Ponzi schemer Scott Rothstein, the maestro who orchestrated Florida's largest investment fraud, may soon be sitting down across from a phalanx of lawyers to face a lengthy grilling under oath.
No one knows what Rothstein might want to say, or whether he would invoke his Fifth Amendment right against self-incrimination, but a federal judge on Monday said he will give the go-ahead for bankruptcy lawyers and attorneys for Rothstein's bilked investors to take the locked-up fraudster's deposition.
If Rothstein wants any hope of freedom one day, it may be in his best interest to tell all.
He already has been cooperating with federal agents and prosecutors investigating his $1.4 billion fraud, and helping creditors and investors could also go toward reducing his 50-year prison term.
The move by attorneys representing investors and those marshalling assets for his defunct Rothstein Rosenfeldt Adler law firm to put Rothstein under oath comes a year and half after the fraud scheme imploded, and with a looming deadline to file bankruptcy clawback claims against those who profited.
Rothstein, 48, is locked up in an undisclosed location, after helping federal agents arrest a reputed Sicilian mobster. The attorneys said in court Monday that all indications are that Rothstein is in the witness protection program, possibly imprisoned under another name, and that it would likely take weeks of negotiations with federal prosecutors and the U.S. Bureau of Prisons to make him available.
Federal prosecutors could object to Rothstein giving a deposition, the attorneys said, if his cooperation is still required to bring criminal charges against other suspects in the Ponzi scheme. The prosecutors won't comment, and one attorney called them the "1,000-pound gorilla" that was not in the courtroom Monday.
Bankruptcy attorney Chuck Lichtman, who would be first in line to conduct Rothstein's deposition, said he believes Rothstein has a strong motive to help creditors and investors.
"I believe Scott would tell the truth," he said. "My hope is that we get him as quickly as we can."
U.S. Bankruptcy Judge Raymond Ray, who presided over Monday's hearing, told Lichtman he will approve Rothstein's deposition so the bankruptcy attorneys can glean information that will be used to file additional clawback lawsuits. More than two dozen suits seeking to recover tens of millions of dollars have already been filed, and the two-year deadline for filing such claims expires in early November.
Attorneys for victims of the fraud also want a crack at questioning Rothstein, but the judge temporarily denied a motion by attorney Bill Scherer – who represents investors who allegedly lost more than $100 million — to put Rothstein under oath. However, the judge instructed Scherer to refile the motion under different bankruptcy rules and indicated he would then approve it.
Ray said it could take a week to put all the questions to Rothstein, with different batches of attorneys seeking information for the roughly two dozen federal and state lawsuits spawned by the fraud. Conceivably, Rothstein could sit for one long deposition or in separate sessions.
Scherer told the judge that he has been talking to prosecutors for a year about taking Rothstein's deposition and still doesn't know if they will fight it. "They just listen," he said. As a further complication, the attorneys may have to seek approval of the federal judge, James Cohn, who retains jurisdiction in Rothstein's criminal case.
At one point, Scherer joked that a football stadium might be necessary to accommodate all the lawyers who want the opportunity to quiz Rothstein