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Scott Rothstein plea possible, prosecutor says

A federal prosecutor told a judge Wednesday that a plea from Scott Rothstein is a possibility.

No details were revealed during the brief hearing held before U.S. Magistrate Judge Robin Rosenbaum. If the case proceeds to trial, it would take three weeks, prosecutor Lawrence LaVecchio said.

Rothstein did not appear at the routine status hearing in his criminal case in federal court in Fort Lauderdale.

Rothstein was arrested Dec. 1 and charged with racketeering, money laundering and fraud and offenses related to a $1.2 billion Ponzi scheme. The recently disbarred Fort Lauderdale lawyer, accused of selling fabricated legal settlements to wealthy investors, remains in federal detention in Miami.

Investigators are questioning potential co-conspirators and other witnesses in the investment fraud case, including former lawyers in Rothstein's now-defunct firm. They're also poring over e-mails, financial statements, legal documents and other records generated by Rothstein, his former colleagues and others.

Prosecutors are gathering evidence for a possible indictment of others to be charged as part of Rothstein's RICO case, mostly likely in the upcoming year.

Rothstein, 47, faces spending the rest of his life in prison if convicted, but the judge has discretion and any cooperation he provides the government could reduce his sentence.

If convicted, Rothstein's attorney, Marc Nurik, said he believes the 20-year prison term for Marc Dreier, a New York attorney convicted in a $400 million Ponzi scheme earlier this year, should serve as a benchmark. Nurik carries the sentencing memorandum from that case in his briefcase.

Rothstein "is spending his time like any other inmate," Nurik said in an interview. "He is holding up. He is doing a lot of reading."

Rothstein's wife, Kimberly, has visited him at the jail once, Nurik said.

Kimberly remains in their Bahia Mar home in Fort Lauderdale. Her name is on the deed of the house.

Meanwhile, a bankruptcy court trustee for Rothstein's former law firm has asked the federal judge presiding over his criminal case to grant access to eight of the firm's trust accounts at Gibraltar Bank and Toronto Dominion Bank. Rothstein is accused of using his former law firm and the TD Bank accounts as part of his alleged investment scheme.

The eight bank accounts -- holding about $2.5 million -- were frozen last week after U.S. District Judge James Cohn granted the government's request for a protective order for all of Rothstein's assets in the criminal case.

The trustee, Herbert Stettin, said he and his forensic accountant must analyze those accounts to determine whether any money belongs to former clients, employees or other parties once associated with the law firm. Stettin said, for example, that a former client has contacted him asking for funds in one bank account from the closing of his home.

"These funds were supposed to have been held in trust and were in fact transferred into one of the accounts that is currently the subject of this court's protective order," Stettin wrote in his motion to unfreeze the accounts. "However, the current status of those funds is now in question because of possible commingling of funds in the account."

Stettin's motion could be the start of a major confrontation between parties in the bankruptcy proceeding and the U.S. government over the fate of Rothstein's array of assets -- from waterfront properties to luxury cars to bank accounts. The government's initial civil forfeiture of Rothstein's assets has become part of the criminal case, and normally the recovery of any of those properties would be converted to cash to repay his investment victims.

Cohn has asked federal prosecutors to respond to Stettin's motion to lift the protective order on the eight bank accounts. Afterward, he will issue his decision.