scott_rothstein.jpegMIAMI (AP) _ To avoid possibly dying in prison, convicted pyramid schemer Scott Rothstein is naming names and pledging to tell the complete truth about who else was involved in the $1.2 billion fraud, attorneys said Monday.

 

More than 30 lawyers representing dozens of wronged investors lined up to question Rothstein about the scheme he ran in his now-defunct Fort Lauderdale law firm, and how much assistance he got from outsiders, mainly bankers and other attorneys.

William Scherer, who represents about 25 investors, said the first few hours of the two-week, closed-door questioning revealed fresh details about other players and illegal actions in the scheme, which imploded in fall 2009. Scherer declined to reveal those details but said transcripts will eventually become public.

“There is some astounding stuff we are hearing,'' Scherer said. “The illegalities that went on there are bigger than what I knew. It's pretty amazing to me.''

For example, Scherer said Rothstein named three other South Florida law firms that supposedly referred hundreds of cases to Rothstein's firm, some of them likely bogus because the fraud revolved around investments in faked legal settlements. That could make those attorneys part of the pyramid, or Ponzi, scheme, with possible criminal liability and also potentially targets of lawsuits by investors seeking repayment.

Scherer and others said Rothstein, who is serving a 50-year prison sentence, promised to come clean in hopes of one day getting out. Federal prosecutors have recommended an unspecified reduction in Rothstein's sentence, but only if he continues to cooperate in the ongoing criminal investigation and the civil cases.

Scherer quoted Rothstein as saying, “The only way I cannot die in prison is to tell the truth.''

Others implicated previously in the scheme include at least one executive at a branch of TD Bank, which has repeatedly denied wrongdoing but could be sued by investors based on Rothstein's testimony. Former Rothstein associates have been charged with creating fake bank documents and fictitious websites that made it appear to investors that their money was safe.

Prosecutors are attending Rothstein's deposition. It is being held in private because Rothstein, 49, is part of the prison witness protection program following his assistance in fingering others linked to his own fraud and in the conviction of a South Florida man with organized crime ties.

When the public will learn details of the deposition remains up in the air. A federal bankruptcy judge is holding a hearing Tuesday on an attempt by Scherer's firm to allow news media quick access to the transcripts, which could provide a wealth of inside knowledge about the case now known mainly by prosecutors and investigators. Otherwise it could be days or weeks before they are released.

Victims in the scheme have filed claims for about $360 million in losses, with about $100 million recovered so far. Rothstein's homes, fancy cars, exotic jewelry and many other assets have been seized and sold to benefit investors.

Seven other Rothstein associates have been charged with crimes, but so far not the potential major players in the scheme. U.S. Attorney Wifredo Ferrer said recently that more charges are expected in one of the biggest fraud cases in South Florida history.