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Sentencing Debra Villegas

Might as well start this up now. Scott Rothstein's right-hand woman, Debra Villegas, is scheduled to be sentenced tomorrow at 10:30 a.m. at the federal courthouse. This post will be updated, certainly after the sentencing.

Incidentally, her estranged husband, Tony Villegas, accused of murdering her best friend and former Rothstein Rosenfeldt Adler attorney Melissa Britt Lewis, will also be in court today for a competency hearing. My colleague Lisa Rab will be covering that, and I'll get you to her work. Because Villegas is pleading guilty to only one count, Villegas faces a maximum of ten years.

My speculation is she'll get hit with well over five years, maybe the whole ten. Inside, I'll explain why (and share some great transcript material).   

The short answer is that U.S. District Judge William Zloch may have played his hand.  During Villegas' resentencing hearing on June 11, Zloch made it clear how he felt about her involvement in what is probably the greatest crime ever to hit Broward County. Here's Zloch and Assistant U.S. Attorney Larry LeVecchio at the hearing:

THE COURT: Well, wasn't Ms. Villegas intimately involved in the Rothstein Ponzi scheme?

MR. LaVECCHIO: Yes, Your Honor. ...
THE COURT: But you said an information was filed before Judge Cohn?
MR. LaVECCHIO: Yes; charging just Mr. Rothstein.
THE COURT: So how many counts was that information?
MR. LaVECCHIO: That was five.
THE COURT: And what did Mr. Rothstein plead to?
MR. LaVECCHIO: He ended up pleading to racketeering conspiracy, conspiracy to commit mail fraud and wire fraud, and mail fraud and wire fraud.
THE COURT: But this is a one-count information?
MR. LaVECCHIO: It is, Your Honor; charging conspiracy to commit money laundering.
THE COURT: But her involvement was greater than that.
MR. LaVECCHIO: Well, the underlying charges -- the underlying activity that formed the basis for the specified unlawful activity she was involved in. Yes, sir.
THE COURT: Well, to say that she was involved in it, that would be an understatement.
MR. LaVECCHIO: Well, she was part and parcel of it. Yes, Your Honor.
THE COURT: She was intimately involved in it.
MR. LaVECCHIO: Yes, sir.
THE COURT: And the statutory maximum is only 10 years.
MR. LaVECCHIO: That's correct, Your Honor.
THE COURT: Mr. Stickney?
MR. [ROBERT] STICKNEY [Villegas Attorney]: Your Honor, I don't presume to know what is going through the Court's mind at this point, but I'd like you to know that my client has been cooperating with the Government since November of last year. She has met with the Government on approximately nine occasions, I believe, and she has been intimately involved with their preparation for their other case and ongoing investigations and prosecutions that may occur in the future that we can't speak to. This is a negotiated plea agreement, Your Honor, based on my client's cooperation. What might have been previously discussed in the news or in media accounts of my client's
involvement may not be precisely what she is responsible for. She is definitely responsible for assisting in this conspiracy, and she wants -- I hope the Court will accept a plea to a
one-count information with a 10-year maximum with the understanding that Mr. LaVecchio, Kaplan, and -- Messrs. LaVecchio, Kaplan, and Schwartz know this case better than anyone other than Mr. Rothstein... And I think when the presentence investigation report is completed, the Court will have a better understanding of exactly what my client was involved in and why she was involved in it and her remorse.

Remember that Zloch isn't unfamiliar with Scott Rothstein on a personal level. Zloch's brother, Chuck, was Rothstein's insurance man -- he sold him a $14.8 million life insurance policy -- but also one of his closest friends, according to Rothstein anyway. He said in one interview that Chuck Zloch was one of his three closest friends in the world (along with Ted Morse and Edify's Howard Gruverman).

I still believe that because of that familial relationship Zloch should have recused himself out of what they like to call an abundance of caution. But it was his prerogative. Federal judges have a lot of leeway, and he apparently didn't have a close relationship with Rothstein.

And Zloch is in the right. A cap of ten years is pretty ridiculous considering the scope of the crime and her depthy role in it. Not to mention that her version of things is a little bit too convenient for her defense. No, she wasn't part of a giant Ponzi scheme run by her boss ripping off dozens of investors. She claims she only thought she trying to save her boss from the Mafia. Obviously the government bought it, hence the lone count. So Rothstein was probably selling it too. I'm sure he wanted to protect Villegas, his loyal servant. The story sure sounds like a good one to try to mitigate her sentence. Remember the story Rothstein wanted to sell Scandiffio about the extortion plot?

Stickney is asking for downward departure on the sentencing guidelines based on the Mafia thing and the idea that Villegas didn't really know what was going on (though she knew she was falsifying papers in a criminal enterprise).

Justice Breyer posed the rhetorical question, "Would we apply a statute that makes it unlawful 'knowingly to possess drugs' to a person who steals a passenger's bag without knowing that the bag has drugs inside?" Stickney wrote to Judge Zloch. "To hold Ms. Villegas responsible for the number of victims of a crime for which she did not know involved any victims is similar to holding the thief responsible for the drugs which he did not know were contained in the bag which he stole. The defendant was unaware that any victims existed..."

Here's more of the transcript:

THE COURT: Would you state your full legal name for the record.
THE DEFENDANT: Debra Allen Villegas.
THE COURT: And have you ever used any false names?
THE COURT: And how old are you?
THE DEFENDANT: 43 years old.
THE COURT: How far did you go in school?
THE DEFENDANT: High school diploma.
THE COURT: Any schooling after high school?
THE DEFENDANT: I went to college, but I didn't obtain a degree.
THE COURT: How many semesters or how many years?
THE DEFENDANT: It was over several years. I probably
completed three semesters.
THE COURT: What was your intended major?
THE COURT: And are you married?
THE COURT: Do you have children?
THE COURT: How many?
THE COURT: What type of work did you do?
THE DEFENDANT: For Mr. Rothstein?
THE COURT: That was your last employment, correct?
THE DEFENDANT: Yes. I was employed by Mr. Rothstein for 17 years initially as a paralegal. And in the last five years of my employment, I worked in a management position.
THE COURT: What was your -- what was that position?
THE DEFENDANT: The title was chief operations officer.
THE COURT: For the law firm?
THE COURT: And is that what you did?
THE DEFENDANT: Yes, it is. I negotiated contracts, dealt with vendors, dealt with lease agreements, hired and  fired personnel, clerical. I also terminated attorneys. I just dealt with the daily operations of the firm and dealt with staff issues, technical issues, IT issues, brought the firm paperless.
(Counsel confers with client)
THE DEFENDANT: The termination of attorneys was at Mr. Rothstein's direction.
THE COURT: Have you ever been treated for any mental illness in the past?
THE DEFENDANT: I am currently being treated.
THE COURT: For what?
THE DEFENDANT: For depression, anxiety. Basically depression and anxiety and panic disorders.
THE COURT: Is this treatment a result of the situation that you find yourself in?
THE DEFENDANT: Yes, Your Honor.
THE COURT: Are you -- other than what you've told me are you presently suffering from any mental or emotional disability or problem other than what you've told me?
THE DEFENDANT: No, Your Honor.
THE COURT: Have you ever suffered from any addiction to anything or alcohol abuse?
THE COURT: Are you taking any drugs, medications, or pills of any kind?
THE DEFENDANT: I'm taking prescription medication for the mental depression and anxiety.
THE COURT: Have you taken any drugs, medications, or pills of any kind in the past 24 hours?
THE DEFENDANT: Yes, Your Honor. This morning I took my prescribed medication....
THE COURT: Mr. Stickney, are you satisfied as to your client's competence to enter a plea at this time?
MR. STICKNEY: Yes, Your Honor. She's -- my client's been under the constant care of a psychiatrist since she -- since this issue arose for her back in November of 2009. She's under the -- she's required to take by her doctor, a psychiatrist, Celexa®, Abilify®, and Klonopin® which are medications that treat anxiety and depression. She stopped taking those medications, Your Honor, because she was afraid that she would -- it might cloud her ability to understand the
proceedings, so she stopped. The United States Probation Office told her that if she didn't commence taking those medications, she might be in violation of her terms of release. So after consultation with myself and her doctor again, she started them again last night. And she is of clear mind. ... 

See how loyal she was; Villegas would even fire people for Rothstein. That was just the beginning of the little talk between Zloch and Villegas. Here's the rest of the transcript, truncated.  Remember she admits to knowingly forging and falsifying documents in a scheme she knew was a criminal enterprise.I can't resist sharing this thing this morning.  

THE COURT: Why did you do this?
THE DEFENDANT: Mr. Rothstein -- well, initially I was reparing the settlement agreements believing them to be egitimate settlement agreements for Mr. Rothstein. And sometime after that Mr. Rothstein approached --
THE COURT: Move a little closer to that microphone.
THE DEFENDANT: Mr. Rothstein approached me and I guess at that point informed me that the settlement documents were not legitimate and that --
THE COURT: Approximately when was that that he told you that these settlement documents were not --
THE DEFENDANT: I would -- I estimate that to be in February of ... 2008.
MR. STICKNEY: How do you know that?
THE DEFENDANT: I know that because it happened several weeks before a dear friend of mine was murdered.
THE COURT: It happened what? Several --
THE COURT: Move that microphone up, please.
THE DEFENDANT: It happened several weeks before a dear friend of mine was murdered.
MR. STICKNEY: Another attorney at the law firm, and her husband is currently charged with that murder.
THE DEFENDANT: Ex-husband.
THE COURT: And so several weeks before that incident
is when Mr. Rothstein told you that the --
THE DEFENDANT: He told me that the settlement documents were -- he told me that he had gotten in a position with some not-so-nice people and that if I did not assist him in signing these documents, that individuals would put a bullet in his head. And ultimately -- not immediately, but ultimately I did sign the documents. And I knew that upon signing the documents that it was wrong, and I should have gone to the authorities. I wish I would have gone to the authorities, but
unfortunately that wasn't the decision that I made at the time.
THE COURT: But then you continued on assisting him after that point in time.
THE DEFENDANT: Yes. Initially he said it would be a one-time thing, and I did it. And then I was out. I'm sorry. I was out of the office for a period of time because of the murder. And after I returned he approached me again and then again and always with a promise that it was the last time; but obviously it wasn't, and I did sign the documents.
MR. STICKNEY: Your Honor, the attorney that was murdered was my client's best friend. She was also very close friends with Mr. Rothstein. She worked for him for 17 years. He was her boss, and I think she -- he was the only attorney that she's ever worked for I think.
THE DEFENDANT: No. I worked for another law firm when I was in high school.
MR. STICKNEY: But for 17 years as a professional paralegal that was her only boss. And her best friend was a lawyer in that firm. Not only was this lawyer her best friend but also a caregiver for her children; used to cook meals for her children, used to take her children to Disney World with her. So it was a big impact on my client, and that's why she left work. When she came back to work, she continued to sign these documents and continued in the conspiracy.
THE COURT: What knowledge did you have regarding the monies that were involved?
THE DEFENDANT: Well, I -- the knowledge I had, the monies would be the dollar amounts set forth in the settlement agreements; but I had nothing -- I didn't --
(Counsel confers with client)
THE DEFENDANT: Because they were in the settlement agreements.
THE COURT: Well, what did you think was happening to the funds?
THE DEFENDANT: I thought that the people that Mr. Rothstein expressed that he had gotten involved with was the Mafia, and I believed that the money was being laundered through the firm's trust accounts.
THE COURT: And where did you think the money was going?
THE DEFENDANT: I believed that it was coming in through the trust accounts and going back out because it would come into the trust accounts and go right back out to the same person all the time. I mean it was different named corporations, but the same person owned these corporations.
And this person I believed to be the -- you know, the bad person that Mr. Rothstein referred to.
THE COURT: Well, did you ever transfer any monies to Mr. Rothstein?
THE DEFENDANT: No, sir. I had no access to firm bank accounts.
(Counsel confers with client)
THE DEFENDANT: The document -- the settlement documents that I prepared, Mr. Rothstein and another individual had formatted an Excel spreadsheet for the dollar amounts and information on those settlement documents to be put into an Excel spreadsheet. So I would put the information into the Excel spreadsheet and email it to the person who would then --
(Counsel confers with client)
THE COURT: Pardon?
MR. STICKNEY: Speak into the microphone.
THE DEFENDANT: To Irene Stay. And she was the firm's CFO and handled the firm bank accounts. And I would email the spreadsheet to her, and she would deal with the money. I
didn't deal with that part of it.
MR. STICKNEY: But, Your Honor, the important fact is that my client knew the amounts. As the Court had asked, did she know what the amounts were. And yes, she did, because she was involved in the spreadsheet preparation and emailing that to Irene Stay who would then take care of the actual financial transaction. So even though my client didn't actually wire transfer money she's responsible for that, and she understands because she was involved in helping prepare the documents that perpetuated this fraud.
THE COURT: Ms. Villegas -- but I'm curious about something -- at any time up until the point of Mr. Rothstein's arrest did you ever wire any money directly to him?
THE COURT: You never did?
THE COURT: Did you ever authorize the wiring of any money to him?
THE DEFENDANT: No, sir. I've never sent a wire in my life. I wouldn't -- I've never done that.
MR. STICKNEY: Whose job at the firm was it?
THE DEFENDANT: Irene Stay was the CFO, and she handled the bank accounts.
MR. STICKNEY: Your Honor, we've debriefed on several occasions with the Government as I've previously referenced. I have no personal knowledge other than some of the accounts that
I've seen, but I believe that everything that she's saying today in court she has previously stated to the Government. I was not her initial attorney, so I wasn't present for some of these proceedings; but I have been at every meeting with my client and the Government since I've been involved in
the case. And it's the Government's position -- and I don't mean to speak for them other than to move this along for the Court's understanding -- everything she says is consistent with their understanding of the case.
THE COURT: Mr. Rothstein obviously rewarded you for your participation, correct, Ms. Villegas, or maybe he didn't? ...
MR. STICKNEY: My client worked so many hours, Your Honor, at her law firm. She's the one that put the law firm -- made it paperless. She's the one that hired and fired everyone. She furnished the offices. It was a 70-man firm, and she worked very hard. She was paid $250,000 a year for the
last year of her employment. And when she was working that hard, she believed she deserved that. In retrospect there are very few paralegals that become -- I don't know that there is any other paralegal that becomes a chief operating officer of a law firm, and I'm not sure that there's anybody else that has her level of education that was a COO of a law firm. And so she understands -- she feels that she worked hard for that money, Your Honor; but she also understands because I've explained it to her that clerical staff at a law firm don't make $250,000 and are not given has Maseratis and are not given houses, which we have already forfeited to the Government.
THE COURT: Well, that's what -- I wanted to hear that from your client. Those were gifts that Mr. Rothstein showered on your client, correct?
MR. STICKNEY: Yes, Your Honor.
THE COURT: Is that correct, Ms. Villegas?
THE COURT: I mean did he give --
THE DEFENDANT: -- I'll answer in my words. Mr. Rothstein -- first of all, I worked for him for 17 years. I have no family in South Florida. He was like a brother to me. We were extremely close. At the time that Mr. Rothstein purchased the home for me and the children my ex-husband had
been incarcerated. We were living in a home that due to the divorce was in foreclosure. My credit was not what it should be, and I didn't have money in bank. Basically me and the children would have not had a home to live in. Mr. Rothstein bought that home. It was in his name, and I -- it was my understanding that I was to pay rent to him for getting that home to us.
THE COURT: Did you pay rent?
MR. STICKNEY: I tried to pay him rent, and he would not take the money. He told me that he wanted me and the children to spend the next year rebuilding our lives and getting everything back together.
THE COURT: Did he buy you a vehicle?
THE DEFENDANT: Yes. In December of '08, he surprised me and another person in the firm with Maseratis.
THE COURT: He bought you a 2009 Maserati?
THE DEFENDANT: Yes, he did. And --
THE COURT: Did you have any money in bank accounts?
THE DEFENDANT: I'm sorry. I don't understand the question.
MR. STICKNEY: How much money did you have in your bank account when he bought you the car?
THE DEFENDANT: Oh, gosh, maybe 5, $10,000.
MR. STICKNEY: Not enough to buy a Maserati, Your Honor.
THE DEFENDANT: Oh, no. But -- I don't mean to be difficult in answering this question. Looking back in retrospect, probably Mr. Rothstein was trying to engender loyalty from me. I don't really know. I'd like to believe that he loved me and cared for me and was doing these things for me and the children to help us because he knew we had nobody else to depend on; but way before the Ponzi scheme existed, Mr. Rothstein did very generous things for me. Even in the beginning of his practice when he made very little money, he did extremely generous things for me that I never really understood. And he always told me it was because he believed me to be the hardest working, most loyal person he knew. And, yes, a house, that was a gift that was beyond my
wildest dreams and my mind couldn't imagine. But to be honest with you, I -- this was immediately after the death of Melissa, and I was depressed and didn't get out of bed. It wasn't that he and I sat down and he said he was going to buy me a home. He showed up in Weston with a real estate agent and drove me over to the house and told me that this was where I was going to be living since I didn't have a home to live in.
THE COURT: You knew that this scheme was fraudulent, correct?
THE DEFENDANT: Well, I knew that signing these documents was fraudulent, yes. I did not understand it to be a Ponzi scheme, but I understood it to be wrong. I understood what I was doing to be wrong.
THE COURT: Well, did you understand that he was receiving money from so-called investors?
THE DEFENDANT: I believed that he was receiving money from a particular -- it was termed an investor, but a Mafia person. But I did not know -- I did not see them as -- him as an investor. I saw him as somebody who was giving money to Mr. Rothstein, creating these documents to aid in the event there was an audit to look like there was a reason for this money to be coming and going out of the bank accounts. I did not understand it to be what ultimately it was. I'm not saying
that that does -- you know, what I did was wrong, but I did not understand what was going on. I understand --
THE COURT: Are you saying that from the time that you found out that this was a fraudulent scheme in 2008 --
THE COURT: -- that you thought that there was just one individual, one so-called investor involved?
THE DEFENDANT: Well, up until the last few months, there was just one.
MR. STICKNEY: And she thought that was the person that was laundering money from other specified unlawful activities. She thought this was a money-laundering -- a huge
money-laundering scheme for clients who were -- for clients of Mr. Rothstein looking to launder funds, to launder it through a law firm with a solid reputation in the community.
THE DEFENDANT: In a trust account.
MR. STICKNEY: In a trust account through Gibraltar and TD Bank and creating the settlement agreements so that if it ever was looked at by the IRS, they could show a settlement agreement that my client thought was totally fictitious, which it was; but for IRS purposes, not because it was an investor that needed to look at a fake document. The documents were so ridiculous.
THE COURT: So, Ms. Villegas, just so I understand what you're telling me, you did not know that other people were investing in these so-called settlement agreements?
THE DEFENDANT: Not until the last several months when another individual became involved in it and he was bringing in investors and he was preparing the bulk of that paperwork. And I assumed that it was the same scenario. To be honest I --
(Counsel confers with client)
THE DEFENDANT: Now I've lost my train of thought.
(Counsel confers with client)
THE DEFENDANT: Oh, investors. You used the term "investors." I didn't know there were any investors. I didn't understand this to be an investment scheme. I understood this to be a money-laundering scheme I guess you would call it. So I never met an investor. I never sat in on a meeting. I never talked with anybody. I never spoke to the bank. I prepared these documents, and I signed names to these documents. And I didn't ask questions because it being the Mafia, I really didn't want to know any more than I already knew. It was, you know, something that I really didn't want to be involved in and wish now that I would have done things very differently.
THE COURT: And just so we're clear, when you engaged in this activity, where were you? Were you at the law firm?
THE DEFENDANT: Yes, Your Honor.
THE COURT: And the law firm's located where?
THE DEFENDANT: In -- it was located in the Bank of America building, 401 East Las Olas Boulevard --
THE COURT: In Fort Lauderdale?
THE DEFENDANT: -- Fort Lauderdale. Yes. On the 16th floor.

So I'm guessing the initial guy is George Levin and the second guy who brought in investors and did the bulk of the paperwork was Szafranski. 

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Journalist Bob Norman has been raking the muck of South Florida for the past 25 years. His work has led to criminal cases against corrupt politicians, the ouster of bad judges from the bench, and has garnered dozens of state, regional, and national awards.
Contact: Bob Norman

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