He once graced the society pages of local newspapers and gave big to Florida politicians, but on Tuesday, Fort Lauderdale attorney Scott Rothstein was arrested on federal fraud charges, accused of running a $1.2 billion mini-Madoff Ponzi scheme. If convicted, he could be sentenced to up to 100 years in prison.
"He spent his clients' money on real estate, cars, yachts, politics and philanthropy, all to create the illusion that he was hugely successful," said Jeffrey Sloman, acting U.S. Attorney in the Southern District of Florida. "Instead, he has potentially bought himself a lengthy prison sentence."
In what federal authorities say is the biggest fraud case in South Florida history, the 47-year-old faces five counts of racketeering and fraud related to his alleged scheme. Prosecutors say Rothstein ran the scheme out of the 70-lawyer Fort Lauderdale law firm where he was CEO, swindling his own friends and clients. He allegedly forged federal court documents, including judges' signatures to make his investors believe the settlements they were buying into were legitimate.
Wearing a black t-shirt and blue jeans, Rothstein's hands were cuffed behind his back as federal agents escorted him into a FBI office early Tuesday. He later made his first appearance in federal court, where prosecutors read the charges they've brought against him: conspiracy to violate the racketeering influenced corrupt organization statue, conspiracy to commit money laundering, conspiracy to commit mail fraud and wire fraud.
Click here to read the federal charges against Rothstein.
Rothstein pled 'not guilty' to all charges and otherwise remained silent during the brief hearing, except to say "Yes, your honor" to Judge Robin Rosenbaum. Judge Rosenbaum ordered that he remain in custody pending trial.
"Scott is a strong individual and he's accepting this like a man," said Rothstein's attorney Marc Nurik. "At the end of the day, the people who deserve to get money will get money back. Scott feels very remorseful."
Court documents filed by federal authorities seek the forfeiture of $1.2 billion. Last week, federal agents seized $60 million worth of assets that hint at the lavishness of his lifestyle. Among the items named were 20 luxury cars, 15 real-estate properties, an 87-foot yacht, 304 pieces of jewelry and $12 million stashed in Moroccan banks. Rothstein briefly fled to Morocco in late October when rumors of his alleged scam began to circulate. He returned to Florida by chartered jet in November.
"Rothstein appeared to be a charismatic, reputable attorney that one could trust to invest one's money and make a sizable profit," said John V. Gillies, special agent in charge of the FBI's Miami office. "We know now it was all smoke and mirrors."
Rothstein was the managing shareholder, chairman and CEO of the law firm Rothstein Rosenfeldt Adler, which had 70 lawyers at its peak but is now effectively defunct. Gillies said the law firm was the ongoing criminal enterprise that enabled Rothstein to orchestrate his massive Ponzi scheme. Former partners in the law firm are among those who have filed suit against Rothstein.
Federal authorities also said that the investigation is far from over, adding that multiple co-conspirators are believed to have helped Rothstein. However, no one would speculate on who they might be or how many people were knowingly involved.