Saturday, July 2, 2011

Federal judge: Scott Rothstein can be questioned

South Florida's most notorious fraudster, Scott Rothstein, can be questioned under oath to help bankruptcy and other lawyers sort out the financial wreckage he left behind, a federal judge ruled Friday morning.

But U.S. District Judge James Cohn granted prosecutors' request to delay the deposition for six months – until the week of Dec. 12.

Rothstein was sentenced to 50 years in federal prison after pleading guilty to racketeering, fraud and laundering money. He is serving his time at an undisclosed location and is cooperating with prosecutors from the U.S. Attorney's Office in Fort Lauderdale in the hope of receiving a reduced prison term.

Bankruptcy lawyers and attorneys for victims of his fraud want to question him under oath for their lawsuits in the complicated legal fallout from the criminal case and to try to get money back.

U.S. Bankruptcy Judge Raymond Ray had recommended that the sworn deposition of Rothstein go forward but prosecutors opposed much of the questioning – by others – because they say it could jeopardize their ongoing criminal investigation and the forthcoming indictment of more of Rothstein's alleged co-conspirators.

Cohn, who sentenced Rothstein a little more than a year ago, heard legal arguments Friday morning from a gaggle of lawyers who want to talk to Rothstein. He ruled that the prosecution team's concerns were "reasonable" and that it would not unduly harm the other lawyers' cases if the delay was granted.

The details of exactly when, where and how Rothstein will be questioned have yet to be figured out. One intriguing tidbit from the hearing came when prosecutor Lawrence LaVecchio said the government would object, for secret reasons, to any attempt by lawyers to videotape the session.

"I don't think it's possible but I can't say – in this venue – why," LaVecchio told the judge.

Rothstein's attorney, Marc Nurik said he couldn't explain the government's objection to the video recording but speculated that it was for security reasons.

LaVecchio said he could not elaborate in public but offered to explain to the judge in documents he would file under seal. Cohn told him to file as much as he could in public records, without endangering Rothstein's security.

LaVecchio also told the judge that the government wants to help bring in as much money as possible to return to Rothstein's victims and creditors.

Chuck Lichtman, one of the lawyers for the bankruptcy trustee, said it's essential for his team to question Rothstein. The bankruptcy trustee will get a separate opportunity to informally interview Rothstein to help file any necessary claims ahead of a November deadline.

"Mr. Rothstein has unique knowledge about what happened," Lichtman said.

Cohn said in court that the bankruptcy trustee, victims and the civil attorneys "deserve certainty and finality as to when Mr. Rothstein will be available for deposition." In his written order, issued shortly after the hearing, Cohn wrote that no further delay will be granted beyond December.

Joseph A. DeMaria, an attorney for Gibraltar Private Bank & Trust, said the lawyers understand there are security difficulties in questioning Rothstein, who is protective custody because of his cooperation in the continuing criminal fraud case and his assistance on what prosecutors said was a separate organized crime investigation.

"They don't want to send Scott Rothstein over to the Broward County Jail, we understand that," DeMaria said.

There could still be more requests to try to compel the government to produce Rothstein to testify at upcoming civil trials. Cohn said Friday he expects that he will be asked to rule on whether that will happen if any subpoenas are issued for Rothstein.

By Paula McMahon, Sun Sentinel, or 954-356-4533


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