Jun.11, 2010, 7:14 p.m. EDT

The woman who spent 17 years working for Ponzi schemer Scott Rothstein said Friday she prepared fake legal settlements for him because she believed he'd gotten mixed up with the Mafia and might be in danger if she didn't help him.

In pleading guilty to a money-laundering conspiracy charge, Debra Villegas said Rothstein told her in February 2008 that he had become involved with "some not-so-nice people" who were capable of "putting a bullet" in his head. That's when he told her that legal settlement documents she had been preparing were fake, she said.

Villegas, the former chief operating officer of Rothstein's law firm, said he promised her that his request to prepare phony documents "would be a onetime thing." It wasn't, she said.

"He approached me again and again, always with the promise that it was the last time," she told U.S. District Judge William Zloch. She spent at least five minutes answering Zloch's questions in a tentative voice that sometimes was hard to hear.

Villegas, 43, said she initially believed Rothstein had her produce the bogus paperwork so he could launder money for a particular client. She said she didn't realize until much later that the documents were being used to perpetuate a massive financial fraud — what turned out to be the largest Ponzi scheme in Florida history.

"Given the Mafia, I didn't want to know anything more than what I already knew," Villegas said.

Rothstein was sentenced Wednesday to 50 years in prison for running the $1.4 billion investment scheme.

Villegas is the only person associated with the fraud to be arrested so far. She faces up to 10 years in prison when she is sentenced Aug. 20, but could get much less. She is now free on bond.

She has been cooperating with federal authorities since November, meeting with them on nine different occasions, said her attorney, Robert Stickney.

As Rothstein rose from little-known labor lawyer to head of a downtown Fort Lauderdale law firm, Villegas was by his side. She started off as a paralegal to eventually hold the $250,000-a-year chief operating officer job at Rothstein Rosenfeldt Adler.

Villegas said Rothstein was "like a brother" to her and could be unexpectedly generous. She said he would surprise her with gifts, including a Maserati GranTurismo sports car and a $475,000 house in Weston. As part of her plea agreement, she gave up both.

Villegas said that in retrospect, she believes Rothstein was trying to buy her loyalty.

In addition to Villegas, one of the three men arrested as part of a government sting involving Rothstein pleaded guilty Friday to a charge of conspiring to obstruct justice, which carries up to five years in prison.

Daniel Dromerhauser, who ran Five Star Executive Protection & Investigation, faced nine felony charges as a result of the undercover operation before he reached a plea agreement. Court documents indicate that Dromerhauser was caught on tape agreeing to destroy documents for Rothstein before the papers could end up in the hands of a federal grand jury.

Dromerhauser's business partner, Enrique Ros, pleaded guilty last week to the same obstruction of justice charge. Both men are scheduled to be sentenced in August.