By Peter Franceschina and Jon Burstein, Sun Sentinel, April 27, 2010
Rothstein Ponzi scheme: Debra Villegas, close associate of Scott Rothstein, charged with money laundering – South Florida Sun-Sentinel.com
One of Ponzi schemer Scott Rothstein’s closest associates — Debra Villegas, the woman he made his second-in-command at his law firm — is scheduled to face a federal judge Wednesday morning on a money-laundering charge that alleges she was instrumental to his massive investment fraud.
Villegas, 42, became the second person criminally implicated in Rothstein’s $1.4 billion conspiracy when federal prosecutors filed the single charge against her Tuesday as part of a far-reaching investigation targeting Rothstein’s associates and business partners.
Villegas has known Rothstein for years, rising from paralegal to his most trusted associate as chief operating officer of his now-bankrupt law firm, Rothstein Rosenfeldt Adler. As his Ponzi scheme was going full steam last year, Rothstein made clear to co-workers at the firm that her authority was absolute.
“When she speaks she is speaking for me … thus, absent extraordinary circumstances, no one is to challenge her authority or come to me to attempt to override any decision she makes,” Rothstein wrote, according to an e-mail contained in a lawsuit. “WE WOULD NOT EXIST WITHOUT HER. SHE HAS HELPED ME AND CONTINUES TO HELP ME MORE THAN I COULD EVER EXPLAIN.”
The criminal charging document filed Tuesday alleges that Villegas forged non-existent legal settlement agreements, which Rothstein used to dupe investors into believing he was bringing in millions of dollars in whistle-blower and employment discrimination cases. Reached by phone Tuesday, Villegas declined to comment.
She was charged by way of an “information,” rather than a grand jury indictment, indicating she is cooperating with prosecutors. Another indication Villegas is cooperating: Prosecutors noted in court records that the case would not go to trial. The money-laundering conspiracy charge is punishable by up to 10 years in prison.
Villegas’ attorney, Robert Stickney, confirmed Tuesday that Villegas has been assisting federal authorities since the Ponzi scheme was revealed. Villegas will enter a not-guilty plea at the 10 a.m. Wednesday court hearing, Stickney said.
“My client has been cooperating with the U.S. Attorney’s Office since the inception of this case,” he said.
Rothstein, 47, also is cooperating with authorities. He has pleaded guilty to five felonies and is scheduled to be sentenced June 9.
John Gillies, who leads the FBI in South Florida, said in a statement Tuesday that Villegas should have turned in her boss for his crimes.
“We sometimes must make tough choices in our lives, and in this case Debra Villegas made the wrong choice,” Gillies said. “She could have done the right thing and reported Rothstein’s fraud to law enforcement, but instead she assisted him in carrying out the scheme. She chose greed over her integrity and now she will have to pay the price for her actions.”
As Rothstein’s close confidante, Villegas worked in his sealed-off inner sanctum, handled aspects of his personal and professional financial affairs and was well-rewarded, earning $120,000 a year.
Rothstein also bought her a $475,000 Weston home, which he deeded to her last summer out of “love and affection,” and a $100,000 Maserati, which she has surrendered to federal authorities. Prosecutors are seeking the forfeiture of the Weston home. Villegas took a $100,000 mortgage out on the home just days before Rothstein’s Ponzi scheme collapsed, records show.
Prosecutors allege in the six-page charging document that Villegas was involved in the money-laundering conspiracy from 2007 through the implosion of Rothstein’s scheme in late October. As in the charges laid out against Rothstein, prosecutors make reference to unnamed co-conspirators several times.
Attorneys for investors who claim they were cheated by Rothstein say Villegas knew what was happening within Rothstein’s inner sanctum. She was named as a defendant in the $120 million lawsuit filed by investors represented by Fort Lauderdale attorney William Scherer.
“As I’ve alleged in my complaint, she is a principal co-conspirator in running this massive Ponzi scheme,” Scherer said. “Accepting that as true, those are criminal violations as well as civil fraud.”
Villegas has described Rothstein as “like a brother.” He took care of her family after her estranged husband was charged in March 2008 with murdering her best friend, Rothstein law firm partner Melissa Britt Lewis.
Before Villegas’ name came up in Rothstein’s investment fraud, she found herself in the media spotlight as a central figure in the Lewis murder investigation. Plantation police believe Villegas’ now ex-husband, Tony Villegas, killed Lewis out of jealousy, because he thought Lewis played a role in his marriage’s demise. Tony Villegas has pleaded not guilty and is now awaiting trial.
Debra Villegas has told police that for years she led a double life.
At work, she was the assertive force behind the day-to-day operations of Rothstein’s downtown Fort Lauderdale law firm and more than 150 employees. At home, she said, she lived in fear of Tony Villegas — his physical abuse of their children and his threats that he would kill her if she left him.
“I run Scott’s law firm,” she told Plantation police detectives investigating Lewis’ murder. “I negotiate … saving hundreds of thousands of dollars a week. I go head to head with anybody and Scott calls me a cold-hearted bitch. I’m just like the toughest person in the world until I got into that little world [home] and I was so terrified whether I stayed or left that he was gonna kill my kids and kill me.
“I am the most private person in the world,” she said. “I hid [the abuse] from Scott, who is like a brother to me.”
Fort Lauderdale defense attorney Richard Rosenbaum, who is not involved in the case, said he was not surprised it had taken prosecutors nearly five months since Rothstein’s Dec. 1 arrest to charge Villegas.
“It’s a complex scheme, although it may seem simple. It’s complex when they have to put it all together,” Rosenbaum said. “So this is the next in the wave of what many of us feel will be a lot of indictments or informations that will be filed against people associated with Scott Rothstein.”
U.S. Attorney Jeffrey Sloman used Tuesday’s developments as an opportunity to warn investors about deals that sound too good to be true, and he also hinted at further arrests.
“Investment fraud schemes target people from all walks of life and often result in the loss of their life’s savings. The best way to avoid being victimized by fraudsters is to do your homework and to ask hard questions before investing,” Sloman said in a statement. “As today’s case demonstrates, we remain committed to prosecuting investment fraud schemes and all who participate, from top to bottom.”
Peter Franceschina can be reached at firstname.lastname@example.org or 954-459-2255.
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