FORT LAUDERDALE, Florida (Reuters) - South Florida Ponzi scheme mastermind Scott Rothstein was sentenced to 50 years in prison on Wednesday for an investment fraud that bilked clients out of more than $1 billion.
The sentence was more than the 40 years federal prosecutors had recommended for Rothstein, a disbarred lawyer who pleaded guilty to racketeering and fraud conspiracy charges in January.
He had faced up to 100 years in prison but his lawyer had asked U.S. District Judge James Cohn to give him no more than 30 years.
Rothstein, who turns 48 on Thursday, fled to Morocco as his fraud scheme collapsed in late October, apparently lured by the fact that the country has no extradition treaty with the United States. He voluntarily came back to Florida in early November and has been jailed since he surrendered to the FBI in December.
Upon his return, Rothstein cooperated with investigators unraveling his investment scheme, which prosecutors cited in asking that he be given a sentence of no more than 40 years. But Cohn tore into Rothstein for his “greed and arrogance” before handing down the tougher sentence, stressing that Rothstein had committed his fraud while serving as a licensed attorney.
Part of that fraud involved forging bogus court documents, making it especially egregious to a federal judge, Cohn said. “There can be no conduct more reviled,” he said.
Cohn said more than $400 million had been lost to investors through Rothstein’s scheme and set an August 20 court date for a restitution hearing.
Cohn waived any substantial financial penalty as part of Rothstein’s sentencing, saying he had already agreed to forfeit all his assets to help repay some of the more than 400 investors in his scheme.
Rothstein has been compared to other Ponzi scheme kingpins including Bernard Madoff, who pleaded guilty to a $65 billion investment fraud and is now serving a 150-year prison sentence.
Both men, who had all the trappings of success, prayed on wealthy South Florida investors, among others, who were lured by the promise of a steady income stream and better-than-average return on their investment.
Court documents have said Rothstein acted with co-conspirators to carry out the $1.2 billion scheme, creating false bank documents that conned investors.
Rothstein, who appeared in court in manacles and wearing a white dress shirt and dark blue pants, apologized for his crime while saying he did not expect forgiveness.
“I’m ashamed and I’m embarrassed,” he said.
A frequent campaign contributor often photographed with local politicians, Rothstein used what Cohn described as “an opulent lifestyle funded by stolen money” to build up the connections aimed at luring rich friends and patrons to investment with him.
“It was all about influence, wealth power and influence,” Cohn said.
Prosecutors have said Rothstein’s fraud centered on the sale of shares in fabricated legal settlements to unsuspecting investors since at least 2005 and used new investor money to pay previous investors in the classic Ponzi scheme model.
Debra Villegas, the former chief operating officer of Rothstein’s Fort Lauderdale law firm, has been charged in the scheme and charges against others may be coming.
Editing by Jane Sutton; Editing by Bill Trott