285 Years for Ponzi Scheme

Posted on: October 27, 2008 at 10:06 a.m.

A Westlake Village man who pleaded guilty to bilking investors out of $65 million in a Ponzi scheme faces up to 285 years in prison. The defendant pleaded guilty to conspiracy, six counts of mail fraud, four counts of wire fraud and eight counts of money laundering in downtown federal court during his trial. Los Angeles criminal defense attorneys handle white collar crimes like this, and only experienced Los Angeles criminal defense attorneys who are experienced and knowledgeable realize how high the stakes can be.

A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. A Ponzi scheme has similarities with a pyramid scheme though the two types of fraud are different.

The defendant and co-defendant told 70 wealthy investors their money would be invested in bond trading programs or used to buy premiums for life insurance pools. The scheme targeted black church parishioners around South Los Angeles. Only $4.7 million of the roughly $65 million raised from investors was used to make life insurance premium payments, the complaint states.

The majority of the funds were used by by the defendants to buy luxurious homes, exotic cars, yachts and jewelry, the indictment reads. The men face a maximum of 285 years in federal prison. One defendant agreed to forfeit $64 million in proceeds, along with personal property and cars seized at the time of his arrest in April 2007.

The other defendant pleaded guilty in February to conspiracy and tax evasion and is scheduled to be sentenced Dec. 15.

Tagged as: california criminal laws

Comments:

Stephen Kim (COMM 174) on November 6, 2008 at 2:29 p.m. wrote:

Of course a life is worth more than money. However, we should not take white collar crimes lightly. A murder takes one's life and can devastate families. But on the other hand, a family that gets all of its savings bilked by an embezzler will become devastated too. There is a possibility of going into poverty, not paying for a child's college tuition, losing their home, and losing all the money they have ever saved. I think criminals who put families in those kinds of situations because of their greed to buy Ferraris and yachts should definitely be punished. Whether it's a rape, or a murder, or money fraud, they all end up devastating a family. We should not go 'easier' on these defendants in the Ponzi scheme. On a side note-- I also found it humorous that the man who stole $65 million from investors 'agreed to forfeit $64 million in proceeds' when being arrested. After all that, he still wanted to keep $1 million of the embezzled money for himself. Greed doesn't disappear, and I have no doubt that if he was ever released he would do the same thing over again. And I find it humorous that after all these convictions, the man who stole $65 million from investors

Phung Tu on November 4, 2008 at 2:34 p.m. wrote:

I agree with the comments above. I would think that taking life or physically harming someone would make a person more dangerous than stealing money, thus deserve harsher punishment. The harsher punishments for white-collar crimes might just reflect the how much our society value wealth than actual physical harms. When convicted of violent crimes one can be let out on parole way before their times are due for 'good behavior'. A person's psyche is not easily changed. Even though a person is let out on parole for 'good behavior', who is to guarantee that 'good behavior' is not because that person is in jail, and upon release he will commit more violent crimes? A white-collar crime convict is less likely to commit the crime again, because they no longer have money to start another scheme, or at least for many years. But a violent convict does not need many conditions, like money, to recommit a violent crime. Hence, why it is that a white-collar crime would be convicted with unrealistic sentences for stealing money, while violent crimes are sentenced 25 years with parole? Isn't a life worth more than money? Off topic, is the 285 years sentence meant for all the men or it is each on of them gets 285 years?

Ericka Carlos on October 28, 2008 at 6:12 p.m. wrote:

This is the first time i learn about a 'Ponzi scheme.' No doubt, promising abnormally high profits to investors and spending the money on something other than what it's intended for is scandalous. It seems though, that crimes involving money always come with longer sentences than violent ones, which is astounding. In no way am I insinuating that someone who commits fraud deserves only a 'slap on the wrist,' however it sends a negative message about where our values are in society when a murderer or child molestor recieves a lighter sentence than someone convicted of tax evasion, or other white collar crimes. The fact that at times, violent criminals have the opportunity to be released on parole for 'good behavior,' or that a child molester can be released into society, despite the threat they pose to it is incredible, considering that they have potential to harm others. It doesn't make sense that a white collar criminal faces harsher penalties than those who have physically harmed people. Furthermore, if the sentence includes possibility of parole, how does that work? How does a white collar criminal demonstrate 'good behavior,' or that they may have changed? When violent criminals get along well with guards, fellow inmates, or avoid fights, it is assumed that they are on 'good' behavior, hence some may be convinced that the individual no longer poses a threat to society. What actions can someone convicted of a white collar crime do to show they have changed? How is it determined whether or not they will be released?

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