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Florida lawyer finally sentenced on fraud charges

June 14, 2010

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A former lawyer appeared in federal court last week for his sentencing hearing. All of South Florida has been following this case since the investigation began regarding Scott Rothstein's multi-million dollar Ponzi scheme. Rothstein previously entered guilty pleas to the following charges: bank fraud, wire fraud and money laundering. The charges stem from a $1.2 million Ponzi scheme which purportedly defrauded investors. The victims invested money in lawsuit settlements. At the forefront of the organized scheme to defraud was his South Florida law firm, Rothstein, Rosenfeldt and Adler. Government prosecutors requested that the federal judge sentence Rothstein to 40 years in prison while his criminal lawyer requested that the court sentence him to 30 years. The pre-sentence investigation report submitted by the federal probation office suggested life in prison. After hearing arguments from all of the parties, the federal judge sentenced him to 50 years.

While 50 years is a long time to spend in prison, Rothstein's cooperation significantly reduced his exposure which was up to 100 years of incarceration. Federal prosecutors went to bat for Rothstein claiming that his cooperation regarding the fraud surrounding his case and his work as a confidential informant was extraordinary. His actions as a confidential informant led to the arrest of a purported Mafia boss engaged in organized crime, money laundering and drug trafficking. As a result of his cooperation with federal law enforcement and prosecutors, a 5K was filed on his behalf. The prosecution can file a 5K when a defendant significantly assists them in the case for which the defendant was charged and when the defendant assists in other law enforcement investigations. Normally a 5K will significantly reduce a defendant's sentence in federal court, however, Rothstein's alleged crimes were so reprehensible due to the nature of the fraud and the amount of loss the 5K could not allow for a sentence in the single digits.

The amount of loss in the case was so significant that it raised Rothstein's possible sentence by 30 levels under the federal sentencing guidelines. As such, the 5K could only reduce his sentence to a certain extent. The good news for Rothstein is that if he continues to cooperate, the federal prosecutors can ask for a further sentence reduction at a later date. Even with a motion to reduce the sentence, the federal judge hearing the matter is unlikely to reduce the sentence much more. The sentence reduction hearing will not occur for some time as he will be required to testify in criminal as well as civil cases for the foreseeable future.

The massive fraud involved targeting friends and clients alike; to invest in fraudulent civil court settlements. Although the head the of the law firm, Rothstein claims that he acted with plenty of co-conspirators and that without their help could not have operated such a large scheme to defraud. In fact, he provided information that led to the arrest and indictment of Debra Villegas, the firm's chief operating officer. Villegas entered a guilty plea Friday as a result of Rothstein's cooperation. The sentencing hearing, like so many involving Ponzi schemes at least provide closure for the defendant and his victims.

Florida Lawyer Given 50 Years in Prison for Ponzi Scheme, Bloomberg, June 9, 2010.
Categories: Fraud
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