Legal News

Reports: Scott Rothstein Was a (Pretty Good) FBI Informant

By Ashby Jones

You know, we thought it was so odd back in November when when disgraced lawyer Scott Rothstein gave this interview during a martini lunch after he’d been accused of masterminding an elaborate fraud out of his Fort Lauderdale law firm. It seemed the mark of someone reckless — or at least not listening closely to his lawyer.

According to reports, it turns out that Rothstein was crazy when he gave the interview — crazy like a fox! (Corny set up, corny joke. We know, we know.)

The news is this: Last fall, after Rothstein came back from his trip to Morocco (after word first broke that something was rotten in the state of Rothstein), he apparently worked undercover for the feds. Not only that, but he actually helped law enforcement catch a suspected Italian Mafia man living in Miami Beach, according to press reports. It seems likely that, as a result of his cooperation, Rothstein will be cut some slack when he’s sentenced in May.* Click here for the stranger-than-fiction story, from the Miami Herald; here for a report from CBS News. Click here for all previous LB coverage on Rothstein.

According to the Herald story, days after Rothstein came back from Morocco, he “spilled his guts to the feds and, hoping to save his neck, agreed to wear a wire to set up Roberto Settineri.” Settineri, who was wanted on charges in Italy, was arrested Wednesday in Miami Beach. Click here for the DOJ release on Settineri’s arrest.

According to the Herald:

Pretending he was being dogged by the FBI and needed help, Rothstein allegedly talked Settineri into tearing up two boxes of documents and laundering $79,000 from Rothstein’s massive investment racket, according to sources familiar with the case.

Settineri’s lawyer, Jeffrey Weiner of Miami, declined to comment about his client, who is being held until a March 25 hearing. Rothstein’s attorney, Marc Nurik, was not reached for comment by the Herald. Nor has he responded to requests for comment from the WSJ.

How in the world did Rothstein pull this off? After all, didn’t everybody in south Florida know that Rothstein at the time was under the FBI microscope?

Indeed, reports CBS:

So in order to make the undercover operation work, Rothstein had to publicly convey the impression he was not cooperating with the FBI.

On November 9th, in a move carefully orchestrated by federal agents, Rothstein showed up at the Capital Grille for a martini. This video was even posted by Broward New Times.

That’s right! Crazy like a fox!

* But will Rothstein get a lightened sentence as a result of his cooperation? Not everyone’s so sure. At the South Florida Sun-Sentinel, Michael Mayo writes:

Originally I thought Rothstein was looking at 30 years for the $1.2 billion Ponzi scheme. Bringing down a legitimate Mob man and helping a far-reaching organized crime investigation could be worth half that, perhaps a 15-year reduction.

But there’s still one wild-card factor before sentencing judge James Cohn: Rothstein forging federal judges’ signatures and bogus court orders as part of his Ponzi scheme.

That’s a big no-no for anybody, much less an attorney, one that the hard-edged Cohn won’t take kindly to.

For that reason, I say Rothstein is still looking at an added 5-10 years on top of the 15.

So I’ll move the over-under on Rothstein’s sentence to 22 years.

Full post as published by Law Blog - WSJ.com on March 16, 2010 (boomark / email).