Scott Rothstein

Scott W. Rothstein is a disbarred Fort Lauderdale lawyer, the founder and chairman of the firm Rothstein Rosenfeldt Adler, who pleaded guilty in January 2010 to racketeering conspiracy and related charges for running, from about 2005 through November 2009, a Ponzi scheme that took about 1.2 billion dollars from investors, partly through purported interests in confidential legal settlements. He was sentenced to 50 years in prison. Jeffrey Epstein sued him in 2009 together with Bradley Edwards, a lawyer who had joined the firm and was representing Epstein's victims, alleging that the firm had marketed cases against Epstein, "real or fabricated," to investors. In 2011 the government filed a motion to reduce his sentence for cooperation, and in 2017 withdrew it, stating that he had provided false information.¹²³

The Scheme

According to court records and statements made at his plea, Rothstein used the firm to induce investors to lend money to non-existent borrowers on promissory notes and requests for short-term bridge loans, and to invest in anticipated payouts from purported confidential civil settlement agreements, which he said could be bought at a discount and would be repaid at full value from the firm's trust account. Neither investment existed. Rothstein and his co-conspirators moved and laundered the money through accounts at TD Bank, N.A., Gibraltar Private Bank and Trust and other institutions, and created false bank documents, false online account information and false settlement agreements to show investors. In one case the firm secretly settled a suit it had brought for its own clients in favor of the defendant, and Rothstein and others then created a false federal court order, "purportedly signed by a U.S. District Judge," stating that the clients had won a judgment of about 23 million dollars that the defendant had moved to the Cayman Islands; told that they had to post bonds to recover it, the clients wired about 57 million dollars to a trust account Rothstein controlled.¹

The proceeds funded the firm and paid for "contributions to federal, state, and local political candidates," donations to charities, exotic cars, jewelry and boats, and were used "to hire local police officers to provide security, and to provide gratuities to high ranking members of police agencies," to buy controlling interests in restaurants and other businesses, "and to socialize with politicians and sports figures." U.S. Attorney Wifredo A. Ferrer said that Rothstein "manipulated and abused the trust of all whom he knew," including "his friends, family, business partners, legal colleagues, political figures, and even charitable organizations."¹

Plea, Sentence and Cooperation

On a criminal information of December 1, 2009, Rothstein pleaded guilty on January 27, 2010 to conspiracy to violate the RICO statute, conspiracy to commit money laundering, conspiracy to commit mail and wire fraud, and two counts of wire fraud. On June 9, 2010 Judge James I. Cohn of the U.S. District Court for the Southern District of Florida sentenced him, at 47, to 50 years in prison and three years of supervised release, with forfeiture of his real property, vehicles, bank accounts and investments. The prosecutors were Assistant U.S. Attorneys Lawrence D. LaVecchio, Paul F. Schwartz and Jeffrey N. Kaplan.¹

Under his cooperation agreement Rothstein undertook, if the government asked, to work "in an undercover role to contact and negotiate with others suspected and believed to be involved in criminal misconduct," and agreed that the government would have "sole and unreviewable" discretion to judge the "quality and significance" of his cooperation. In June 2011 the government filed a motion under Rule 35(b) for a reduction of sentence, which it later called a "placeholder motion," reserving the right to withdraw it if he should "fail to testify truthfully, or falsely implicate any person or entity." On September 26, 2017, with the motion still undecided, the government moved to withdraw it, having concluded that Rothstein "provided false material information to [the Government] and violated the terms of his plea agreement." The district court granted the withdrawal without an evidentiary hearing, and on September 30, 2019 a panel of the Eleventh Circuit (Tjoflat, William Pryor and Grant) affirmed, holding that Rothstein "cannot credibly claim that he had no idea that withdrawal was a possibility."⁴

Epstein v. Rothstein

In 2009 Epstein sued Rothstein and Edwards in the circuit court for Palm Beach County, Epstein v. Rothstein, No. 50-2009-CA-040800, for civil racketeering and fraud, alleging that Edwards had fabricated claims and helped Rothstein market bogus settlement rights involving the sexual abuse claims against Epstein. Edwards had worked briefly at the firm; in May 2009 he signed emails as "Partner, Rothstein Rosenfeldt Adler," including an exchange with the Palm Beach Post courts reporter Susan Spencer-Wendel about the sealed Epstein non-prosecution agreement: "The case in which the Non-prosecution agreement was released to the victims and victim's attorneys is Jane Doe v. United States of America. 08-80736. It was released pursuant to protective order which is why I cannot discuss the contents." Edwards was not implicated in Rothstein's fraud.²⁵

Epstein's witness and exhibit list named "SCOTT ROTHSTEIN individually" and a former employee of the firm as a witness. His requests for production sought "[e]ach investor and potential investor who reviewed approximately ten (10) boxes of cases, real or fabricated, against Jeffrey Epstein" shown by Rothstein "to solicit third party investments"; any agreements "relating to any case (real or fabricated) involving Jeffrey Epstein and Scott W. Rothstein"; documents purporting to show "any transfer of funds or property to investors from Jeffrey Epstein by way of RRA for the settlement of any case, real or fabricated, against Jeffrey Epstein"; "[t]he entire bankruptcy file In Re: Rothstein Rosenfeldt"; and all "Q-Task Projects" referring to Epstein or "Jane Doe."³

Epstein dropped his claims against Edwards in August 2012, and Edwards counterclaimed for malicious prosecution, alleging that the suit was designed to intimidate him and his clients into abandoning their cases. Paul Cassell and Jay Howell appeared as limited intervenor co-counsel for three of Epstein's victims; on March 7, 2018 Howell filed an emergency notice of appearance "for the victims" in the case, then styled Jeffrey Epstein, Plaintiff/Counter-Defendant, v. Scott Rothstein and Bradley J. Edwards. On February 25, 2018 Epstein wrote to the former White House Counsel Kathryn Ruemmler about a newly discovered "email trail": "now the issue is how to use, it, CVRA? marie? Bar. USA[?]. scoff rothsteins prosecutors that w[i]thdrew his r[ule] 35 [ ] filing. nurik, rothsteins lawyer on some of t[h]e emails. Judge marra, cvra.? press? move f[o]r sanctions? strategy time." Ruemmler replied: "How did you discover it? Let's discuss in the a.m." On November 9, 2018 Epstein's counsel, among them Jack Goldberger, moved for in camera inspection of 302 emails withheld on a 1,607-entry privilege log by Edwards and Cassell, arguing that most were "e-mails among attorneys and staff" and "with media sources." Epstein settled the counterclaim in December 2018 with a written apology to Edwards.²⁶⁷⁸