Florida lawyer charged with $1B investment fraud

FORT LAUDERDALE, Fla. (AP) - December 1, 2009

Lawyer Scott Rothstein was led into the Miami FBI office in handcuffs following his early-morning arrest on five charges, including a violation of the Racketeer Influenced and Corrupt Organizations or RICO law often used against the Mafia and other criminal organizations.

Alicia Valle, spokeswoman for the Miami U.S. attorney's office, said Rothstein was also charged with mail fraud, wire fraud, money laundering and conspiracy. The combined maximum prison term for convictions on all counts is 100 years, according to court documents.

Rothstein was scheduled to appear in federal court later Tuesday. A news conference by prosecutors, the FBI and Internal Revenue Service was also planned.

The type of charging document filed by prosecutors, known as an "information," is typically used when a defendant has already agreed to plead guilty. Rothstein's attorney Marc Nurick declined comment Tuesday.

The document cites unnamed "other conspirators" who also played key roles in the fraud, suggesting that more people could face charges. In addition, the document says that Rothstein paid "gratuities" to unidentified police officials "to deflect law enforcement scrutiny" of his activities.

The criminal case was seen as inevitable after Rothstein returned from Morocco early last month amid mounting questions from investors and the FBI about missing money. The FBI has estimated the Ponzi scheme could top $1 billion and asked investors to come forward with information.

Federal agents have seized Rothstein's boats, including an 87-foot yacht, as well as 20 luxury cars and numerous other assets, including his share of the Miami Beach mansion formerly owned by fashion designer Gianni Versace. Prosecutors are also going after 21 homes and other properties linked to Rothstein in Florida, New York and along Rhode Island's Narragansett Bay.

Meanwhile, the once fast-growing law firm Rothstein Rosenfeldt Adler is defunct and Rothstein has been disbarred by the Florida Supreme Court. Several investors have already filed lawsuits seeking their money back, including one case demanding more than $100 million in damages.

Rothstein promised huge returns on investments in legal settlements he said would pay out over time. Prosecutors say most of the settlements never existed and that Rothstein operated a Ponzi scheme, using money from new investors to pay older ones.

Shortly after the scandal broke, the Florida Democratic Party returned $200,000 in contributions from Rothstein and his law firm. The state Republican Party gave back $150,000, and Gov. Charlie Crist returned $9,600 that Rothstein and his wife, Kim, had donated to Crist's campaign for the U.S. Senate.

Rothstein's office is filled with photos of him with politicians from around the country, including former President George W. Bush, former Alaska Gov. Sarah Palin, Arizona Sen. John McCain and California Gov. Arnold Schwarzenegger. He was also close to Miami Dolphins great Dan Marino and many South Florida business and community leaders.

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