Sunday, January 21, 2018
Business

'Outrageous' collection of Ponzi schemer Scott Rothstein's items to be sold by St. Petersburg jeweler

ST. PETERSBURG — Next to the bracelet encrusted with 1,350 diamonds and the leopard-print gold watch and the most expensive women's Rolex ever made, the ring almost looks modest.

It's a marvel, really: a huge, 12.08-carat canary yellow diamond flanked by two 1.5-carat diamonds. Its previous owner went to prison for trying to hide it from federal agents. It's so nice, legend has it, that the band is broken because it had to be cut off her finger.

And in a few months, it will be on the auction block, sold by a St. Petersburg jeweler in one last effort to make whole the victims of one of the biggest Ponzi schemes in American history.

Jeffrey Hess, who owns Old Northeast Jewelers and Hess Fine Art, is tasked with auctioning about 60 items that were seized from Scott Rothstein, 53, and his 41-year-old ex-wife, Kim, liquidating a collection that's appraised at roughly $10 million. At auction, they'll likely sell for 20 to 40 percent of that amount.

In his three decades selling jewelry on Fourth Street N, Hess says he hasn't seen anything like it. The collection is "outrageous," he says. "Collectible, eclectic, expensive stuff."

There's the Rolex Daytona watch with a leopard-print band and a gem-studded face made with 18-carat gold (expected auction price: $30,000 to $40,000). Or the women's Rolex, which is covered with diamonds on every surface; it retailed for $109,000, but will likely auction for closer to $50,000. Or the bracelet covered with no fewer than 1,350 diamonds. Or the Zenith Zero-G Tourbillon, a men's watch so technically sophisticated it cost about $550,000.

"This is a first even for us," Hess said. "It's just mind-boggling."

They're some of the last remnants of Rothstein's lavish lifestyle in Fort Lauderdale, which has been sold off piece by piece after his $1.2 billion Ponzi scheme came crashing down under the weight of the Great Recession.

Before he pleaded guilty to five charges in 2010 and wound up in prison serving a 50-year term, Rothstein spent enormous sums, using his investors' money to bankroll a life of stunning luxury. In a 2011 deposition, he estimated he had spent close to $200 million.

"We were living like rock stars; private jets, massive amounts of money," Rothstein said. "Between the money we were actually pulling out and the money we were spending for lavish parties, trips, dinners, presents, gifts for wives, gifts for mistresses, our mistresses, the numbers are astronomical."

The last remnants of that opulence will be gone in early April when Hess starts the online auction that will divvy up the watches and bracelets, rings and earrings, necklaces and fountain pens that have been in his safekeeping since November.

It will be the last auction of Rothstein's estate, according to the Daily Business Review, a South Florida publication. Michael Goldberg, the Fort Lauderdale lawyer overseeing the liquidation process, didn't respond to a request for comment.

Selling those items will be no easy feat. It requires tight security, extra insurance and close supervision from the attorneys and judge in Rothstein's bankruptcy case. In return, Hess will receive a fee set by the court, but he says it's "extremely modest" — maybe a third of what he'd charge otherwise.

It's worth it, he said, just to handle such rare pieces and such a big collection. And while Hess already has a robust reputation for online auctions, a sale of this size could solidify his business' position as a leader. He and his wife have handled more than $100 million in online auctions.

"It's going to be fun," Hess said. "It's going to be a lot of fun."

Once the sales are complete, the work won't be over. Delivering the items means navigating a morass of regulations from shippers, insurance companies and foreign governments. Plus, there are the security concerns, the reason why many items will be sent in crates with videocameras and GPS trackers and some hand-delivered. It's a jigsaw puzzle, says Hess' wife, Katrina, who co-owns the store.

Jeffrey Hess says he feels "a lot of pressure," because his assessments will impact what victims will get in return. He feels bad for the victims, he says, and even Rothstein's ex-wife in a way — how she was plucked from relative obscurity when she met him and how she was left a few years later with nothing but an 18-month sentence.

But then, he also wonders what leads someone to buy so much expensive jewelry. How could anyone find a way to wear it all?

"He just had too much money, and it wasn't his, so he didn't care," he reasons. "I'm in the business of selling pretty. That's what we do; we sell pretty. But at some point, there's got to be — you've got to say, Hey, enough already. How many six-figure pieces does one person need?"

Contact Thad Moore at [email protected] or (813) 226-3434. Follow @thadmoore.

   
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