This can’t possibly be correct – Michael L. Rothenberg nominated for DeKalb Superior Court

Last month the Judicial Nominating Commission started accepting name submissions to fill the vacancy on the DeKalb County Superior Court (formally the Stone Mountain Circuit) caused by Judge Hancock’s resignation. Anyone can submit a name, and apparently, somebody submitted the name of Michael L. Rothenberg, and there is only one person by that name who is a member of the Georgia Bar.

If Rothenberg’s name sounds familiar, it’s because he has a long history with PeachPundit that includes trying to run for an office for which he was not qualified, dropping out of that race, then running again in 2010 and making the runoff before being sued in federal court and by the Securities and Exchange Commission for alleged fraud.

In 2008, Rothenberg ran for Superior Court and Erick questioned his eligibility.

After initially arguing that he was indeed eligible, Rothenberg later ended that campaign. Erick congratulated him on making the right decision and wrote, “I hope in 2010 he will run.”

Rothenberg did indeed run in 2010, and made the runoff against Courtney Johnson, who won the election. Between the general election and the runoff, Rothenberg was accused of running a ponzi scheme in a federal lawsuit seeking the return of $1.35 million “invested” with Rothenberg.

Rothenberg called the lawsuit “nothing more than a political hit job on me.”

He said the lawsuit’s allegations were “absolutely outrageous, slanderous and completely untrue, completely untrue.”

On November 18, 2010 the Daily Report ran a story that Rothenberg implied that his campaign was supported by Congressmen Hank Johnson and John Lewis and State Senator Jason Carter. All three of those elected officials denied having endorsed Rothenberg.

On November 29th, the AJC reported that State Representative Mike Jacobs withdrew his personal endorsement of Rothenberg based on concerns over the private lawsuit. That article also reported that DeKalb County Commissioner Elaine Boyer (R-Smokerise) denied having endorsed Rothenberg, despite her picture appearing on Rothenberg’s mailings under the heading “Endorsed By”.

Liz Carter, the Republican Candidate for the Fourth Congressional District, had the day earlier emailed  a number of DeKalb Republicans stating that she had not approved the printed endorsement that Rothenberg attributed to her and was asking people not to vote for Rothenberg in the runoff.

Both DeKalb Libertarians stood by their endorsement of Rothenberg.

After losing to now-Judge Johnson, the federal Securities and Exchange Commission filed a complaint against Rothenberg, alleging that his “investment” scheme violated the ’33 and ’34 Acts.

[As an aside, let this stand as a lesson to the political opportunists and scalawags who seek to destroy America by robbing Georgians of our God-given right to vote in runoff elections. Absent the runoff election, this might not have all come out and Rothenberg might have been elected. And it would have been your fault when a Superior Court Judge was indicted for fraud.]

According to the SEC complaint and press release:

The Commission’s complaint alleges that between at least February 2010 and March 2010, Rothenberg, through Four Five, used misrepresentations and omissions of material fact to induce investors to participate in a secret and allegedly risk-free trading platform or trading facility. This trading platform or trading facility purportedly involved transactions among international banks that would generate substantial return on a recurring basis. Specifically, Rothenberg represented that the trading platform would produce returns in excess of 300% every fourteen days. Rothenberg and Four Five also represented to investors, both orally and in writing, that the majority of their funds would remain at all times in Rothenberg’s attorney trust account, and that all funds invested, along with the profits, would be returned to the investors at the conclusion of the trades. [Emphasis added]

As a result of a settlement of the SEC charges, Rothenberg’s right to appear or practice before the agency has been suspended. His website also is suspended.

As part of the settlement, the SEC found that:

contrary to Rothenberg’s representations that investor funds would remain in his attorney trust account, Rothenberg began disbursing investor funds within days of receipt of those funds. Between March 2010 and October 2010, at least $210,000 in investor funds were transferred to a bank account designated for contributions to Rothenberg’s judicial election campaign. Rothenberg used another $190,000 of investor funds for personal expenses. Although Rothenberg ultimately returned approximately $910,000 to investors, he misappropriated at least $800,000 of investor funds. [Emphasis added.]

And according to the SEC’s press release:

Defendants were also ordered to pay disgorgement, pre-judgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission’s Complaint shall be deemed true. Defendants consented to the entry of the order without admitting or denying the allegations of the Commission’s Complaint.

19 comments

  1. DavidFLaw says:

    Todd,

    I read the blog a lot and I respect your insights. However, I must correct the statements in your article.

    I was Michael’s lawyer during this incident. As I am sure you know, simply because someone alleges something, doesn’t mean it is true. In the underlying lawsuit, Michael was a lawyer for one of the parties. The parties had a contract dispute which settled prior to the suit being filed. When the settlement broke down, the plaintiff sued the company and Michael in an attempt to ruin his campaign and made all sorts of salacious allegations. Because of the allegations, the SEC also filed suit.

    Well, the truth is the original lawsuit, which contained false allegations of fraud and “ponzi scheme” was totally dismissed by the plaintiff, with the Judge scolding the other side for the political nature of the complaint. No one reported on that. The only thing that was enforced was the original settlement agreement between the two companies. Further, the SEC suit lasted four weeks and was resolved amicably.

    Because of information discovered during this process, it was determined that Michael, along with dozens of others around the country, were actually victims of a sophisticated fraud that targeted professionals. He, along with others, filed a federal lawsuit in Chicago against the bank and perpetrators of the fraud. In fact, one of his Chicago lawyers is a former SEC lawyer who took his case because he had been wronged.

    Michael never took money into his trust account as had been alleged and reported in the press. Michael never promised anyone high yield investment returns. Michael was representing a client, nothing more. These sensational type cases have a tendency to get embellished and get out of hand.

    Michael is an honest person and a good lawyer who deserves better. I respect your right to your opinion but the whole truth needs to be presented, not simply allegations with no basis in fact. Michael would make a great judge.

    If you’d talk to him directly, I am sure you would understand.

    Thanks and continued success on the blog.

    • NoTeabagging says:

      David FLaw:
      If you talk to your ‘client’ be sure to remind him to obey sign ordinances and not illegally litter the public right of way and public properties in his next campaign. HE did break those laws, and that is a fact.
      The Sign Czar has spoken

    • Todd Rehm says:

      David-

      First, I cannot talk to Michael about this directly since he defriended me on Facebook when I first took note here of the federal lawsuit.

      Secondly, you are correct that the “Ponzi scheme” allegation came in a civil suit, not the government action. The SEC described it as a “prime bank scheme” instead and reading their description of what that is and their findings in the settlement, I think their description is more accurate.

      Third, as for your statement that the private lawsuit was dismissed by the plaintiff with the judge scolding them, I simply say “Prove it”. Email me the proof and if I can authenticate it, I’ll post it here.

      Finally, as to your statements that “Michael never promised anyone high yield investment returns,” it appears that the Securities and Exchange Commission has a different opinion.

  2. DavidFLaw says:

    Todd, thanks for the reply. I would just add that the government suit was brought because of and based upon allegations made in the private civil action. They went hand in hand. The agreement which lead to the government action being closed did not admit or deny anything on either side, and nothing was advanced or proven in any court. The allegations were just that – allegations. I will say we worked closely with them to explain the situation and resolved the case in very short order. Also, the press release simply restated the facts alleged in the complaint, as each press release from them does.

    In fact, it was during the course of those discussions that it became clear that Michael was a victim of a large fraud and that lead to the filing of further lawsuits by other victims against the real bad guys. Those lawsuits are very enlightening to the situation and explain in further detail the series of events. I’d be happy to share those with you. There are several lawsuits filed in various federal courts against the real perpetrators and nearly a dozen more on the way, filed by various lawyers around the country. Michael has been instrumental in helping others bring these people down.

    As far as the “proof” there was no court reporter present at the one and only hearing in the private civil suit but I can tell you on my honor that that is what occurred. The documentation however does show that all allegations of fraud and otherwise in the complaint were dismissed by the plaintiff.

    I can understand how these events can be perceived, but please understand that perception is often not in line with the actual facts. Michael is a good person and did nothing wrong.

    I will sign off now, but I do want to thank you for allowing me to post and I genuinely enjoy the blog.

  3. The Comma Guy says:

    He was also one of the original group of folks submitted for consideration by the JNC for a current opening on the Court of Appeals.

    • Michael L. Rothenberg, a Dunwoody attorney, last year lost in a runoff for a seat on the DeKalb Superior Court. The campaign included allegations that Rothenberg had suggested he had endorsements he didn’t have. The U.S. Securities and Exchange Commission later sued him and a company he controlled, claiming the defendants operated a fraudulent prime bank scheme; the suit was quickly resolved by a court order to which the defendants consented without admitting liability.

    http://www.dailyreportonline.com/Editorial/News/singleEdit.asp?l=101339713241 (behind a paywalll, sorry)

  4. JeffD says:

    Just to set the record straight, anyone can be “nominated” to go through the JNC interview process. A lawyer can “nominate” themselves, which consists of nothing more than sending one’s name to the Judicial Nominating Commission via email. The JNC then thoroughly vets and interviews candidates and then sends a short list to the Governor to be interviewed by the Governor himself.

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