• Cigar smokers, campaign money and a Ponzi scheme Monday, November 23, 2009

    Gov. Arnold Schwarzenegger is not the first politician to raise big money from a rich guy who turns out to be less than savory.

    Unlike many pols, however, Schwarzenegger has no plans to return money given by Scott Rothstein, the latest Ferrari-driving high-flier to crash amid allegations that he bilked friends and investors in a Ponzi scheme.

    Rothstein was a Fort Lauderdale lawyer and head of a Florida law and lobbying firm, Rothstein Rosenfeldt & Adler. He is accused of having stolen more than $1 billion by convincing investors including hedge funds to invest in apparently nonexistent legal settlements. The Sun-Sentinel of Florida offers this report about the emerging scandal.

    Like many wealthy people who later become law enforcement targets, Rothstein was generous, giving large sums of other people’s money to charities, as detailed in this report back when he was viewed as a “prince.” And like many others in his situation, Rothstein would dole out large campaign donations.

    Politicians swarmed to his side.

    When Schwarzenegger traveled to Rothstein’s home turf of Florida in search of campaign contributions, Rothstein could not have been more accommodating.

    Rothstein’s law firm gave $250,000 to a Schwarzenegger-backed redistricting initiative, Proposition 11, which voters approved in November. Rothstein himself spent another $6,484 to co-host the Florida fund-raiser, California Secretary of State records show.

    Schwarzenegger and Rothstein both are cigar aficionados. The governor is well known for his smoking tent in the courtyard outside the governor’s office. Rothstein once shared a stogie with an ink stained wretch. The campaign finance statement detailing Rothstein’s donation notes a nonmonetary contribution worth $315, presumably cigars, by Brazil Cigars & Tobacco of Miami to the Yes-on-11 campaign.

    Counting the Proposition 11 money, Rothstein’s firm and its partners spread $441,784 to state campaign and politicians nationally, data compiled by the nonpartisan National Institute for Money in State Politics in Helena, Mont. Other than the $256,484 to Proposition 11 money, the firm’s next largest state donation was $177,000 to the Florida Republican Party, according to the institute’s findings.

    The firm and its partners gave another $602,000 to federal candidates and parties between 2006 and 2009, including at least $142,500 to the Republican National Committee, according to the nonpartisan Center for Responsive Politics.

    Rothstein could not have cared much about a California initiative. But he did care what Florida Gov. Charlie Crist thought of him and his law-lobbying firm. Crist, a Republican running for U.S. Senate, was the conduit  between Rothstein and Schwarzenegger, as well as other Republican heavyweights. Many of those benefactors now are distancing themselves from Rothstein.

    A Miami hospital is giving back $1 million that Rothstein sent its way, as the Miami Herald reports. Louisiana Gov. Bobby Jindal took $10,000 in October 2008 and is giving it back, according to Talking Points Memo. TPM also reports that there are calls for the Republican Governors Association to return $200,000 in Rothstein money. The New York Times detailed several others who are giving back the money or placing it in trust funds for victims of the purported fraud.

    Not California Gov. Schwarzenegger.

    Schwarzenegger spokesman Aaron McLear said by email that the money was given to the Proposition 11 committee, not the governor. So the governor has nothing to return, he reasoned.

    The governor did, however, return Crist’s favor. Schwarzenegger hosted a fundraiser for Crist at his home a few weeks back.

    Dan Morain

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Category: Political Influence;