Swindler Scott Rothstein, serving 50 years, strikes out again in bid to lower sentence

A decade ago, flash-in-the-pan lawyer Scott Rothstein was charged with using the guise of his plush Fort Lauderdale law firm to dupe dozens of wealthy investors into buying phony legal settlements purported to be worth more than $1 billion.

Rothstein, who fled to Morocco only to return and start cooperating with the feds, pleaded guilty to running a racket and was sentenced to a stunning 50 years in prison. The feds formally pledged to recommend a lower sentence. But then he lied to them about what he did with some of the money from his Ponzi scheme, so they took back the promise.

Now, a federal appeals court has affirmed a judge’s decision saying the U.S. Attorney’s Office in Fort Lauderdale had the discretion under its plea deal with Rothstein to rescind the prior promise to lower the disbarred lawyer’s sentence.

Rothstein, 57, still has roughly 40 years to go on the 2010 sentence imposed by U.S. District Judge James Cohn. Last year, Cohn rejected Rothstein’s challenge that federal prosecutors Lawrence LaVecchio, Paul Schwartz and Jeffrey Kaplan reneged on their formal promise to lower his sentence under the plea deal. Rothstein argued they didn’t have that discretion, and therefore he was entitled to a hearing on the prosecutors’ withdrawal of the promise.

A three-judge panel of the 11th Circuit Court of Appeals in Atlanta ruled that such a hearing was “unwarranted,” then weighed in on the crux of his appeal.

“We are faced with the purely legal question of whether the government had full discretion to withdraw its [motion recommending a lower sentence] based on its own unreviewable evaluation of Rothstein’s assistance to the investigation — and we concluded that the government did have this discretion,” the panel wrote in a 15-page decision released Monday.

“No facts that Rothstein can allege regarding his actual level of cooperation would disturb the government’s unilateral conclusion that his help was insufficient to warrant a substantial-assistance motion,” the three judges concluded.

Prosecutors withdrew their motion two years ago to reduce Rothstein’s sentence based on his cooperation in the sprawling racketeering investigation because he provided “false” information and violated his plea agreement. Rothstein, who helped the U.S. attorney’s office gain convictions of almost 30 defendants — including the defendant’s wife — was hoping to see many years cut from his sentence for his assistance.

But Rothstein’s fatal mistake — though not spelled out in the court record — was lying to authorities about jewelry that he bought for his wife but did not turn over to authorities from the proceeds of his $1.2 billion Ponzi scheme.

“In the judgment of the United States, the defendant provided false material information to the government and violated the terms of his plea agreement,” LaVecchio wrote in a motion withdrawing the government’s promise to request a lower sentence for Rothstein. “Therefore, in the exercise of its sole discretion, the government moves to withdraw the previously filed motion.”

LaVecchio didn’t provide details of Rothstein’s false information in the court filing.

Rothstein’s defense attorney, Marc Nurik, could not be reached for comment on the appeals court’s ruling.

Rothstein’s crime shook up powerful people in high places throughout the region. Rothstein was sentenced to the 50 years in June 2010 on racketeering and other fraud convictions for selling fabricated legal settlements to investors from Florida, New York and Texas. He pleaded guilty in January 2010, after his Ponzi scheme collapsed around Halloween the previous year.

This story was originally published October 1, 2019 at 3:00 PM.