Rothstein sentenced to 50 years in prison for running $1.2B Ponzi scheme
6/10/2010

FORT LAUDERDALE — In the end, it wasn't about the size of disbarred attorney Scott Rothstein's Ponzi scheme: $1.2 billion. It wasn't even how much investors lost: $429 million.

His opulent lifestyle - the 87-foot yacht, the Lamborghinis, the Rolls Royces, the Ferraris and the multi-million-dollar million watch collection - was certainly damning.

But, in sentencing the once high-flying attorney to 50 years in prison on Wednesday, U.S. District Judge James Cohn said Rothstein's most heinous crime was using the legal system to perpetuate his fraud.

While other headline-grabbing fraudsters have gotten lighter sentences, Cohn said that unlike Rothstein they didn't phony up court documents or forge signatures of federal judges to dupe trusting clients.

"The actions constitute the most egregious wrongs a licensed attorney can commit," Cohn told Rothstein on the eve of the scammer's 48th birthday. "There can be no conduct more reviled."

Further, he said, Rothstein's crimes were fueled completely by arrogance and greed.

"This Ponzi scheme was not the result of poor business decisions, quite the contrary," he said. "This was a fraud from its inception."

A standing-room-only crowd of reporters, lawyers, curiosity-seekers and a small smattering of former clients watched as Cohn sentenced Rothstein to 10 years more than even federal prosecutors recommended he receive for luring people to invest in bogus lawsuit settlements.

But when the man who once counted Gov. Charlie Crist and members of South Florida's power elite as friends stood to address the packed courtroom, he stood alone. No one testified on his behalf.

And, Rothstein said, he understood why: He violated the trust of virtually everyone he had touched.

Far thinner and grayer, with his hands shackled and wearing a beige button-down shirt without a tie, he listed all the people he had hurt - the roughly 70 lawyers at his now bankrupt law firm, investors who lost millions, his clients, charities who were forced to repay his donations and his family. His wife cried quietly throughout the hearing while his mother, father and sister looked on.

"I'm ashamed and embarrassed," he concluded.

Few said they believed him.

"It sounded like it was scripted," said Tony Moss, a Miami criminal defense attorney who said he came to the hearing because he was angry that Rothstein had tarnished his profession.

Like other former members of the now disbanded Rothstein Rosenfeldt Adler law firm, Palm Beach County Commissioner Steve Abrams and former Palm Beach County Circuit Court Judge William Berger didn't attend the hearing.

"Garbage took precedence," Abrams said of his need to attend a Solid Waste Authority meeting. But, he added more seriously, there was no reason for him to go.

"I'm not supportive of him," he said. He speculated that others undoubtedly felt the same. "It seems like most of it was a false friendship," he said.

Berger said he was glad that "at least this part of it is over." But, most acknowledged, it's only the end of one chapter not the conclusion of the saga.

So far, only the firm's chief operating officer, Debra Villegas, has been charged in connection with Rothstein's scam. However, one former law firm attorney, Howard Kusnick, has said he is a target of the ongoing federal investigation and expects to be indicted. Others under scrutiny include Rothstein's partner, Stuart Rosenfeldt. He lives in Boca Raton and recruited Abrams and Berger to open the firm's Boca Raton office.

In a letter to the court, Rothstein said he and Rosenfeldt "continued to draw down ridiculous sums of money, though we knew the business was not there to support it."

Rosenfeldt, along with Rothstein, Kusnick and two other former firm attorneys, are being sued by South Florida auto dealer Ed Morse for taking $57 million from him and his wife. In the lawsuit, the couple claims they were shown a phony court document with the forged signature of U.S. District Court Judge Kenneth Marra as evidence that they had won a $23 million verdict in a lawsuit against the decorator of their homes in Boca Raton and Maine. Using the phony court order, Rothstein and others persuaded them to post a $57 million bond.

Berger, whose daughter went to school with Rosenfeldt's daughter, said he is hopeful no more lawyers are charged.

"I have a great deal of fondness for many of the people I worked for at the firm," he said. "This is a tragedy. Anything further would be an even greater tragedy."

In addition to expecting more people will be charged in connection with the scheme, attorney William Scherer predicted more civil lawsuits would be filed. He has filed suit on behalf of investors who lost $120 million.

Much of the information that could spur additional civil and criminal charges is likely to come from Rothstein. Since shelving suicide plans and returning from Morocco with some of his millions in November, his attorney said he has been cooperating fully with investigators. Nurik said he plans to use Rothstein's cooperation to seek a sentence reduction.

The case has captivated South Floridians. Cohn said he understands why.

"Mr. Rothstein infiltrated so many spheres of public interest. He infiltrated so many parts of our daily lives - politics, sports, law enforcement, society pages, billboards, magazines. . . He was everywhere. Not only was he everywhere, he was everywhere with excess," Cohn said. "It makes us examine how we make decisions and makes us question our own values."

By Jane Musgrave

Source: The Palm Beach Post