Bloomberg Business Week
Former South Florida lawyer Scott Rothstein was sentenced to 50 years in prison for using his law firm to run a $1.2 billion Ponzi scheme that financed a lavish lifestyle, bankrolled his firm and bought political influence.
The sentence imposed today by U.S. District Judge James Cohn is 10 years longer than prosecutors requested. Rothstein, who turns 48 tomorrow, pleaded guilty in January to two counts of wire fraud and three conspiracy charges. He faced a maximum sentence of 100 years.
“These acts constitute the most egregious wrongs a licensed attorney can commit,” Cohn told Rothstein in federal court in Fort Lauderdale, Florida.
Rothstein sold discounted stakes in fraudulent settlements of sexual-harassment and whistleblower claims, which ranged from hundreds of thousands to millions of dollars, he admitted in January. He told investors they would collect the full proceeds when the cases settled, while taking money from new investors to pay back old ones.
Rothstein and unidentified co-conspirators created fake settlement papers, bank statements and personal guarantees to convince investors the scheme was real, he admitted. He also generated false court orders and forged a judge’s signature.
Undercover Operations
“The defendant placed himself in the pantheon of fraudsters,” Assistant U.S. Attorney Lawrence LaVecchio told Cohn today.
“I don’t expect your forgiveness,” Rothstein said, reading from a prepared statement. “I do promise you that I will do everything in my power to undo the terrible harm that I caused.”
Rothstein had asked Cohn for a 30-year sentence. Prosecutors sought 40 years. Rothstein said he deserved a lighter sentence because he voluntarily returned from Morocco, where he had fled when the scheme was unraveling, and admitted his guilt to authorities.
He cooperated with prosecutors and participated in “numerous undercover operations,” Rothstein said in a June 4 request for leniency. He didn’t disclose details. Prosecutors said his “post-offense conduct has been extraordinary.”
Marc Nurik, an attorney representing Rothstein, said he is still cooperating with authorities and may request a sentence reduction in the future.
Sentencing Hearing
“In light of the fact that we anticipate a subsequent sentencing hearing down the road, based on his ongoing cooperation, it would not be appropriate to make a statement at this time,” Nurik said in a telephone interview.
One other person, Debra Villegas, the firm’s former chief operating officer, has been charged with a role in the scheme. Villegas, who pleaded not guilty to charges of money-laundering conspiracy, will change her plea June 11 in Fort Lauderdale federal court, records show.
The 70-lawyer firm Rothstein co-founded, Rothstein Rosenfeldt Adler PA, is being dissolved in U.S. Bankruptcy Court in Fort Lauderdale. It collapsed after other attorneys there said they found evidence that Rothstein was running an illegal side business.
Rothstein used money from the scheme to keep his firm afloat, pay employees, rent office space and buy equipment, he said in January.
Political Campaigns
He instructed law firm employees to contribute to the campaigns of local, state and federal politicians in a way that evaded limits on such donations and disguised the true sources of the money. Many of the donations were returned after the accusations against Rothstein became public.
“Mr. Rothstein acknowledges that he not only stole other people’s monies, he also used it to corrupt the political process and enhance his power for personal gain,” according to Rothstein’s request for leniency.
Rothstein used proceeds from his crimes to buy property in Florida and Narragansett, Rhode Island, and residences in New York City, prosecutors said in court papers. He had a white Lamborghini, a red Ferrari Spider, 304 pieces of jewelry and a collection of sports memorabilia.
Cohn will determine how much to pay back alleged victims, former clients and banks from property Rothstein agreed to forfeit. Rothstein agreed to be disbarred in November by the Florida Supreme Court.
While the total amount of the fraud was $1.2 billion, about 400 victims lost $400 million and some investors recouped their money, Nurik told Cohn today.
Jealousy and Greed
Rothstein grew up in the Bronx and moved as a teenager to South Florida, where he attended college and law school, he wrote in a letter accompanying his leniency request. After founding his law firm, he became motivated by jealousy and greed, he wrote.
“My partner and I continued to grow the firm at an alarming pace despite the clear fact that the business would never support the growth,” Rothstein wrote. “I needed to find some other way to fund the business and the lifestyle I had created out of thin air. Failure was not an option.”
Rothstein began to ask acquaintances for high-interest loans, saying they were for clients. He then devised the scheme to sell non-existent legal settlements, he wrote.
“We went from tens of millions to hundreds of millions almost overnight,” he said in the letter.
Stuart Rosenfeldt, Rothstein’s former law partner, denies any involvement in the scheme, a lawyer for Rosenfeldt said in a telephone interview yesterday.
“If he’s going to try to lay this at the feet of Stuart Rosenfeldt, Stuart Rosenfeldt will be one more victim of Scott Rothstein,” attorney Bruce Lehr said.
Rosenfeldt was sued in February by the defunct firm’s court-appointed trustee for taking almost $8 million in excess compensation.
The case is U.S. v. Rothstein, 09-cr-60331, U.S. District Court, Southern District of Florida (Fort Lauderdale).
The sentence imposed today by U.S. District Judge James Cohn is 10 years longer than prosecutors requested. Rothstein, who turns 48 tomorrow, pleaded guilty in January to two counts of wire fraud and three conspiracy charges. He faced a maximum sentence of 100 years.
“These acts constitute the most egregious wrongs a licensed attorney can commit,” Cohn told Rothstein in federal court in Fort Lauderdale, Florida.
Rothstein sold discounted stakes in fraudulent settlements of sexual-harassment and whistleblower claims, which ranged from hundreds of thousands to millions of dollars, he admitted in January. He told investors they would collect the full proceeds when the cases settled, while taking money from new investors to pay back old ones.
Rothstein and unidentified co-conspirators created fake settlement papers, bank statements and personal guarantees to convince investors the scheme was real, he admitted. He also generated false court orders and forged a judge’s signature.
Undercover Operations
“The defendant placed himself in the pantheon of fraudsters,” Assistant U.S. Attorney Lawrence LaVecchio told Cohn today.
“I don’t expect your forgiveness,” Rothstein said, reading from a prepared statement. “I do promise you that I will do everything in my power to undo the terrible harm that I caused.”
Rothstein had asked Cohn for a 30-year sentence. Prosecutors sought 40 years. Rothstein said he deserved a lighter sentence because he voluntarily returned from Morocco, where he had fled when the scheme was unraveling, and admitted his guilt to authorities.
He cooperated with prosecutors and participated in “numerous undercover operations,” Rothstein said in a June 4 request for leniency. He didn’t disclose details. Prosecutors said his “post-offense conduct has been extraordinary.”
Marc Nurik, an attorney representing Rothstein, said he is still cooperating with authorities and may request a sentence reduction in the future.
Sentencing Hearing
“In light of the fact that we anticipate a subsequent sentencing hearing down the road, based on his ongoing cooperation, it would not be appropriate to make a statement at this time,” Nurik said in a telephone interview.
One other person, Debra Villegas, the firm’s former chief operating officer, has been charged with a role in the scheme. Villegas, who pleaded not guilty to charges of money-laundering conspiracy, will change her plea June 11 in Fort Lauderdale federal court, records show.
The 70-lawyer firm Rothstein co-founded, Rothstein Rosenfeldt Adler PA, is being dissolved in U.S. Bankruptcy Court in Fort Lauderdale. It collapsed after other attorneys there said they found evidence that Rothstein was running an illegal side business.
Rothstein used money from the scheme to keep his firm afloat, pay employees, rent office space and buy equipment, he said in January.
Political Campaigns
He instructed law firm employees to contribute to the campaigns of local, state and federal politicians in a way that evaded limits on such donations and disguised the true sources of the money. Many of the donations were returned after the accusations against Rothstein became public.
“Mr. Rothstein acknowledges that he not only stole other people’s monies, he also used it to corrupt the political process and enhance his power for personal gain,” according to Rothstein’s request for leniency.
Rothstein used proceeds from his crimes to buy property in Florida and Narragansett, Rhode Island, and residences in New York City, prosecutors said in court papers. He had a white Lamborghini, a red Ferrari Spider, 304 pieces of jewelry and a collection of sports memorabilia.
Cohn will determine how much to pay back alleged victims, former clients and banks from property Rothstein agreed to forfeit. Rothstein agreed to be disbarred in November by the Florida Supreme Court.
While the total amount of the fraud was $1.2 billion, about 400 victims lost $400 million and some investors recouped their money, Nurik told Cohn today.
Jealousy and Greed
Rothstein grew up in the Bronx and moved as a teenager to South Florida, where he attended college and law school, he wrote in a letter accompanying his leniency request. After founding his law firm, he became motivated by jealousy and greed, he wrote.
“My partner and I continued to grow the firm at an alarming pace despite the clear fact that the business would never support the growth,” Rothstein wrote. “I needed to find some other way to fund the business and the lifestyle I had created out of thin air. Failure was not an option.”
Rothstein began to ask acquaintances for high-interest loans, saying they were for clients. He then devised the scheme to sell non-existent legal settlements, he wrote.
“We went from tens of millions to hundreds of millions almost overnight,” he said in the letter.
Stuart Rosenfeldt, Rothstein’s former law partner, denies any involvement in the scheme, a lawyer for Rosenfeldt said in a telephone interview yesterday.
“If he’s going to try to lay this at the feet of Stuart Rosenfeldt, Stuart Rosenfeldt will be one more victim of Scott Rothstein,” attorney Bruce Lehr said.
Rosenfeldt was sued in February by the defunct firm’s court-appointed trustee for taking almost $8 million in excess compensation.
The case is U.S. v. Rothstein, 09-cr-60331, U.S. District Court, Southern District of Florida (Fort Lauderdale).
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