Calif. Man Gets 30 Years for Ponzi Scheme
Saturday, May 27, 2006; 3:22 AM
SANTA ANA, Calif. -- A man accused of operating one of the largest Ponzi schemes in U.S. history was sentenced to 30 years in prison Friday.
The federal judge imposed the maximum sentence on James Lewis Jr. for running a $311 million scheme that defrauded about 1,600 people over nearly two decades.
U.S. District Judge Cormac Carney also ordered him to pay $156 million in restitution, though he conceded that Lewis would not be able to.
Lewis pleaded guilty to one count of money laundering and one count of mail fraud last October. Prosecutors agreed to drop 12 of 14 counts in exchange for the pleas.
More than 50 former investors packed the courtroom during the sentencing hearing. Ten of them testified against Lewis.
Former investor Collene Campbell testified she and her husband lost the money they were saving for a down payment on their granddaughter's first home, a grandson's college savings and the contents of a scholarship fund established in memory of another grandson, who died in 2001.
"James Lewis did not make a mistake in investing our money, he didn't invest it at all. ... He just stole it," Campbell said, fighting back tears. "We are suffering and yet all those thousands of nights (Lewis) could sleep and carouse while he was sucking the life blood from his victims."
Lewis, who wore a prison jumpsuit and was shackled at the wrist, was expressionless during the testimony.
Brick Kane, the court-appointed receiver for Lewis' holdings, testified that Lewis took in $311 million between 1985 and 2003.
The judge asked how Lewis could keep up his scheme for nearly two decades.
"As long as you're able to raise money and keep paying the promised annual or monthly payments, you can keep going until you implode," Kane said. "And Mr. Lewis was about to implode when he was arrested."
Lewis told investors he was earning returns of 18 percent to 40 percent by leasing medical equipment, financing purchases of medical insurance, making commercial loans and buying and selling distressed businesses.
But prosecutors alleged that instead Lewis was using money from new investors to pay off the original ones _ something known as a Ponzi scheme.
Kane testified that some early investors did receive money back, leaving the total loss at $156 million.
Defense attorneys, however, have argued that the net loss to investors was much lower.