Rothstein's Top Assistant Testifies That Others Knew Of Ponzi Scheme

, Daily Business Review


Debra Villagas
Debra Villagas

The chief administrator of Scott Rothstein’s law firm testified Tuesday that the head of a South Florida hedge fund knew the former attorney was running a financial scam.

Debra Villegas, the former chief operating officer of Rothstein Rosenfeldt Adler, made the statement in the federal trial of Boca Raton attorney Christina Kitterman. Kitterman is accused of assisting Rothstein in his $1.2 billion Ponzi scam by pretending to be a Florida Bar official to thwart investors’ concerns about the legitimacy of a settlement scheme Rothstein ran from his firm.

Villegas testified that George Levin, CEO of Banyon Investments LLC, knew the finances for Rothstein’s firm did not add up. Villegas said only three of 70 attorneys at RRA billed enough hours to justify their salaries.

“Certainly this was not a professionally run law firm,” Villegas said. “Things just weren’t right.”

Banyon provided $775 million in financing for Rothstein’s supposed settlement side business at RRA.

Villegas also said the firm’s chief financial officer, Irene Stay, knew RRA’s financials did not make sense without some outside income source.

Villegas testified she thought she was money laundering for Rothstein, and Villegas said both Levin and Stay knew the settlements were not legitimate. Neither Levin nor Stay are charged with any crimes in connection with Rothstein’s scheme. They were two of many names that came up in court of people linked to Rothstein and his scam but who have not been indicted.

Villegas said Kitterman was paid far less than others at the firm. Attorney Peter Feldman, one of Kitterman’s attorneys, said that was important testimony.

“It shows she did not get rewarded like most of the people at that firm,” Feldman said.

The afternoon session of the trial included testimony from Jack Simony, portfolio manager at Platinum Partners LLC, the hedge fund that became suspicious of Rothstein. Simony said he was on the phone with Kitterman at the behest of Rothstein but he was uncertain of the length of their phone call. On redirect, Simony testified that Kitterman confirmed Rothstein’s story that Rothstein was under investigation by The Florida Bar.

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