Scott Rothstein’s Wife Faces $2 Million Judgment Over Hidden Jewels

Attempting to hide jewelry from the authorities hasn’t worked out so well for Kim Rothstein, the wife of convicted Ponzi-scheme operator Scott Rothstein.

In November, Ms. Rothstein began serving out an 18-month prison sentence after pleading guilty to conspiracy for trying to conceal more than $1 million worth of jewelry tied to Mr. Rothstein’s $1.2 billion Ponzi scheme.

This week, a bankruptcy judge in Florida confirmed a $2 million judgment against Ms. Rothstein, tied to the same missing jewels.

Michael Goldberg, the trustee liquidating Mr. Rothstein’s now-defunct law firm, told U.S. Bankruptcy Court Judge Raymond Ray at a Tuesday hearing that the penalty reflects the resale value of about $1.39 million in jewelry that the trustee hopes to use to fulfill the judgment, Daily Business Review reports.

When confronted by agents in June 2012, Ms. Rothstein admitted to hiding valuables that should have been used to pay back her husband’s victims, including several diamond rings, earrings, and necklaces; 10 designer watches, and 50 gold bars.

Ms. Rothstein’s attorney, David Tucker, said that he and his client are hopeful that the jewelry she turned over will satisfy the judgment, because “unfortunately she has no money.”

Mr. Tucker calls the bankruptcy complications “one more consequence of the connection in the whole Rothstein affair,” adding that his client “really is looking forward to going on with the rest of her life without this stuff.”

But first, Mr. Tucker says, she needs to finalize her divorce with Mr. Rothstein. Although she filed the divorce papers last year, Mr. Rothstein has yet to be served because the location of the prison he’s housed in has not been widely disclosed.

“How do you serve someone who’s in a secret location?”
Mr. Tucker says. “It’s been very instructive for me.”

Creditors pushed Mr. Rothstein’s firm, Rothstein Rosenfeldt Adler, into bankruptcy protection in November 2009, weeks before Mr. Rothstein’s arrest. After pleading guilty to running a Ponzi scheme that involved promised huge returns for investing in confidential legal settlements that never actually existed, Mr. Rothstein was sentenced to 50 years in prison.

The law firm’s creditors are expected to receive 100% of the money they’re owed, a rarity in bankruptcies tied to a Ponzi scheme. In August, Mr. Goldberg made an initial round of creditor payments worth nearly $96 million.