Former lawyer charged in Ponzi scheme
Yahoo News – By Jane Sutton
MIAMI (Reuters) – A disbarred Florida lawyer surrendered to the FBI on Tuesday and pleaded not guilty to charges he ran a complex Ponzi scheme that bilked investors out of more than $1 billion.
Scott Rothstein, who fled to Morocco in late October but returned to Florida in early November, was denied bond during a brief appearance before a federal magistrate in Fort Lauderdale.
He was charged with racketeering conspiracy under a statute often used to prosecute organized crime chiefs and drug lords.
Rothstein, who was disbarred last week by the Florida Supreme Court, also was charged with mail, wire and bank fraud, and money laundering. He faces up to 20 years in prison on the racketeering charge and up to 100 years if convicted on all counts, plus forfeiture of tens of millions of dollars in illegal profits.
The FBI said that Rothstein, 47, had been selling shares in fabricated legal settlements to unsuspecting investors since at least 2005, using new investor money to pay previous investors in the classic Ponzi scheme model.
He claimed to have won lucrative awards in workplace discrimination and whistle-blower lawsuits, when no such settlements existed, federal investigators said.
Rothstein pleaded not guilty to all the charges. His lawyer, Marc Nurik, said after the hearing that Rothstein was “going to try to do the right thing” for his investors.
“My client wishes to see that legitimate investors get paid their money back,” Nurik told journalists, without specifying how that might be done.
FBI and IRS agents raided Rothstein’s Fort Lauderdale law office in November and seized his waterfront home, yacht and other properties in Florida, New York and Rhode Island.
Investors have already begun filing lawsuits saying they were cheated and should get a share of the assets. Lawyers for the alleged victims said the scheme was so massive and complex that Rothstein could not have acted alone.
The Miami Herald said federal prosecutors would ask a grand jury to consider criminal charges against his alleged co-conspirators, possibly including former employees of his now-defunct firm.
He was chief executive and managing partner in the firm of Rothstein Rosenfeldt Adler PA, which was placed in receivership in November.
Rothstein, a frequent campaign contributor who was often photographed with politicians, lived a lavish life with opulent homes and a fleet of foreign sports cars. He used his connections and charm to lure wealthy friends and patrons to invest with him.
Early on Tuesday morning, television cameras showed him being led into the FBI headquarters with his hands cuffed behind his back.
(Reporting by Jane Sutton, editing by Jim Loney and Vicki Allen)
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