upon Tolz to remit the sum of $1 million wire transferred," the lawsuit stated. "Tolz failed to turn over the funds to the marshals." The federal government ended up suing Furr as Tolz’s successor in the Driscoll case. The Boca Raton trustee filed a 74-page third-party complaint Thursday against Tolz and Liberty Mutual Insurance, which issued bonds on behalf of U.S. trustee panelists on condition of "faithful performance." Panelists for the U.S. trustee’s office are appointed on a rotating basis as caretakers for commercial and personal bankruptcies in federal court. Tolz was one of 12 panelists until she was forced to resign in May when Driscoll’s case came to the attention of the office. The U.S. trustee’s office did not comment on the matter. Furr, in his complaint against Tolz, seeks $1.5 million allegedly misappropriated from Driscoll and more than $76,900 in fees paid to her. He alleges Tolz filed a false accounting in Driscoll’s case March 31, stating the estate had $888,000, when in fact the account was barren. When confronted with the discrepancy by the U.S. trustee’s office, Tolz listed a nonexistent account at Sun American Bank and fake accounts to support her filing, Furr alleges. Furr, who inherited about 10 of Tolz’s cases, details a busy shell game as Tolz moved money to and from several accounts to hide her trail, culminating in the transfer of Rothstein money into Driscoll’s account. Furr’s lawsuit claims Tolz took $1 million from the Driscoll account and deposited it into her general trust account in April 2009. Tolz "accounted for" the money by creating fake receipts and disbursement records for the purchase of high-yield certificates of deposit at Bank of America, the lawsuit stated. The trustee’s office later determined the account did not exist. On May 18, the day before Tolz resigned from the trustee’s panel, she issued a $967,856 check from her personal trust account to the Driscoll case. On May 20, she covered it with money from the Rothstein case, according Furr’s lawsuit. Furr also alleges Tolz illegally transferred $500,000 from Driscoll’s account to her personal account in April 2008, taking investigators further back in time. Financial irregularities also have been documented in numerous other cases. Heller took over receiverships of two financially troubled Miami-Dade commercial properties from Tolz: Douglas Centre REB-GEM, owner of a share of a Coral Gables office complex, and Monticello 856, a condominium conversion. Heller’s Miami forensic accounting firm, Pontis Advisors, found $856,000 in checks from Douglas Centre REB-GEM had been deposited in outside accounts controlled by Tolz and that $456,000 could not be traced. Drew M. Dillworth, who succeeded Tolz in the bankruptcy case of Wilkinson Hi-Rise, a Hollywood trash and linen chute manufacturer, told U.S. Bankruptcy Judge John Olson in September that Tolz should not be immediately paid her $13,000 fee because of "questionable financial transactions."

‘Over Her Head’

Then there is the Fuzion bankruptcy case, which allegedly received $715,000 meant as an inheritance for the children of man whose probate assets were administered by Tolz. The children’s new trustee claimed in court documents that the estate was $965,000 short due to diversions by Tolz. Two adversary lawsuits trying to retrieve money have been filed in the Fuzion matter, one by Heller and one by the successor trustee in the probate case. Heller said Tolz represented "the old school" of receivers and trustees, who intermingled money among accounts — even for personal use. The drama surrounding Tolz has drawn comparisons to former Miami attorney-accountant Lewis Freeman, sentenced earlier this year to more than 10 years for stealing $2.6 million and misappropriating at least $6 million from accounts he oversaw as a court-appointed receiver and trustee. Like Freeman, Tolz was considered one of the best. "Tolz was a very respected individual," Heller said. "She got in over her head."