Ponzi schemer Scott Rothstein won’t get any reduction in his 50-year federal prison sentence despite arguing he deserved one for cooperating with the feds, who say he lied to them, a judge ruled Monday.
Rothstein, 55, pleaded guilty to orchestrating a $1.4 billion Ponzi scheme from his downtown Fort Lauderdale law firm after the massive fraud imploded in late 2009.
Rothstein and his attorney have spent the past several months trying to persuade the sentencing judge to side with them and require federal prosecutors to recommend a cut in Rothstein’s punishment.
The defense argued that prosecutors improperly withdrew their offer after Rothstein cooperated in the investigation, worked under cover for them and pleaded guilty to the federal charges.
Prosecutors said that Rothstein, a disbarred attorney, violated the explicit terms of his plea agreement by lying to them and committing additional crimes after he signed the cooperation agreement.
On Monday, Senior U.S. District Judge James Cohn, the sentencing judge, filed a nine-page ruling that prosecutors were correct and Rothstein was wrong.
The terms of the agreement stated that prosecutors could bow out if Rothstein failed to live up to his side of the bargain, the judge found.
“This adequately put Rothstein on notice of the potential consequences of his untruthfulness,” Judge Cohn wrote.
Rothstein has served about 8 1/2 years of his punishment so far. He is serving his sentence in the federal Bureau of Prisons’ top secret witness protection program for inmates. Authorities have said he is in one of the secure prisons used for inmates who are considered to be more at risk of retaliation than other defendants who have cooperated with investigations. No details about his location have been released, but he was placed there because he helped authorities arrest and convict at least one defendant who had Mafia ties.
From prison last month, Rothstein personally filed pleadings on his behalf. He wrote that he believed he had earned a sentence reduction by working under cover and making secret recordings.
“Defendant [Rothstein] engaged in extremely dangerous undercover work,” Rothstein wrote in his motion.
In January 2010, Rothstein pleaded guilty to several racketeering, money-laundering and mail- and wire-fraud conspiracies, as well as two counts of wire fraud. Later that year, the judge imposed the 50-year prison sentence.
In 2011, the prosecution and defense filed a court document that stated they would recommend a cut in his punishment to reward his cooperation but sought a delay because his work was not completed. That document stated that the prosecution “expressly reserves the right to withdraw this motion if, in the judgment of the United States, [Rothstein] should fail to comply with the terms of his plea agreement, fail to testify truthfully, or falsely implicate any person or entity.”
In September 2017, prosecutors notified the judge that they were withdrawing their offer because “in the judgment of the United States, the defendant provided false material information to the government and violated the terms of his plea agreement.”
Court records show Rothstein lied to prosecutors and investigators and attempted to help his then-wife, Kim Rothstein, to hide assets from court and bankruptcy officials. Kim Rothstein, her friend and one of her attorneys all served prison time for their roles in trying to conceal some of the couple’s assets.
The judge wrote in his decision that prosecutors clearly had the “sole discretion” to file the recommendation in the first place and to withdraw it.
The U.S. Attorney’s Office in South Florida routinely recommends sentence reductions of 10 to 30 percent for cooperating defendants who help their investigations. In extraordinary circumstances, they have recommended 50 percent reductions in punishment.
Veteran attorneys say there’s a golden rule that applies to every federal plea agreement that involves cooperation: “If you commit new crimes or lie to prosecutors and investigators after you make the deal, you won’t get the benefits you were expecting.”
Rothstein’s defense attorney Marc Nurik said he hadn’t had a chance to fully study the judge’s ruling or speak with Rothstein.
“It’s too soon to say what’s next,” Nurik said.
As part of his plea agreement, Rothstein gave up his right to appeal — a very common feature of federal plea agreements in South Florida. But it’s still possible, and probably likely, that he will still try to appeal the ruling.
With standard time off for good behavior — 15 percent — Rothstein can expect to serve 42 1/2 years in prison and would be eligible for release sometime in the year 2052. He would be about 90 years old.
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pmcmahon@sunsentinel.com, 954-356-4533 or Twitter @ByPaulaMcMahon
