He is in the federal witness-protection program because of assistance he provided to prosecutors investigating organized- crime figures, according to court papers.
'Die in Prison'
"If I lie and get caught lying, even a little bit, I will die in prison," he said when attorney Sam Rabin questioned his credibility. Rabin represents a former T.D. Bank regional vice president who Rothstein said helped him pull off the fraud.
Rothstein's firm was forced into bankruptcy by his investors. More than 30 lawsuits were filed by the bankruptcy trustee and groups of investors.
The confidence man was questioned by William Scherer, an attorney for a group of investors that sued Centurion, Platinum and Level 3 claiming they knew of the scheme and should disgorge money they took before the law firm's bankruptcy.
The three funds invested a total of $180 million and had about $100 million at stake when the scheme almost collapsed in the spring of 2009, Scherer said.
"And at the end of the crash, they got it all back except about $18 million?" the lawyer asked.
"Yes," Rothstein replied. He recalled that "they were just $18 million shy," he said.
Client Losses
Scherer said his clients lost $180 million.
The three funds sued TD Bank, a U.S. unit of Canada-based Toronto-Dominion Bank, where Rothstein claimed to have settlement funds in escrow accounts. The funds claimed bank employees gave false statements saying the accounts contained "hundreds of millions of dollars."
The bank asked for dismissal of the case, saying the claims are "factually vacant and legally insufficient."