Of the recent clawback suits filed in the Rothstein ponzi case, one stands out above all others: Levinson Jewelers. A Rothstein clawback suit filed yesterday claims Rothstein dropped $11 million at the Las Olas jeweler in a period of about five years. The suit alleges that about $1 million of that business -- involving "nearly flawless loose gemstones" -- was done "off the books" between Rothstein and Mark Levinson. From the lawsuit:
Rothstein also engaged in a material cash business with Levinsons, which resulted from Rothstein approaching Mark and asking if he wanted to do some ?off the books transactions? if Mark was interested, and Mark said yes. Rothstein then bought large and nearly flawless loose gemstones from Mark on 6 or 7 separate occasions for cash, usually in private in Mark?s office. Sometimes Mark came to Rothstein?s office to effect these transactions and once, they did a transaction at Levinson?s home. Each such transaction was for approximately $150,000, though one purchase was for less than $100,000. Thus, the total amount of off the books cash transactions between Rothstein and Levinsons? was approximately $1 million.
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The Levinsons' attorney, Jan Atlas, called the suit "ridiculous" and while not commenting on the specific allegation above, provided this written statement:
The Adversary Complaint has absolutely no legal merit and we are shocked that it was filed. The allegations are absolutely frivolous, baseless and unequivocally false. It is ridiculous for the Trustee to accuse Levinson Jewelers of knowing that Mr. Rothstein was a fraud. Why is it being charged with a higher state of knowledge than anyone else in the community? Levinson Jewelers was a good faith vendor and had no knowledge of the events surrounding Mr. Rothstein. In the absence of any such knowledge, the Trustee?s action for the return of these funds is not legally sound and unjust. Levinson believes the action to be improperly motivated by the Trustee and based solely upon innuendo.
While most of the clawback lawsuits -- including those filed against Don King and billionaire Norman Braman's car dealership -- come in the form of boilerplate copies, the Levinson suit exhaustively details Scott and Kim Rothstein's alleged close relationship with Mark and Robin Levinson, who is pictured with Kim here. The business is probably best-known for its billboards featuring another former Rothstein pal, Dolphins Hall of Fame quarterback Dan Marino. Again, from the suit:
Rothstein became a client of Levinson in the late 1990s or early 2000?s. Over the course of his relationship with Levinsons, Rothstein became familiar with and eventually personally close to its principals, Mark and Robin Levinson (respectively hereafter ?Mark? and ?Robin?), a married couple who had built the Levinsons business together, starting it as a single counter at the Aventura Jewelry Exchange. As part of their business practice in providing excellent service for their established customers, Mark and Robin worked hard to develop personal relationships with them, including Rothstein, necessarily an important component of building a high-end retail jewelry business and brand, so as to obtain repeat business.
Over time, by 2004, Rothstein had become a close personal friend of Mark and Robin. This close personal friendship that Rothstein and the Levinsons viewed as being ?like family,? is evidenced by the following:
a. Mark and Robin socialized regularly with Rothstein and his wife, Kim; b. Mark and Rothstein frequently spoke and got together in person for drinks and to share a cigar, and in emails to Rothstein, Mark fondly called him ?Denny Crane?; c. At Robin?s urging, Rothstein invited Mark to join him and some of his closest friends into a group that included Ted Morse, John Bria, Moe Sohail, Crockett Heard, Marty Hines and David Boden, for frequent dinner and drinks, usually Bova Restaurant, which was owned in part by Rothstein. d. Mark and Robin discussed with Rothstein selling him their home; e. Mark and Robin sold Scott their yacht; f. Rohtstein either personally or through RRA, sponsored many special events at Levinsons, including paying $10,000 to sponsor Levinsons? new store opening on Las Olas Boulevard; g. Rothstein allowed hi name and likeness to be used in Levinson?s marketing and promotional materials, including the Levinsons asking Rothstein if they could use his watch collection for their advertising, and he was also a regular guest of theirs at special store events; h. Rothstein participated in the ?Live Life Levinsons? campaign as a favor, without renumeration by Levinsons for use of his name, although other celebrity participants, such as Dwayne [sic] Wade and Dan Marino were compensated; i. Rothstein referred many people to go to Levinsons to buy jewelry, including Ted Morse and Ron Picou, without receiving any kind of referral fee or return favor, despite the fact that referral fees were to others for certain referral business; j. On a friendly, consensual basis, Rothstein hired away from Levinsons its President of Marketing, Kip Hunter Epstein, to work for RRA, and allowed Ms. Epstein to continue performing marketing work on the side for Levinsons; k. Rohtstein shared private matter with Robin, such as when he and Kim broke up their relationship briefly in 2006; l. Robin and Rothstein regularly, sometimes daily, exchanged e-mail not just on business, usually payment issues, but also of a very personal nature where they mutually addressed each other with great fondness; and m. Mark and Rothstein regularly got together for a cigar and a drink where they talked about business and personal matters.
Rothstein spent nearly $11 million at Levinsons from January 2006 through October 2010, making him of Levinsons? largest customers by sales, if not its largest. The amount Rothstein spent at Levinsons and his close personal relationship with its principals created a circumstance in which Levinsons did not treat Rothstein like any other customer in the ordinary course of Levinsons operating its business. Indeed, Levinsons allowed Rothstein to pay for jewelry under circumstances different from any other customer. This special relationship manifested itself in the following ways:
a. Rohtstein was regularly allowed to take expensive jewelry out of the store, or have it delivered to his office, and was not required to pay for it under consistent terms or business practices, including but not limited to Rothstein issuing post-dated checks to Levinsons; b. Rothstein paid Levinsons with no regularity either as to time or mode; c. In some cases, Levinsons would be paid with an RRA American Express card, although Levinsons would not put the charge through until Rothstein said it was okay to do so; d. In other cases Levinsons would be paid by check from the RRA operating account; e. In many cases Levinsons was paid from one of the Rohtstein?s individual accounts that was funded by contemporaneous cash transfers from RRA; f. In many instances, Robin or other Levinsons? employees telephoned and worked with RRA employees to get Levinsons? paid on jewelry purchases purportedly made by Rothstein; g. Levinsons gave Rohtstein a $100,000 credit line without conducting a background check on him; and h. H. Levinsons repeatedly allowed Rothstein to bounce checks in payment for jewelry, then failed to take action against him consistent with how Levinsons treated other customers who bounced checks to his company.
Rothstein also engaged in a material cash business with Levinsons, which resulted from Rothstein approaching Mark and asking if he wanted to do some ?off the books transactions? if Mark was interested, and Mark said yes. Rothstein then bought large and nearly flawless loose gemstones from Mark on 6 or 7 separate occasions for cash, usually in private in Mark?s office. Sometimes Mark came to Rothstein?s office to effect these transactions and once, they did a transaction at Levinson?s home. Each such transaction was for approximately $150,000, though one purchase was for less than $100,000. Thus, the total amount of off the books cash transactions between Rothstein and Levinsons? was approximately $1 million.
Based on Rothstein?s need to have large quantities of cash at his disposal, and because he also often flipped one jewelry purchase for other jewelry (much like Rothstein did with his automobile collection), Mark sometimes allowed Rothstein to trade loose gemstones for future purchases. Sometimes Rothstein would sell the gemstones back to Mark when he wanted cash. In those transactions, even if it was a very recent cash purchase of a gemstone, Mark would only give Rothstein back approximately 75 percent or less of what he had paid Levinsons, even though the gemstone had not decreased in value.