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South Florida lawyer Scott Rothstein faces arrest in Ponzi scheme

Scott Rothstein, the flashy Fort Lauderdale attorney who authorities say ran a $1 billion investment scam while acting like a philanthropic tycoon, is expected to be arrested today on a federal racketeering charge, sources familiar with the case said.

Rothstein, who had fled to Morocco in late October but returned in early November, is expected to appear at a magistrate hearing to face a RICO conspiracy charge at the federal courthouse in Fort Lauderdale.

While under federal watch in November, Rothstein cooperated with prosecutors and provided them with details of his Ponzi scheme, involving the sale of fabricated legal settlements to wealthy investors.

FBI and IRS agents also raided his Fort Lauderdale law office and seized his waterfront home and other assets.

Rothstein could not be reached for comments, and his attorney, Marc Nurik, declined to say anything about his client's imminent arrest.

"Scott intends to see that all legitimate investors get paid back," Nurik said late Monday. "Exactly how that's going to be done remains to be seen. He is sincere in his intent."

Rothstein, 47, is likely to plead guilty soon while he is in custody. The U.S. attorney's office, meanwhile, will convene a grand jury to consider criminal charges against Rothstein's alleged co-conspirators — including possibly former employees of his now-defunct firm.

Prosecutors are using the Racketeer Influenced and Corrupt Organizations Act to charge Rothstein and possibly others. The conspiracy law was passed by Congress to battle the Mafia and others involved in criminal enterprises. Rothstein, who was disbarred last week by the Florida Supreme Court, is accused of mail, wire and bank fraud, along with money laundering. He faces at least 20 years in prison and forfeiture of tens of millions of dollars in illegal profits.

Rothstein's life in the fast lane — befriending high-profile figures including Gov. Charlie Crist and NFL Hall of Famer Dan Marino — crashed spectacularly over the Halloween weekend, when his investors first suspected that the lawyer may have stolen hundreds of millions of dollars from them. The trail of wreckage is long — including Holy Cross Hospital's returning a $1 million gift from Rothstein's charitable foundation.

Rothstein, a once obscure employment lawyer, opened his law firm with partner Stuart Rosenfeldt in 2002.

Over the span of six years, Rothstein's net worth soared from about $160,000 to tens of millions of dollars — including opulent homes, a fleet of foreign sports cars, dazzling watches, a stake in the former Versace mansion in South Beach and a restaurant group called Bova, court records show.

South Florida lawyer Scott Rothstein faces arrest in Ponzi scheme 12/01/09 [Last modified: Tuesday, December 1, 2009 7:43am]
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