Rothstein describes the inner workings of his swindle

 

The man whose massive Ponzi scheme took down Fort Lauderdale’s rich and powerful made his first public appearance Wednesday — in court.

 
Scott Rothstein.
Scott Rothstein.
CHARLES TRAINOR JR. / MIAMI HERALD FILE

jbrown@MiamiHerald.com

The people in Scott Rothstein’s world asked no questions. They did everything he wanted, whether it was unethical, illegal or immoral.

And most of them, he trumpeted, did so for one reason: greed.

For the first time since his billion-dollar-plus Ponzi scheme imploded four years ago, Rothstein, 51, re-emerged Wednesday, testifying in federal court. And he unloaded on just about everyone — from Florida’s former governor to judges, bankers, police officers and gangsters.

The disbarred lawyer, now serving a 50-year prison sentence and cooperating with prosecutors, appeared eager to unburden himself. There were plenty of people, he testified, within his inner circle and beyond who knowingly broke the law because they were paid well and wanted to live what he called “the rock-star life.’’

“No one was forced to do anything illegal,’’ Rothstein said, explaining that those he allowed into his schemes were getting rich so they didn’t ask questions. The problem was “the more they saw, the more they wanted,’’ he said.

On the stand in West Palm Beach, Rothstein, in handcuffs, was about 60 pounds lighter than five years ago, when he regularly enjoyed martinis, steak and lobster at Capital Grille.

He was called as a defense witness in the trial of his former colleague, Christina Kitterman, who is accused of helping him swindle investors.

But Kitterman’s role, or lack of, in his schemes was a sideshow to a day filled with testimony about one madcap plan after another that he used to bilk investors out of millions.

He described secret “Thursday Night Council Meetings” with mobsters at Runway 84, a popular Italian restaurant in Fort Lauderdale; and how he fabricated elaborate ruses, enlisting his associates, or “soldiers,” to help him lie, cheat and steal $1.2 billion from investors in what is considered one of the biggest Ponzi schemes in South Florida history. Rothstein promised fabulous returns on the sale of what turned out to be fabricated legal settlements, purportedly won by his law firm’s clients.

Collectively, hundreds of investors from Florida, New York and Texas lost more than $360 million from 2007 to 2009 in his scheme. So far, 14 others, including his wife, Kimberly, have pleaded guilty to their involvement.

At one point, he described how the firm’s two computer techs helped him create a phony website he could call up on his computer. It was an exact copy of TD Bank’s online site — except that his page showed that he had millions of dollars in his bank account. He would call it up on his computer, he said, to show investors that he was solvent, thereby conning them into believing he would help them make huge profits on their investments.

He detailed how he got around federal campaign finance laws, enlisting members of the firm to contribute hundreds of thousands of dollars to politicians, including former Gov. Charlie Crist. He claimed Crist appointed him to the Judicial Nominating Committee as part of a “quid pro quo” for helping to bankroll his campaign. Crist has said he returned Rothstein’s money after learning it was dirty.

There were Broward sheriff’s deputies and police officers on his payroll, as well as judges, businessmen, his law partners and, he said, probably even hookers.

Among those he allegedly lured into his illegal activities was Kitterman, an associate with his law firm, Rothstein Rosenfeldt Adler, based in Fort Lauderdale. Kitterman, on trial on three counts of wire fraud, is accused of posing as chairwoman of the Florida Bar’s grievance committee and lying to investors who had become suspicious of Rothstein’s business dealings in April 2009. As his money began drying up, and investors became anxious, he concocted a desperate plan to convince them to continue investing. He claimed that 26 complaints had been filed against him and if the investors didn’t continue to cough up large sums of money, he could be suspended — and they would not only stop making money, but lose their investments.

“If they could stop the Goose that Laid the Golden Egg from being suspended,’’ Rothstein said, “They could continue getting paid.’’

But the investors wanted proof that the deals were legitimate and asked to meet with the investigator Rothstein claimed was digging into his business dealings. Kitterman ageed to help him, Rothstein said. He set up a conference call with the investors, and arranged for Kitterman to pose as the Bar investigator.

In an email presented in court, Rothstein told Kitterman to practice her lines and act like a tough lawyer. Kitterman’s attorney, Valentin Rodriguez, tried to show that his client innocently did what she was told by her boss, not knowing that he was involved in a massive illegal fraud.

Rothstein acknowledged that Kitterman was kept in the dark about the inner workings of his enterprises, but said she knew what they were doing was illegal and did it anyway, without question.

“I didn’t need to tell her anything,’’ Rothstein said. “She knew it was a lie.’’ He described her as a “team player” who did what he asked in exchange for a $149,000 salary and lavish perks, like being invited to his Dolphins suite on the 50-yard line at Sun Life stadium. He said she was a regular at many of his parties and dinners, including at Runway 84.

Throughout the day, Rothstein, clad in a blue polo shirt and jeans, matter-of-factly answered questions posed by prosecution and defense. He often steered his answers into territory far afield from Kitterman’s role — using the witness stand to denounce others who were involved but who, he said, haven’t come clean.

“I’m sorry all this happened,’’ Rothstein said. “But other people have to accept responsibility and admit what they did and take their punishment so we can move on with our lives.’’

His two partners, Stuart Rosenfeldt and Russell Adler, are under investigation but have thus far not been charged. Their lawyers have said they did nothing wrong and knew nothing about the scheme.

Rothstein said his partners were not only in on his crooked deals, but “they used the firm like a piggy bank,’’ enjoying the same lavish lifestyle that he lived in his waterfront mansion, where he entertained political bigwigs.

After pleading guilty to racketeering conspiracy in 2010, he went into a government witness-protection facility and is working with prosecutors in hopes of getting a shortened prison term.

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