Rothstein Pleads Guilty in South Florida Ponzi Scheme
Dressed in a tan prison jumpsuit and shackled at his ankles and wrists, the disbarred 47-year-old displayed no emotion as he acknowledged guilt for operating a massive Ponzi scheme that destroyed his law firm, damaged charities and drained the bank accounts of his investors and clients.
Rothstein, looking pale and gray, did not address the court, other than to answer yes or no to questions from the judge and say that he was taking medication for his cholesterol, blood pressure and anxiety. Rothstein's notorious misdeeds have been compared to those of the world's biggest Ponzi schemer, Bernard Madoff, convicted last year of running a $65 billion scam and sentenced to 150 years.
Prosecutors indicated more arrests were likely as they continue their investigation...
Rothstein, charged in December with five counts of racketeering, fraud and money laundering, faces up to 100 years in prison at his sentencing on May 6. But his ultimate sentence may later be reduced to the 30-year range for a few key reasons: He returned from a flight to Morocco in November just after the scandal broke, detailed his crime for federal authorities and named others who aided him or benefited from the illegal profits.
After his return, he pinpointed for authorities hundreds of homes, cars, jewelry, watches, businesses, bank accounts and other personal assets purchased with the tainted proceeds of the Ponzi scheme over the past four years. Authorities have seized about $60 million in Rothstein assets.
U.S. District Judge James Cohn told prosecutors seeking forfeiture of Rothstein's assets that his ``concern'' was returning as much money as possible to the ``innocent victims'' of Rothstein's scam.
Outside the courthouse, U.S. Attorney Jeffrey Sloman made it loud and clear there are other suspects who could be arrested in the coming weeks and months.
``This is the first step in bringing closure to a $1.2 billion Ponzi scheme,'' Sloman said. ``Rest assured that we are not done, and rest assured that we intend to follow every lead and bring to justice those who helped perpetrate this $1.2 billion Ponzi scheme.''...
According to a ``statement of facts'' filed with Rothstein's plea agreement, the former attorney used his law firm as a front to perpetuate his scheme of selling phony legal settlements to investors to sustain himself and the firm.
One critical section reads: ``Defendant Rothstein and other co-conspirators utilized funds obtained through the `Ponzi' scheme to supplement and support the operation and activities of RRA, to expand RRA by the hiring of additional attorneys and support staff, to fund salaries and bonuses, and to acquire larger and more elaborate office space and equipment in order to promote the ongoing scheme and to enrich the personal wealth of persons employed by and associated with RRA.''
Rothstein co-founded Rothstein Rosenfeldt Adler in 2002 and transformed it into a 70-attorney operation. He was disbarred in November after the scandal became public over Halloween weekend.
The Wall Street Journal Law Blog also has a piece on the matter.
The use of money from a ponzi scheme to build and run an apparently successful law firm is reminiscent of the events surrounding the fall of Marc Dreier. For previously articles from the Plea Bargaining Blog about Dreier, see here and here.
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