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September 29, 2011

Another notable example of a (seemingly massive) white-collar sentencing trial penalty

This press report on a set of federal fraud sentencings in Virgina highlights, yet again, what a steep sentencing price some federal white-collar defendants will end up paying if they exercise the right to go to trial and get convicted.  Here are the basics from this press report:

Two Houston men have been sentenced to lengthy jail terms for their part in a $100-million life settlement fraud scheme that victimized 800 victims people the U.S. and Canada.

Adley H. Abdulwahab, 36, a hedge fund manager and part owner of A&O Resource Management Ltd., was sentenced to 60 years in prison.  Co-founder and vice president of A&O, Christian Allmendinger, 40, was sentenced to 45 years in prison.  Many of the victims were looking for safe, conservative investments but lost their entire retirement savings, said U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.

"These defendants used the savings of their unsuspecting, often elderly, investors to live the high life—luxury houses, fancy cars and even a 15-karat diamond ring," said Assistant U.S. Attorney General Lanny A. Breuer.  "Having wiped out the life savings of many of their victims and stolen funds marked for retirement, Mr. Abdulwahab and Mr. Allmendinger appropriately now face significant prison terms."...

Five others in the scheme, including David White, 41, the former president of A&O, who received 60 months in jail, were sentenced after pleading guilty.  Abdulwahab and Allmendinger were found guilty at trial.

The principals at A&O misrepresented such things as A&O's prior success, its size and office locations, its number of employees, the risks of its investment offerings and its safety and use of investor funds, according to court and trial records.  When regulators began looking into the investment scheme, the principals invented two sham companies to hide behind, Blue Diamond and Physician's Trust, court records say.

I do not know any details about this fraud or about the relative roles of the various defendants.  Still, the passage I have highlighted above reports that the president of the corrupt company got a sentence of only 5 years after having pleaded guilty, while the defendants who went to trial received, in essence, LWOP sentences. 

I ass assume that the defendant who pleaded guilty got lots of sentencing credit and benefits for accepting responsibility and (I assume) helping secure the convictions of the other fraudsters.  But still, the remarkable gap between a post-plea sentence of 5 years and the post-trial sentences of 60 and 45 years for (I assume) roughly the same fraudulent behavior provides yet another stark reminder of the extraordinary sentencing consequences than can flow from putting the federal government to its budern of proof at trial in a white-collar case.

September 29, 2011 at 04:41 PM | Permalink

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Comments

what it tells me is the system is getting real close to be BEYOND fixing and needs to be scrapped and rebuilt from scratch using the CONSTUTION this time!

Posted by: rodsmith | Sep 29, 2011 6:59:31 PM

"I ass assume that the defendant " No pun intended?

Posted by: Obvious | Sep 30, 2011 12:23:41 PM

Doug,

I am aware of numerous examples of similar consequences in non-white-collar cases, particularly drug conspiracy cases, specifically in the E.D. Va., although I'm sure it happens elsewhere as well. The thing about a drug conspiracy is that everyone involved -- from masterminds to bit players -- is ultimately exposed to the full weight of drugs that flowed through the conspiracy, for purposes of sentencing calculations. Sure, there are additional enhancements for organizing and leading, etc. But the meat of your offense level is coming from the huge drug weight that is attributable to the larger conspiracy.

So, the marginally-involved player who may be more likely to think he or she can beat the case at trial can easily end up with a worse sentence than the key player who reads the writing on the wall and makes a deal that limits his exposure (by staying away from a conspiracy charge, making agreements about the amount of weight he will agree to, etc.).

Posted by: Anon | Sep 30, 2011 5:56:59 PM

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