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February 26, 2014
Ponzi schemer Scott Rothstein told federal prosecutors in 2011 that fellow attorney Douglas Bates “was in his pocket.”
Now, the Sun Sentinel is reporting that Bates is the latest South Florida figure to be convicted in connection with Rothstein’s $1.4 billion fraud scheme- a scheme that was exposed in October 2009. Since that date, fourteen other people have gone to federal prison because they committed crimes linked to the Ponzi scheme. Rothstein is serving a 50-year term.
Attorney Bates pleaded guilty in federal court in West Palm Beach to one count of wire fraud in connection with the largest financial fraud case in South Florida history. He faces up to five years in prison and significant fines when he is scheduled to be sentenced on May 1st.
At the change of plea hearing, prosecutors laid out Bates’ role in the Rothstein enterprise. Federal prosecutors claimed that in 2008, Bates arranged for a lawyer at his law firm to meet with a representative from an investment firm that had given money to Rothstein, That attorney falsely told the investor representative that the firm had referred numerous clients to Rothstein over an extended period of time. Clients, he claimed, who were plaintiffs in sexual harassment cases where the firm had set up negotiated settlements. Based on this information, Rothstein’s investors agreed to buy off these clients with a lump-sum payment, expecting to receive installment checks from the defendants. However, neither the clients nor the settlements existed.
Rothstein instead used the lump sum payment from new investors to pay previous investors and to finance his lavish lifestyle.
The West Palm Beach Wire Fraud Attorneys at Whittel & Melton have been seeing a trend in federal wire fraud cases. Increasingly, the Department of Justice is using wire fraud charges in conjunction with the prosecution of RICO, money laundering, fraud against financial institutions, and telemarketing fraud, because wire fraud is the easiest crime for an AUSA to prosecute. And, in many instances, the sentencing range for a conviction for wire fraud will exceed the sentence available these other offenses.
If you are being investigated or have been charged with fraud, call the federal criminal defense attorneys at Whittel & Melton today to discuss your case. Local (561) 367-8777 or statewide, toll free: (866) 608-5529.