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$1.2 billion Ponzi scheme brings 50-year sentence

By Jen Christensen, CNN
Scott Rothstein, with his watch collection  in 2007, is headed to federal prison.
Scott Rothstein, with his watch collection in 2007, is headed to federal prison.
  • Scott Rothstein ran elaborate $1.2 billion Ponzi scheme from law office
  • He pleaded guilty in January, received 50 years on Wednesday
  • Rothstein sold investors shared in phone court settlements
  • Investigation continues, but investors have not been paid back

(CNN) -- Scott Rothstein, the politically connected lawyer and admitted mastermind of a $1.2 billion Ponzi scheme, was sentenced Wednesday to 50 years in federal prison.

U.S. District Court Judge James I. Cohn gave Rothstein, 47, more prison time than federal prosecutors requested.

"Today's sentence punishes the defendant for his thievery and hopefully brings some sense of justice to the victims of this massive fraud," said U.S. Attorney Wilfredo A. Ferrer in Miami, Florida.

Rothstein, known as "the Bernie Madoff of South Florida," pleaded guilty in January to fraud and racketeering charges. During his plea, Rothstein admitted using his Fort Lauderdale law firm to court wealthy investors, talking them into buying shares in settlements from nonexistent court cases.

According to court records, Rothstein told investors that he had clients who didn't want to wait to collect their settlements. He told investors the clients would take a sharp discount if the money came sooner and in a lump sum.

Investors believed they would get their money back, plus the difference, according to court records. Hedge fund mangers, sophisticated trust directors and friends all invested with Rothstein.

The scheme collapsed in October when Rothstein ran out of money to pay investors. Investigators say he wired $16 million to an offshore account and fled to Morocco in a private jet.

He returned a couple of weeks later, explaining to CNN affiliate WSVN: "I went away to make sure I had my head on straight. I had been through all the emotional things and went through the hysterics -- all the things you go through when you've done things you shouldn't do."

All that he had accomplished crashed and burned when his elaborate Ponzi scheme fell apart.
--U.S. Attorney Wilfredo A. Ferrer

Ferrer said the case is a "rags-to-riches-to-jail saga," calling it "a humbling reminder of what can happen when greed and ambition run amok."

Rothstein abused the trust of friends, colleagues, political figures and clients and "to enhance his reputation, standing and the power in the community," Ferrer said. "All that he had accomplished crashed and burned when his elaborate Ponzi scheme fell apart."

Rothstein has surrendered millions of dollars worth of personal property that included cars, yachts and houses.

The court also auctioned off Rothstein's collection of signed political photos showing him arm-in-arm with a who's who of national politicians, including both Presidents Bush and Govs. Sarah Palin, Bill Richardson and Arnold Schwarzenegger.

One photo depicting Florida Gov. Charlie Crist and Rothstein in a happy embrace and signed, "Scott -- you're amazing!" fetched $2,100 auction. But the sales of property, assets and memorabilia fell short of what Rothstein owed his investors, federal authorities say.

The IRS and FBI investigation into the scheme will continue. More arrests are expected.