Judge Exceeds Prosecutor’s Request in Sentencing Ponzi Perpetrator
Posted: Monday, July 12th, 2010 at 9:30 am
A Fort Lauderdale lawyer who sold investors shares in phony court settlements, earning him the nickname “the Bernie Madoff of South Florida,” has been sentenced to 50 years in federal prison—more time behind bars than prosecutors had requested.
Scott Rothstein, 47, had connections throughout the legal and political worlds, and exploited those connections in order to perpetrate a Ponzi scheme that netted him a cool $1.2 billion. Rothstein pleaded guilty in January to charges of fraud and racketeering, admitting that he used his law firm to trick investors into buying stakes in phony legal settlements.
He told them that his clients, who were due damages as a result of court decisions, would be willing to take a discounted sum if they could obtain it earlier. The investors—who included hedge fund managers, trust directors and personal friends, according to court documents—then ponied up, thinking that they would recoup their money and then some when the settlement was paid. As in other Ponzi schemes, the earlier investors were paid using money from later investors.
In October, Rothstein flew to Casablanca after wiring $16 million dollars to an offshore account there. After threatening suicide and being convinced by his partners and colleagues to turn himself in, Rothstein surrendered to federal authorities in early December. He pleaded guilty to five federal crimes the next month.
Rothstein and his co-conspirators have also admitted to using the Ponzi scheme profits to make contributions to political candidates, on both the state and federal levels, donations which violate campaign-finance rules
United States District Court Judge James I. Cohn sentenced Rothstein to 50 years in federal prison, even though the prosecutors had only asked for 40.
“Today’s sentence punishes the defendant for his thievery and hopefully bring some sense of justice to the victims of this massive fraud,” said U.S. Attorney Wilfredo A. Ferrer.
Rothstein has surrendered millions of dollars’ worth of cars, yachts, homes and other personal property. The court has also auctioned off numerous photographs showing Rothstein in chummy poses with a veritable who’s who of Republican politicians, including George H.W. Bush, George W. Bush, Arnold Schwarzenegger, Sarah Palin and Charlie Crist.
The disgraced attorney’s firm, Rothstein Rosenfeldt Adler, is now defunct. Rothstein himself has been disbarred. Both the IRS and the FBI are continuing their investigations into the scheme—victims of which have not yet been repaid. Additionally, more charges in the case may yet be filed.
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