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Chief operating officer at rothstein firm charged in federal court

April 28, 2010

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The federal government filed an information against a former chief financial officer for her alleged involvement in the Rothstein $1.2 billion Ponzi Scheme. The information alleges one count of money laundering. Apparently, Debra Villegas is cooperating with federal investigators. The majority of cases filed in federal court are charged by indictment. However, federal prosecutors often charge cooperating defendants by information. Villegas is scheduled to appear in federal court with her criminal defense attorney for her arraignment this week. Her lawyer told reporters that his client would surrender at the arraignment and that she has in fact been cooperating with law enforcement, as well as, the prosecution since the inception of the case.

Villegas is facing 10 years in federal prison for allegedly helping her boss, Scott Rothstein, run the Ponzi scheme. She assisted him in fabricating legal settlements that were sold to wealthy investors. Villegas is the first co-conspirator to be charged along with Rothstein. Rothstein entered a guilty plea back in January to charges including racketeering, money laundering and wire fraud. Court documents revealed that Rothstein richly rewarded Villegas for her assistance in the scheme to defraud. In exchange for forging names of fictitious plaintiff's and defendants on fake court settlements, she received a home an expensive car and a $125,000 a year salary. Like all Ponzi schemes, the federal authorities are seeking an asset forfeiture for those items. In forfeiture proceedings, lawyers for the government have to prove that the items were obtained from ill-gotten gains. However, when defendants enter plea agreements with federal prosecutors, there is language in the agreement requiring the defendant to waive all rights to an asset forfeiture hearing.

Federal prosecutors are using Rothstein and Villegas to get other perpetrators that were attached to the Ponzi scheme. Former employees of the now defunct law firm of Rothstein, Rosenfeldt and Adler law firm are currently being investigated. It is believed that former partners Stuart Rosenfeldt and Russell Adler are being looked at as possible co-conspirators along with another senior partner named Steven Lippman. The former chief financial officer and general counsel are also being investigated. The criminal defense law firms representing those individuals claim that their clients were not involved and had no knowledge of the organized scheme to defraud. Both Rothstein and Villegas are seeking to reduce their prison sentences by providing substantial assistance to the authorities.

Pursuant to the Florida Sentencing Guidelines, defendants will often cooperate in the prosecution of other defendants in their case or help make other cases. If the defendant provides substantial assistance, federal prosecutors will file a motion stating that the defendant provided substantial assistance in the investigation or prosecution of another person who has committed an offense. The actual motion filed by the government is referred to as a 5K. The court will evaluate the usefulness and nature and extent of the defendant's assistance in determining the appropriate sentence reduction. When a defendant must take a plea do to overwhelming evidence, the best way to reduce a sentence is by providing substantial assistance.

Officer in Rothstein Firm Charged, The Miami Herald, April 28, 2010.
Categories: Fraud
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