Kim Rothstein, the so-called “free-spending” wife of Scott Rothstein, was sentenced to 18 months in jail yesterday for plotting to hide over $1 million worth of jewelry to avoid it being seized as proceeds of crime.
Mr. Rothstein is a former lawyer incarcerated for running a $1.4 billion Ponzi scheme through the trust accounts of his now defunct law firm. In 2010, he was sentenced to 50 years in prison for money laundering, fraud and racketeering. At the time of his arrest, he owned more than a dozen luxury homes, 21 exotic cars, a 87-foot yacht, and a handful of restaurants. According to reporters, he spent over $50,000 a month on escorts and prostitutes. Nine years before, he was worth less than $200,000. The incredible fortune he amassedÂ in such a short period of time was derived illicitly, and much of it from firm clients. His Ponzi scheme was the largest investment fraud scheme in Florida history.
At the time of Mr. Rothstein’s arrest, his wife, her lawyer Scott Saidel, and one of her close friends, Stacie Weisman, conspired to hide the jewelry. All three were charged with conspiracy to commit money laundering and each pleaded guilty.
Last month, Mr. Saidel was sentenced to three years in jail. His sentence was more harsh than Ms. Rothstein because he broke the law to service his client. As U.S. District Judge Robin Rosenbaum noted: “It’s good to be a zealous advocate, but [lawyers] must do it within the bounds of the law.”
Ms. Rothstein said that she never paid her lawyer. At his sentencing, Mr. Saidel apologized, saying:
“I am profoundly sorry for the conduct that led me here today,” he said. “I apologize to my family and friends, who I have let down and hurt and embarrassed, and to my client Kimberly Rothstein, who might not find herself standing here in this very same spot at a later time, if I had simply been a better lawyer.”
Scott Rothstein’s Ponzi scheme took two novel forms – he solicited clients and investors to purchase hundreds of millions of dollars of structured settlements at discount prices that would be repaid at face value over time. He also fabricated court orders, forging the signatures of federal court judges, that showed that his clients had been awarded large sums of money in lawsuits. Clients were told that defendants had transferred funds to the Cayman Islands and in order to recover the funds, they had to post bonds worth millions of dollars with his firm.
Although Mr. Rothstein is now in jail, what U.S. District Judge James Cohn called the tsunami left in his wake is far from over – Rothstein’s 70 lawyer firm went bankrupt and 35 of its former lawyers were investigated. The TD Bank, N.A. was sued by several parties for allegedly facilitating Rothstein’s laundering activities, former associates and employees of the firm were sued to repay lavish bonuses and gifts (that sometimes included houses and cars) from their boss by the firm’s receiver because it is proceeds of crime, and the firm’s COO Debra Villegas was sentenced to a 10-year term in prison after pleading guilty to conspiracy to launder money through the firm.