In My Opinion

Fred Grimm: Yellow diamond caper bound to cost Rothstein

Her yellow diamond was so dazzling, it shone the way to prison.

Kim Rothstein will do 18 months in federal lock-up for clinging to that 12.08-carat contraband when the feds came looking for the garish assets of her husband’s $1.2 billion dollar Ponzi scheme.

Her onetime close friend and co-conspirator, Stacie Weisman, must do three months, followed by another nine months of house arrest, for helping Kim secret away her pricey baubles in the fall of 2009 as Scott Rothstein’s audacious criminal swindle imploded.

Scott Saidel, Kimmy’s attorney, friend and enabler, lost his law license and will begin a three-year federal sentence next week. Fort Lauderdale jeweler Patrick Daoud and local businessman Eddy Marin, who both lied to federal investigators about their own grubby encounter with Kim’s gems, will be sentenced in February.

The diamond, described by appraisers as a “fancy intense yellow VS2 radiant-cut,” was of such blinding allure that these five conspirators, one of them with a law degree, tried to steal it away even as U.S. marshals and IRS investigators and FBI agents and bankruptcy lawyers were swarming over Scott Rothstein’s plunder like ants at a picnic. Even as Scott Rothstein himself was singing like a diva to the feds.

But here’s the thing about the yellow diamond caper. There seems to have been a sixth conspirator.

Sure, when Scott Rothstein realized the jig was up on his audacious cheat in Octobe, 2009, he wired himself $16 million bucks, chartered a Gulfstream jet and flew off to hunker down in extradition-proof Morocco. But he came back a few days later a born-again Boy Scout, ready to finger all his old associates. He even ratted out his 67-year-old uncle Bill (got him four years in federal prison) — anything to hack a big chunk off his own looming sentence.

Gracious, and wasn’t he the perfect cooperating witness, whose testimony brought down 11 of his old associates and enabled bankruptcy lawyers to storm after the businesses that had greased Rothstein’s Ponzi machine. In his spare time, Rothstein helped the feds nail a Mafia-connected wine merchant from Miami Beach. Rothstein could hardly shut up about his old friends’ transgressions, filling 6,000 pages with his depositions.

This beatific Rothstein makeover was a jarring contrast to the cigar-chomping, Ferrari-driving, money-flashing wanna-be tough guy, who kept an Al Pacino The Godfather portrait hanging in his office, in case anyone missed the more subtle hints. Before his fall, he had been Fort Lauderdale’s very king of vulgar ostentation with his waterfront mansions, array of jewelry, fleet of 19 insanely expensive cars, three yachts, the fancy restaurant he owned across the street from his law firm’s digs on Las Olas Boulevard, and the petite China doll blonde he had lured from behind a Blue Martini bar and married in a gaudy show at the Versace mansion in 2008. He was the guy with politicians drooling around his checkbook, 25 compromised cops on his payroll and a condo near his law firm stocked with high priced call girls. All this financed by selling shares in phony “confidential” lawsuit settlements.

Scott summed up his business ethics nicely in one of his many depositions: “We were involved in public corruption with politicians. We were involved in public corruption with law enforcement. We were involved in activities with mob-related individuals. We were involved in activities involving the physical threats of other individuals. We were involved in the public corruption side of purchasing of political positions. We were involved in the manipulation of the judiciary.”

His abrupt lurch from crime boy to angelic cooperating witness was part of a desperate strategy to persuade federal prosecutors to recommend a reduction of the 50-year sentence U.S. District Judge James Cohn dropped on Rothstein three years ago. Without a sentence reduction, the 51-year-old Rothstein’s not likely to outlive his stint in prison. Except this deal with the prosecutors also hinged on Rothstein’s absolute honesty. As Herald reporter Jay Weaver noted last week, that notion was torpedoed at Kimmy’s sentencing hearing.

Her lawyer, in his pitch for a downward departure from federal sentencing guidelines for his client, claimed that Rothstein, even while he was feigning cooperation with federal officials, was secretly conspiring with Kim, using “coded letters” about stashing the precious yellow diamond and other valuables, worth about a million dollars. “Kim is fully responsible for her behavior. However, it was her husband, Scott Rothstein, who originally requested that she take some family heirlooms, watches and other items of value as insurance.”

Federal Prosecutor Lawrence LaVecchio told Judge Robin Rosenbaum that “evidence supports” that it was Rothstein who dreamed up this notion of making off with the family jewels.

Apparently Judge Rosenbaum believed Kim’s version. She cut six months off the two-year sentence recommended by the U.S. Attorney’s Office. Good news for Kim. Very bad news for her soon-to-be-ex-husband (Divorce papers were filed Nov. 4).

Judge Cohn never seemed convinced by Rothstein’s sudden personal transformation. Back in 2010, after prosecutors recommended a 40-year prison term, Cohn thought 50 years would better suit his criminal audacity. I doubt Rothstein’s secret finagling in the yellow diamond affair will make Judge Cohn any more sympathetic.

The perverse twist here was that the revelation about Rothstein’s part in the jewelry swipe might just keep his old law firm’s partners Stuart Rosenfeldt and Russell Adler and his general counsel, David Boden, out of federal court. It’s hard to imagine that these lawyers, even as they raked in big money from the mendacious scam, could not have noticed that Rothstein’s investment plan was wildly out of whack with reality. The U.S. Attorney’s Office has spent months investigating their connections to the Ponzi scheme. (The Florida Supreme Court, in an unrelated case, suspended Adler’s law license for 90 days last week, for lying to a New York co-op board about his finances.)

But the credibility of the prosecution’s star witness took a big hit last week. Thanks to his wife and the allure of a certain piece of jewelry.

Should Adler, Rosenfeldt and Boden escape criminal charges, they ought to buy poor Kimmy a token of their gratitude, once she gets out of prison. I’m thinking a nice yellow diamond would be appropriate. About 12.08 carats.

Read more Fred Grimm stories from the Miami Herald

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