Scott Rothstein, the former South Florida lawyer serving 50 years in prison for a $1.2 billion Ponzi scheme, was ordered by a judge to pay his victims $363 million.
U.S. District Judge James Cohn in Fort Lauderdale, Florida, imposed the order today on Rothstein, 48, at a hearing where prosecutors said they recovered $50 million to $60 million in assets for 320 investors and clients who lost money in his scam.
Cohn is seeking to divide cash and the proceeds of homes, jewelry, a yacht and Rothstein’s interests in businesses seized after his arrest last November. He pleaded guilty to fraud and conspiracy, admitting the Ponzi scheme financed his lifestyle, bankrolled his law firm and bought political influence.
“I wish we’d been able to seize sufficient funds so that we would be able to restitute all of the victims,” Assistant U.S. Attorney Lawrence LaVecchio told the judge.
Rothstein admitted that he used his firm, Rothstein Rosenfeldt Alder PA, as a racketeering enterprise, and that he sold discounted stakes in phony legal settlements to investors. He wasn’t at the hearing, which his lawyer attended.
The judge ruled that most of the victims should be paid on a pro rata basis, getting up to 16 percent of what they lost.
Thirteen will be paid 100 percent of what the law firm held in trust for them, Cohn said. Their attorney, Seth Lehrman, said they engaged the law firm for legitimate purposes and most were of limited economic means.
Lehrman said one client, an auto mechanic and father of eight whose oldest son was killed in a car accident, lost $60,000 from an insurance settlement. Cohn agreed that the group should receive full restitution.
Lehrman was once a lawyer at Rothstein’s firm. He and several of the firm’s former attorneys represent 37 clients who recovered the full $1.1 million that they lost. That group includes former National Football League star Warren Sapp, who lost $80,000.
The judge denied an application by auto dealer Ed Morse, who lost $30 million and seeks to recover a larger percentage of his loss than other victims. He argued that he deserved special consideration because Rothstein forged a judge’s signature on a document to trick him into wiring money.
American Express Co. asked Cohn to allow it to seek restitution at a later date. A trustee in the law firm’s bankruptcy is seeking to recover as much as $20 million from American Express for credit card expenses by Rothstein, his family and associates. The judge denied the request.
The case is U.S. v. Rothstein, 09-cr-60331, U.S. District Court, Southern District of Florida (Fort Lauderdale).