The Pleasure of Crime

The question that I am most often asked about Ponzi schemes is “Why?” Didn’t the person behind the scheme know that it was inevitable he would be caught? That he would be sent to prison?

The nature of a Ponzi scheme is that it must take in more and more money to keep paying the old investors. Bernard Madoff notwithstanding, Ponzi schemes generally do not last for very many years.

My High and Low Finance column this week is about how TD Bank aided a particular Ponzi scheme, and is now suffering for it. Perhaps the column contains a clue to the answer to those questions: So what if the end is inevitable? The joy along the way makes up for it.

Months before his scheme blew up, Scott W. Rothstein, then 46, and his wife, Kimberly, then 34, celebrated their first anniversary at an Eagles concert. It cost Mr. Rothstein a $100,000 charitable contribution to have Don Henley, the lead singer in the group, dedicate his song “Life in the Fast Lane” to the couple.

Mr. Rothstein was then a prominent lawyer, known for high living and big charitable donations. The dedication became widely known in the Miami area.

Perhaps his choice of song provided clues about how he viewed his marriage and his future.

The song begins:

He was a hard-headed man.
He was brutally handsome, and she was terminally pretty.
She held him up, and he held her for ransom in the heart of the cold, cold city.
He had a nasty reputation as a cruel dude.
They said he was ruthless, they said he was crude.
They had one thing in common, they were good in bed.
She’d say, ‘Faster, faster. The lights are turnin’ red.’
Life in the fast lane, surely make you lose your mind.

It ends:

They went rushin’ down that freeway,
messed around and got lost.
They didn’t care, they were just dyin’ to get off.
And it was life in the fast lane. Life in the fast lane.

(Lyrics by Don Henley, copyright Cass County Music)

Mr. Rothstein is now serving a 50-year prison sentence for the Ponzi scheme, which managed to defraud hedge funds as well as individual investors. Mrs. Rothstein will be sentenced next month, and is expected to be sent to prison, for trying to conceal a 12-carat diamond ring from United States marshals who were seizing Mr. Rothstein’s assets.