MIAMI (CBS4 I-TEAM) | Mar 15, 2010
In South Florida, where hucksters and cheats are an everyday fact of life, Scott Rothstein may be remembered as the greatest con man of them all. A lawyer who rose from obscurity to build one of the most politically powerful law firms in the state, Rothstein now stands convicted of bilking friends and strangers alike. The $1.2 billion Ponzi scheme he orchestrated is the largest in South Florida history. He lied, tricked and deceived nearly everyone he met. And the damage he caused may never be repaired.
But Rothstein's biggest con may actually be the one he has done on behalf of the federal government. The CBS4 I-Team has learned from multiple sources that Rothstein was the key figure in bringing down a suspected Mafia figure who the FBI had been trying to catch for years.
Last week, U.S. Attorney Jeffrey Sloman announced the arrests of three individuals, including Roberto Settineri, who the prosecutor described as the go between for the Gambino crime organization in Brooklyn and La Cosa Nostra in Palermo, Sicily.
"These arrests were part of a joint US and Italian law enforcement action," Sloman said during Wednesday's press conference.
At the same time Settineri was arrested by an FBI SWAT Team at his home on Miami Beach, three alleged members of the Gambino crime family were arrested in Brooklyn and twenty members of the Sicilian mafia organization, Santa Maria de Gesu, were taken into custody in Palermo.
Taken into custody in South Florida along with Settineri was Daniel Dromerhauser. A third individual, Enrique Ros of Pembroke Pines was charged but was out of the country when the raids took place.
Settineri, Dromerhauser and Ros were charged with one count of conspiracy to obstruct justice and two counts of obstruction and attempting to obstruct federal proceedings, one count of conspiracy to launder money and five counts of substantive money laundering. If convicted of all nine counts the men could each be sentenced to 180 years in prison.
Although Rothstein's name never appears in the indictment, nor was it mentioned during Wednesday's press conference at the U.S. Attorney's Office, CBS4 News has learned that the man at the center of the case is none other than Scott Rothstein.
When Rothstein returned from Morocco on November 3, he immediately began cooperating with prosecutors. Hunkered down in a hotel room, teams of federal agents questioned Rothstein for days about everyone he has ever done business with. One name, however, quickly stood out -- Roberto Settineri.
Prosecutors describe Dromerhauser and Ros as "associates" of Settineri. They operated a private security firm called Five Star Executive Protection & Investigation. According to the attorney for Dromerhauser, Five Star did extensive work for Rothstein, providing security for Rothstein's home and his businesses. They were first hired by Rothstein several years ago to provide security for Casa Casaurina -- the former Versace Mansion -- after Rothstein bought the property.
John Gillies, the special agent in charge of the FBI's Miami Field Office, said Settineri is someone the feds have been interested in for years.
"This operation code named Paisan Blues began in 2006 when Italian National Police provided the FBI with information about Settineri," Gillies said.
But in all those years, the FBI had been unable to build any sort of criminal case against Settineri. That is, until Rothstein came along.
Based on sources familiar with the investigation, as well as details contained in the indictments, on November 8, five days after returning from Morocco, Rothstein was directed by federal agents to contact Settineri and the others. He pretended he needed the men to help him destroy incriminating financial records before federal agents could find them.
He also allegedly asked them to help move some of his Ponzi scheme money to off shore bank accounts.
Rothstein, however, was front page news and reports were already surfacing he was cooperating with the FBI. So in order to make the undercover operation work, Rothstein had to publicly convey the impression he was not cooperating with the FBI.
On November 9th, in a move carefully orchestrated by federal agents, Rothstein showed up at the Capital Grille for a martini. This video was even posted by Broward New Times. Continuing the charade, Rothstein that same day granted an interview with Channel 7. Once again, he stressed he was not cooperating with federal authorities.
After years conning others to make himself rich, Rothstein was now using those skills on behalf of the federal government. And the feds say he was successful.
"As alleged in the indictment Settineri, Dromerhauser and Ros were part of a conspiracy to launder 10 million in illicit funds," Gillies said during Wednesday's press conference.
In January, as federal agents in Miami continued to build a case against Settineri, a high level meeting took place in Italy. Agents and prosecutors from Miami and Brooklyn, as well as Justice Department officials from Washington, flew across the Atlantic to meet with their Italian counterparts.
Italian prosecutors were working on a massive indictment against twenty suspected members of the Palermo-based crime organization, Santa Maria de Gesu. And in New York, prosecutors were building a separate case against three alleged members of the Gambino crime family. The Miami case involving Settineri had finally given them the link they had been waiting for.
The group agreed they would coordinate their cases and make the arrests simultaneously.
Raffaele Grassi, a vice director in the Italian National Police, arrived in South Florida last week with a handful of agents to monitor the Settineri operation.
"The important intermediary in the US was Roberto Settineri, a man from Palermo who has been living in Miami for a long time," Grassi said. "He has important ties to the American Mafia families of Gambino and Colombo. Through Roberto Settineri, La Cosa Nostra was trying to open new connections in the US and his connections would enable the Italian organization to infiltrate new markets."
"Today is a very important day in the fight against the criminal organization of La Cosa Nostra," Grassi said. "Today's results are the fruit of a very complicated investigation carried out by the Italian State Police together with the FBI both in Italy and the United States."
Just how complicated was the investigation? Not wanting to reveal Rothstein's role in the case, US Attorney Sloman only offered this cryptic response when asked what brought the Italians and the Americans together.
"We had mutual interests that overlapped with one another," he said. "That is all I will say about that."
In advance of these arrests, Rothstein was moved out of the federal detention center for his own protection. Sources tell CBS4 News that because of his cooperation in this case, Rothstein will be entering the federal witness protection program -- meaning he will serve his prison time for the Ponzi scheme under a different name and in a prison outside of Florida.
Ultimately, Rothstein is hoping his cooperation in the Settineri case will shave years from his prison sentence. He is facing up to 100 years in prison after pleading guilty to five counts of money laundering and wire fraud. Similar Ponzi cases around the United States, however, have yielded sentences of around 40 years in prison. Rothstein is scheduled to be sentenced in May.
In addition to the Settineri case, Rothstein is also helping federal authorities identify the other players in the Ponzi scheme. And he is providing information on how campaign finance laws were routinely violated.