Rothstein Turns Snitch?

Scott W. Rothstein is serving time in prison for running one of the nation’s largest Ponzi schemes.

Image: South Florida Business Journal

Disbarred attorney Scott Rothstein, who was sentenced to 50 years in prison in June, could become the first major recent Ponzi schemer to testify against the people who helped him run his scheme.

Fort Lauderdale, Florida, attorney William Scherer said Rothstein has agreed to testify in a civil lawsuit where Scherer represents alleged victims of the $1.4 billion scheme.

Scherer’s 2,200-page lawsuit is aimed at hedge funds, banks and professionals who audited Rothstein’s accounts. Scherer says Rothstein has been talking to him for months and helping him identify co-conspirators.

Rothstein’s scheme is among the largest in history, right behind Bernard Madoff, R. Allen Stanford and Tom Petters. If he sits for testimony against banks and investors who fed his scheme, he would be the first of his kind to do so. Like any other convict who testifies, Rothstein’ character and motives would be attacked.

“It’s a little bit novel. I’m surprised, but it is certainly evidence and could help build a case with a jury,” said Todd Foster, a white-collar crime lawyer in Tampa, Florida, who once represented Ponzi schemer Arthur Nadel.

“Madoff wouldn’t do it because he’s maintained throughout that he did it by himself. Nadel also maintained that. Plus, Madoff is older than Rothstein, so even a 50 percent sentence reduction is meaningless for Madoff,” Foster said.

For more on Scott Rothstein's possible testimony, click here for the full story from the South Florida Business Journal (subscription required).