Rick Raw: Madoff’s South Florida Twin Scott Rothstein Ran $1.2 Billion Ponzi Scheme–Sentenced to 50 Years in Prison

By Rick Grant Commentary rickgrant01@comcast.net

Big time politically connected lawyer, Scott Rothstein followed Bernie Madoff to the slammer for running his Ponzi scheme and bilking clients out of $1.2 billion in fraudulent investments. Rothstein was just sentenced to 50 years in federal prison for his fraud. At 47, Rothstein’s prison term is a life sentence.

There is no parole in federal prison. Rothstein will be dead or 97 years old when he gets out. The sentence sends a message to people who would consider perpetrating this level of fraud to think twice. Madoff is serving two life sentences as his retirement. .

U.S. District Court Judge James I. Cohn gave Rothstein more prison time than federal prosecutors requested. He threw the book at Rothstein’s ass.

"Today’s sentence punishes the defendant for his thievery and hopefully brings some sense of justice to the victims of this massive fraud," said U.S. Attorney Wilfred A. Ferrer in Miama, Florida.

Rothstein was dubbed "the Bernie Madoff of South Florida". He used his Fort Lauderdale law firm to con wealthy investors into buying shares in large settlements from nonexistent court cases. He paid his investors a form of "interest" from the money he received from new investors.

Inevitably, the Ponzi scheme eventually collapsed when Rothstein’s investors dried up.
Investors believed they would get their money back, plus "interest." Hedge fund managers, trust directors, and friends all invested with Rothstein.

Here is how he paid his clients interest: He told investors that he had clients who didn’t want to wait to collect their settlements, He told investors the clients would take a sharp discount if the money came sooner in a lump sum. The difference was the "interest" he paid the investors. Of course, the principle went into Rothstein’s bank account.

The scheme collapsed in October when Rothstein ran out of money to pay investors. To get out rich, Rothstein wired $16 million to an offshore account and fled to Morocco in a private jet.

Like Madoff, he left a trail of angry investors some of whom lost millions on the scheme. And like Madoff, staying alive in prison is Rothstein’s new worry. It doesn’t take much money to contract a hit inside prison.

Rothstein loved to flaunt his wealth with all the accouterments of the super-rich. He loved expensive cars, clothes, mansions, yachts, jets, and $35,000 watches. Easy come easy go was his motto.

Greed like power is as addictive as heroin. Rothstein knew that eventually he’d run out of money, but by then he thought he could escape justice on some far away island.

A contrite Rothstein returned from Morocco to the States two weeks later, explaining to CNN that "I went away to make sure I had my head on straight, I had been through all the emotional things and went through the hysterics–all the things you go through when you’ve done things you shouldn’t do."

How pathetic was that statement? Rothstein was trying to lessen the magnitude of his crime. "Oh, my head must have been twisted," he could have said.

Yeah, Rothstein had perpetrated a $1.2 billion fraud. He was on the FBI’s 10 Most Wanted Poster. A criminal of his stature would be tracked down anywhere in the world by every law enforcement agency on the planet, and he knew it. When you defraud influential VIPs of over a billion dollars, there is no place to hide.

From wearing $6,000 suits to an orange jumpsuit is a long fall from grace. Pissed off investors will never let Rothstein have a minute of peace in jail. It’s just a matter of time before some inmate gladly shoves a shank in his heart for $200. In that respect, Madoff’s days are also numbered.

Even if Madoff and Rothstein are killed in prison, their deaths will not erase the damage they did. Nothing will make the investors whole again. The money has evaporated in the shock wave of their explosive frauds. Poof, there goes $1.2 billion.