Jan.06, 2010

Accused Ponzi schemer Scott Rothstein will soon plead guilty to running a $1-billion-plus investment racket that could send him to prison for 30 years to life.

The disbarred lawyer, who pleaded not guilty in early December to RICO conspiracy, fraud and money laundering charges, is expected to tell a federal judge in Fort Lauderdale Wednesday that he wants to change his plea.

``We are in the process of finalizing a plea agreement,'' Marc Nurik, Rothstein's attorney, told The Miami Herald Tuesday. ``I can't comment on any of the details.''

U.S. District Judge James Cohn will set a date for Rothstein, 47, to plead guilty in coming weeks, to be followed by his sentencing a few months later -- capping the biggest investment fraud case in South Florida history.

Rothstein has been cooperating with authorities as they build cases against members of his inner circle and now-defunct Las Olas Boulevard law firm. Typically, defendants who provide information that results in additional prosecutions do so seeking a benefit: the possibility of a reduced sentence down the road.

Rothstein is accused of executing a $1.2 billion scam by selling bogus legal settlements to wealthy investors -- including five hedge funds that sank $775 million in the deals.

The investors' trust and money helped Rothstein, who was raised in a working-class Bronx family, attain a high profile that fed both his craving for the limelight and his Ponzi scheme, federal authorities and other observers say.

The investment scandal broke in late October as hedge fund operator George Levin reported to the U.S. attorney's office that Rothstein had failed to make good on investors' latest distribution payments from the purported settlements in employment and other civil cases. By then, Rothstein had already flown to Morocco to deposit about $16 million, leaving his investors and colleagues doubting whether he would ever return to South Florida.

But he did return -- in a private Gulfstream jet -- in November, fueling one of South Florida's wildest media stories in years.

Rothstein was immediately compared to other masters of the Ponzi scheme -- the con man's art of paying off early investors with the contributions of later investors. The massive scale of Rothstein's scheme put him in company with Bernard Madoff, Allen Stanford and Marc Dreier, all of whom have faced prosecution in the past year.

Rothstein is accused of laundering hundreds of millions of dollars to support the lifestyle of a tycoon. According to the government's seizure list of Rothstein's property, he owned more than a dozen homes, including a Spanish-Med waterfront home, along with 21 flashy cars such as Ferraris and an 87-foot yacht.

Rothstein also hired police to guard him and his mansion.

Eager to rub shoulders with power brokers, Rothstein, his law firm Rothstein Rosenfeldt Adler, his wife Kimberly and other colleagues gave about $2.2 million in campaign contributions to Gov. Charlie Crist, the McCain-Palin presidential ticket and other prominent politicians.

It was all remarkable, considering he had less than $200,000 to his name seven years ago, according to court records. But not everyone asked questions, and to those who did, Rothstein provided forged court orders, fake bank statements and other lies, authorities say.

Rothstein, who started his law firm in 2002, built it into a 70-attorney operation. Lawyers and executives who worked with Rothstein are under scrutiny as FBI and IRS agents try to determine who knew what, and when.

Rothstein's office in downtown Fort Lauderdale was a secured inner sanctum, complete with video cameras, a second entrance and hidden private elevator.

Anyone attempting to visit had to contact Rothstein's top assistants through an intercom system.

``He liked being front and center; he liked being the number one guy. He was trying to corner the market and be the law firm in Fort Lauderdale,'' Jose Marrero, former special agent in charge of the IRS' South Florida office, said in a recent interview.

``Look at [billionaire] Wayne Huizenga -- he's not that ostentatious or boastful,'' he said.

``Rothstein was the opposite. How many Bugattis did he have? How many Ferraris did he have? How many houses? That screams of someone begging for attention.''

Rothstein is being held in Miami's federal detention center.

Cohn, the federal judge in the case, will have the final say on how many years Rothstein must spend behind bars.

Prosecutors filed a motion Tuesday asking the judge to approve an alternative method of alerting victims in the case due to their large numbers.

Rather than contact potentially hundreds of people individually, prosecutors want to post new information on a website to notify victims and creditors of upcoming court proceedings.