Local News

MIAMI (CBS4) ― The attorney accused in a $1 billion investment scam has appeared before a judge at the federal courthouse in Fort Lauderdale and pleaded not guilty to federal racketeering and fraud charges. The judge also denied bond.

Scott Rothstein, the once-prominent lawyer who rubbed elbows with the rich and famous and counted Governor Charlie Crist among his close friends, instead rubbed elbows with FBI agents when he surrendered Tuesday morning. Rothstein was led into the FBI field office in North Miami Beach in handcuffs around 7:45 a.m. following his early morning arrest on five charges, including a violation of the Racketeer Influenced and Corrupt Organizations or RICO law often used against the Mafia and other criminal organizations.

Alicia Valle, spokeswoman for the Miami U.S. attorney's office, said Rothstein was also charged with mail fraud, wire fraud, money laundering and conspiracy. The combined maximum prison term for convictions on all counts is 100 years, according to court documents.

When asked about Rothstein's mental state, his attorney Marc Nurik told CBS4's Jim DeFede, "Not good, but he's strong and he is, at this point in time, trying to do the right thing."

Nurik also said, "We've made it clear that my client wishes to see that legitimate investors get paid their money back. At this point we are examining all of our options and not making any conclusions yet about what we are going to do."

A news conference by prosecutors, the FBI and Internal Revenue Service is planned for 2:30 p.m.

Rothstein is accused of running a massive $1.2 billion Ponzi scheme from his Fort Lauderdale law office.

The type of charging document filed by prosecutors, known as an "information," is typically used when a defendant has already agreed to plead guilty.

The document cites unnamed "other conspirators" who also played key roles in the fraud, suggesting that more people could face charges. In addition, the document says that Rothstein paid "gratuities" to unidentified police officials "to deflect law enforcement scrutiny" of his activities.

Jeff Sonn, an attorney representing many of the victims, also spoke Tuesday upon learning of Rothstein's arrest.

"Finally, a lot of victims are very frustrated but now they're pleased that the government has finally moved against Scott Rothstein. I've explained to many of the victims that it's a very complex case, it's a RICO case, it's a criminal enterprise, so it did take some time for the government to do its job," said Sonn.

"I've worked on Ponzi schemes for over 20 years and they take a lot of time. Its a billion dollar case and they have to go through hundreds of thousands, if not millions of documents to find the money, but ultimately we do expect to find out what happened to the money and help those victims retrieve their money. We also expect the government to follow through on its promises to ultimately arrest and charge the others that helped Scott Rothstein commit this heinous crime. He didn't do it alone and we expect others will and should be charged," said Sonn.

The criminal case was seen as inevitable after Rothstein returned from Morocco early last month amid mounting questions from investors and the FBI about missing money. The FBI has estimated the Ponzi scheme could top $1 billion and asked investors to come forward with information.

Federal agents have seized Rothstein's boats, including an 87-foot yacht, as well as 20 luxury cars and numerous other assets, including his share of the Miami Beach mansion formerly owned by fashion designer Gianni Versace.

Prosecutors are also going after 21 homes and other properties linked to Rothstein in Florida, New York and along Rhode Island's Narragansett Bay.

Meanwhile, the once fast-growing law firm Rothstein Rosenfeldt Adler is defunct and Rothstein has been disbarred by the Florida Supreme Court.

Several investors have already filed lawsuits seeking their money back, including one case demanding more than $100 million in damages.

Rothstein promised huge returns on investments in legal settlements he said would pay out over time. Prosecutors say most of the settlements never existed and that Rothstein operated a Ponzi scheme, using money from new investors to pay older ones.

Shortly after the scandal broke, the Florida Democratic Party returned $200,000 in contributions from Rothstein and his law firm. The state Republican Party gave back $150,000, and Gov. Charlie Crist returned $9,600 that Rothstein and his wife, Kim, had donated to Crist's campaign for the U.S. Senate.

Rothstein's office is filled with photos of him with politicians from around the country, including former President George W. Bush, former Alaska Gov. Sarah Palin, Arizona Sen. John McCain and California Gov. Arnold Schwarzenegger. He was also close to Miami Dolphins great Dan Marino and many South Florida business and community leaders.

CBS4's Jim DeFede contributed to this report.

(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

CBS4.com Top Videos

• Super Bowl Ad: Snickers & Betty White
• Super Bowl Ad: The Bud Light House
• Super Bowl Ad: Coke & The Simpsons
• US 27 Shutdown After Deadly Crash
• Avoid Pain At The Pump