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Sholam Weiss

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Sholam Weiss
Born (1954-04-01) April 1, 1954 (age 70)
Brooklyn, New York, U.S.
StatusHoused at Federal Correctional Institution, Otisville; Otisville, New York scheduled date of release: June 10, 2738
OccupationFormer business consultant
Criminal charge78 counts of racketeering, wire fraud and money laundering
Penalty835 years imprisonment (reduced from 845 years in 2009), $123.4 million fine, $125 million restitution (satisfied in full)

Sholam Weiss (born April 1, 1954) is an American former businessman and philanthropist currently incarcerated at FCI Otisville.[1][2]

On February 15, 2000, the Middle District Court of Florida (Orlando) sentenced Weiss, to 845 years (later reduced to 835 years) in prison for racketeering, wire fraud and money laundering, albeit Weiss proclaimed his innocence throughout his nine month trial against embezzlement charges,[3] Weiss was ordered a restitution of $125,016,656 and a fine of $123,399,910, in connection with the collapse of National Heritage Life Insurance Company (NHLC).[4][5][6][7] Weiss fled the country at the end of his trial, during Jury deliberations and was a fugitive for one year, and was subsequently extradited from Austria.[8]

Weiss' sentence is the longest given to a white-collar criminal sentence in the United States.[9]

Early life and background

Weiss was born in Brooklyn, New York to a poor Hungarian-Jewish family. Weiss' father supported the family with a fruit store that he owned.

As a young boy, Weiss delivered fruit for his father's fruit store. In his late teens, he became a handyman and did construction work, then established his own business, Windsor Plumbing Supply, in 1974. Windsor Plumbing Supply sold pipes, valves, boilers and plumbing equipment in the Brooklyn area; starting as a small business, it eventually grew to making $20 million a year in sales.[10][11]

In the 1989 recession, when the construction industry declined by a third,[12] Windsor Plumbing failed and declared bankruptcy. Having learned a lot about bankruptcy law from this incident, Weiss then pursued a career as a bankruptcy specialist, advising other struggling businessmen.[11] Through that business, Weiss met New York attorney Michael D. Blutrich, who was "outside counsel" to the National Heritage Life Insurance Company, and Michael's partner Lyle K. Pfeffer, also connected to National Heritage, through whom he became involved with National Heritage.[11]

Allegations and conviction

Pre-Weiss's involvement

Weiss became involved in National Heritage in August 1993, but the problems with National Heritage started years earlier.[5] In late 1989, National Heritage reported an operating loss and 27% reduction of capital from a decline of sales, and in 1990 insurance regulators threatened to shut down the company if it did not raise additional capital.[4][13] A group of investors including Michael Blutrich, David Davies, Lambert Aloisi and Patrick Smythe offered $4 million to satisfy regulators in exchange for a controlling interest in National Heritage. The group provided a $4 million check, but once in control of National Heritage, transferred $3 million from National Heritage to help cover the check.[14] This began a long series of schemes in which millions were stolen from National Heritage by the group of investors. Bad investments further depleted National Heritage capital, creating a $35 million hole plus an additional $10 million for the company.[15][16]

Weiss's involvement

In early 1993, the group decided to cover up all the missing money by a "mortgage-backed bond scheme". Weiss was contracted by the investment group to purchase discounted mortgages with National Heritage funds, which were put into a mortgage-backed bond.[17]

Weiss and NHLC agreed that Weiss, through his company South Star, would place NHLC money into viable secured investments, which needed to be backed by real property, and be for the benefit of the insurance company. Weiss received approximately $100 million of NHLC funds and bought $177 million face-valued mortgages. They were mostly non-performing but were bought at a deep discount for roughly $87 million. The mortgages were mostly FDIC-insured and secured by real property.[18] It was believed that the discounted mortgages could be rehabilitated, and thus make a large profit for NHLC. But once the mortgages were purchased and placed in a bond, the managers of NHLC fraudulently placed the bond on National Heritage's books with inflated values to conceal the missing money that was mismanaged or looted by the company's managers.[17] It was later claimed that 25,000 policy holders had lost $400 million[19] until this claim was refuted by George Piccoli, Deputy Receiver for National Heritage, who stated, "All policyholders were repaid completely by July 2000"[20] Additionally, Weiss's restitution, which was jointly and severally with other co-defendants, has fully been satisfied.[6]

Plea Deals

Weiss and other business executives and lawyers working for NHLC either pleaded guilty or were convicted in the fraud case. Some of the executives who were the originators of the crime like Michael Blutrich, Lyel K. Pfeffer and Patrick Smith, either received immunity or pleaded guilty with a plea deal for their testimony,[21][22] admitted to forging documents and lying to regulators. In exchange for their testimony against co-defendants like Weiss and others. The government prosecutors would drop their criminal counts and recommend a reduction of their sentence.[23]

Weiss was initially offered by the government a five years plea bargain, then, closer to trial, a ten years plea bargain. He would have been required to accept responsibility and testify for the government, instead he exercised his constitutional right to a trial.[24]

Weiss claims that if he were re-sentenced today under current sentencing guidelines, without losses attributed to him, he would receive a sentence of no more than 37 months.[25] Additionally, Weiss claims that the satisfaction of restitution was satisfied with the proceeds of the mortgages that he bought for the benefit of NHLC at a substantial discount from its face value (53% discount). The receivers settled these mortgages and collected the full face value, realizing a large profit for the insurance company,[26] therefore, the restitution should never have been imposed in the first place.[7]

Sentencing

The rules of the sentencing guideline (§2B1.1, Application Notes: (D) Exclusions from Loss and (E) Credits Against Loss (iii), "In a case involving collateral pledged or otherwise provided by the defendant, the amount the victim has recovered at the time of sentencing from disposition of the collateral, or if the collateral has not been disposed of by that time, the fair market value of the collateral at the time of sentencing").[27] While at sentencing, the receivers claimed they had collected only $65 million, however no credit was given.[28] Three weeks after sentencing the receivers had collected a total of $175-$200 million, yielding a profit of $50-$100 million.[29] It took the government 16 years to file a satisfaction of restitution.[30]

At Weiss's sentencing on the National Heritage charges in February 2000, Judge Patricia C. Fawsett sentenced Weiss to 845 years in prison and co-defender Keith Pound to 740 years. Weiss received a fine of $123.4 million and ordered $125 million in restitution (which is jointly and severally with other co-defendant, and has fully been satisfied.[31][30])

Weiss is currently serving his sentence at the medium security prison, FCI Otisville, in Otisville, New York. His projected release date is June 10, 2738.[32]

Extradition

Weiss was arrested by Austrian authorities in the fall of 2000,[8] and was extradited back to the United States in 2002.[33] The extradition was challenged at the United Nations Human Rights Committee, and the European Court of Human Rights, both of which noted that the United States provided assurances that Weiss would receive a full appeal and a full re-sentencing.[34][35] The extradition was also raised in the Parliamentary Assembly of the Council of Europe, also noting the U.S. assurances.[36]

Efforts to free Weiss

Austrian support

According to a 2017 letter from Austrian Chancellor Christian Kern to US President Donald Trump, under Austrian law, Weiss would have received no more than a 10-year sentence, and Austria granted extradition on assurances from the United States that Weiss would receive a full appeal and full re-sentencing.[37] Austria has requested Presidents Bush, Obama, and Trump for a commutation of sentence to time served.[38]

Weiss challenged his incarceration in federal court, arguing that the United States violated its extradition treaty with Austria by not providing a full re-sentencing and a full appeal (denied under the fugitive disentitlement doctrine), which United States assured Austria to effectuate the extradition.[39] In 2009, a judge restored his right of appeal to satisfy the treaty obligation, and took ten years off his sentence.[40] Weiss argued that the United States was also required to provide a full re-sentencing, but was denied for procedural reasons, with the court commenting that it was up to the Executive branch to satisfy the international obligation by a commutation of sentence.[41]

Organizational support

Efforts to free Weiss continue with strong support from Rabbi Dovid Zwiebel of the Agudath Israel of America, other support organizations also include National Association of Criminal Defense Lawyers (NACDL), CAN-DO Foundation,[42] Tzedek Association,[43] Cong Yetev Lev D’Satmar, Central Rabbinical Congress (CRC) of USA and Canada, Grand Rabbi of Satmar rav Zalman Leib Teitelbaum and Mivtzar Hakolilem of Kiryas Joel all issued a public letters to President Trump on Weiss's behalf.[44]

Former federal prosecutors, judges and senior government officials support

Attorneys including Professor Alan Dershowitz, Jay Sekulow and Shon Hopwood, and a group of former federal prosecutors, judges and senior government officials including United States Attorney General Edwin Meese, Former United States Circuit Judge, Court of Appeals for the D.C. Circuit & Former United States Solicitor General Kenneth Starr, Former Deputy Attorney General of the United States, Former Assistant Attorney General, Environment and Natural Resources Division Carol E. Dinkins, Former Associate Attorney General of the United States, Former United States Attorney, Northern District of Oklahoma, Former FBI Agent & Former Governor of Oklahoma Frank Keating, Former Solicitor General of the United States Seth P. Waxman, Former United States Attorney, Northern District of Georgia, Former Anti-Drug Coordinator for the US DOJ, Southeastern United States & Former Member of Congress (R-GA) Bob Barr, Former United States Attorney, District of Utah, Former member of the Attorney General’s Advisory Committee & Former Assistant United States Attorney, District of Utah Brett L. Tolman, Former United States Chief Circuit Judge, Court of Appeals for the Ninth Circuit Alex Kozinksi, Former United States Attorney, Eastern District of Texas, Former Assistant United States Attorney, Northern District of Texas & Former President of NAFUSA Matthew Orwig, Former United States Attorney, Northern District of Georgia & Former Assistant United States Attorney, Northern District of Georgia Kent B. Alexander, Former United States Attorney, District of Kansas & Former State Judge, Eighteenth Judicial District of Kansas Ben Burgess, Former United States Attorney, District of Arizona & Former First Assistant United States Attorney, District of Arizona A. Bates Butler III, Former United States Attorney, Southern District of Florida Kendall Coffey, Former United States Attorney for the Northern District of Texas Paul Coggins, Former United States Attorney, Southern District of Ohio & Former Assistant United States Attorney, Southern District of Ohio Michael Crites, Former United States Attorney, Eastern District of Virginia William B. Cummings, Former United States Attorney, Eastern District of Arkansas Bud Cummins, Former United States Attorney, District of Rhode Island Margaret E. Curran, Former United States Attorney, Northern District of Florida & Former Assistant United States Attorney, Eastern District of Tennessee W. Thomas Dillard, Former United States Attorney, Eastern District of Missouri Edward L. Dowd, Jr., Former United States Attorney, District of Colorado Troy A. Eid, Former United States Attorney, Southern District of Texas Lawrence D. Finder, Former United States Attorney, District of Minnesota Thomas B. Heffelfinger, Former United States Attorney, District of New Mexico, Former member of the Attorney General’s Advisory Committee & Former Assistant Attorney General, New Mexico David C. Iglesias, Former United States Attorney, Southern District of Ohio & Former Assistant United States Attorney, Southern District of Ohio Gregory G. Lockhart, Former United States Attorney, District of Arizona, Former member of the Attorney General’s Advisory Committee & Former Superior Court Judge, Maricopa County A. Melvin McDonald, Former United States Attorney, Western District of Kentucky, Former Lieutenant Governor of Kentucky & Former Assistant United States Attorney, Western District of Kentucky Stephen B. Pence, Former United States Attorney, Eastern District of Arkansas, Former chair of the Attorney General’s Advisory Committee, Former Federal Immigration Judge & Former Assistant United States Attorney, Territory of Guam George W. Proctor, Former United States Attorney, Northern District of Iowa James H. Reynolds, Former United States Attorney, Northern District of Texas Richard Roper, Former United States Attorney, Western District of Michigan & Former Principal Associate Deputy Attorney General, U.S DOJ John Smietanka, Former United States Attorney, District of Massachusetts Former Acting Director, Bureau of Alcohol, Tobacco, Firearms and Explosives, Former District Attorney, Plymouth County, Massachusetts & Former Representative, Massachusetts House of Representatives Michael J. Sullivan, Former United States Attorney, District of Connecticut Stanley Twardy Jr., Former United States Attorney, Western District of Kentucky & Former chairman of the Attorney General’s Advisory Committee Joseph M. Whittle, Former United States Attorney, Southern District of Florida Atlee W. Wampler, Former United States District Court Judge, District of New Jersey & Professor of Law, Fordham Law School William G. Bassler, Former United States District Judge, Eastern District of Pennsylvania Edward N. Cahn, Former United States District Judge, District of Wyoming & Former Member of the Judicial Conference of the U.S. Committee on Criminal Law William F. Downes, Former United States District Chief Judge, Eastern District of Pennsylvania James T. Giles, Former United States District Court Judge, District of Puerto Rico Hector M. Laffitte, Former United States District Court Judge, Southern District of Texas Robert O'Connor, Jr., Former United States District Judge, District of New Jersey & Former United States Magistrate Judge, District of New Jersey Stephen M. Orlofsky, Former United States District Court Judge, Southern District of New York Abraham D. Sofaer, Former United States District Judge, District of New Jersey Alfred M. Wolin, Former Solicitor General & Acting Attorney General of Pennsylvania, Former Commissioner of Montgomery County, PA, Former District Attorney, Montgomery County, PA & Former president of the Pennsylvania District Attorneys’ Association Bruce L. Castor, Jr., Former Chief Justice, Supreme Court of Georgia Leah Ward Sears, Former Deputy Assistant Attorney General, Dept. of Justice Civil Rights Division & Former Assistant to the Solicitor General Nathan Lewin, Former Senior Counsel to the Assistant Attorney General for the Criminal Division Matt Lewis, Former Assistant United States Attorney, District of Utah Eric Benson, Former Assistant United States Attorney, Eastern District of New York John F. Lauro, Former Assistant United States Attorney, District of Utah Brett Parkinson, Appellate Attorney, Department of Justice & Professor of Law, Chicago-Kent College of Law Harold J. Krent, Former Appellate Attorney, United States Department of Justice & Former Assistant Attorney General, Texas Mark R. Lee, Professor of Law and Criminal Justice Brian Levin, J.D. and Former Director of Litigation, United States Federal Trade Commission & Former Special Assistant United States Attorney, Eastern District of Virginia Steven Newborn have sent letters to President Trump urging him to grant Mr Weiss clemency. [44]

Congressional support

Members of congress including Representatives Ted Deutch, Kelly Armstrong, Max Rose, Don Bacon, Sean Patrick Maloney, Veronica Escobar, Ted W. Lieu, Alcee L. Hastings, David Trone, Bradley S. Schneider, Yvette D. Clarke, Nydia M. Velázquez, Jan Schakowsky, Frederica Wilson, Lois Frankel, Adriano Espaillat and David N. Cicilline sent letters to President Trump urging him to grant Mr Weiss clemency. [44]

NYS elected officials support

NYS elected officials including NYS Senator Brian Kavanagh, NYC Councilman Chaim Deutsch, NYS Assemblymember Yuh-Line Niou, NYC Councilman Stephen T. Levin, NYS Assemblymember David I. Weprin, NYS Senator Julia Salazar, NYS Senator Simcha Felder, NYS Assemblymember Joseph R. Lentol, NYS Assemblymember Simcha Eichenstein, Rockland County, NY Legislator Aron B. Wieder all issued a public letters to President Trump on Weiss's behalf.[44]

See also

References

  1. ^ "Find an inmate".
  2. ^ Herald-Record, Chris McKenna,Times. "Convicted thief paid for religious school". recordonline.com. Retrieved 2020-05-26.{{cite web}}: CS1 maint: multiple names: authors list (link)
  3. ^ Writer, Susan Clary, Sentinel Staff. "INSURANCE THIEF BACK IN FLORIDA". OrlandoSentinel.com. Retrieved 2021-01-17.{{cite web}}: CS1 maint: multiple names: authors list (link)
  4. ^ a b United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Judgment Doc. 1372.
  5. ^ a b Whitney, Sally (1 September 2000). "Anatomy of a Failure". Best's Review. pp. 96–104. Archived from the original on 23 March 2006.{{cite news}}: CS1 maint: bot: original URL status unknown (link)
  6. ^ a b "Satisfaction of Restitution 2016" (PDF). Retrieved 28 July 2016.
  7. ^ a b Cite error: The named reference :5 was invoked but never defined (see the help page).
  8. ^ a b https://www.orlandosentinel.com/news/os-xpm-2000-10-26-0010260287-story.html
  9. ^ "Top 10 white-collar prison sentences".
  10. ^ "Sholam Weiss | Longest White-Collar Sentence 845 Years". freesholamweiss. Retrieved 2020-05-22.
  11. ^ a b c Rashbaum, William K. (9 March 2000). "845 Years in Prison, If the Authorities Can Catch Him; F.B.I. Says Fugitive Has a Flair For Fraud and Hiding Stolen Cash". The New York Times. Retrieved 6 July 2009.
  12. ^ NY Mag (January 31, 2008). "The sad stretch from 1989 to 1992, when the median home price in Manhattan dropped by more than a quarter, construction declined by a third". Retrieved December 15, 2020.{{cite web}}: CS1 maint: url-status (link)
  13. ^ Whitney, Sally (September 2000). "Anatomy of a Failure". Best's Review. p. 96. Archived from the original on March 23, 2006. Retrieved February 14, 2018.
  14. ^ Whitney, Sally (September 2000). "Anatomy of a Failure" (PDF). Best's Review. p. 97. Archived from the original (PDF) on March 23, 2006. Retrieved February 14, 2018.
  15. ^ Whitney, Sally (September 2000). "Anatomy of a Failure" (PDF). Best's Review. pp. 97–98. Archived from the original (PDF) on March 23, 2006. Retrieved February 14, 2018.
  16. ^ "PSR 16" (PDF). docs.wixstatic.com.
  17. ^ a b Whitney, Sally (September 2000). "Anatomy of a Failure" (PDF). Best's Review. p. 100. Archived from the original (PDF) on March 23, 2006. Retrieved February 14, 2018.
  18. ^ "Anatomy of a Failure". Best's Review. Archived from the original on 2006-03-23.
  19. ^ https://www.masslive.com/news/2011/04/judge_reduces_sholam_weiss_845.html
  20. ^ Sally, Whitney (September 2000). "Anatomy of a Failure". BEST’S REVIEW. p. 104. Archived from the original on March 23, 2006. Retrieved November 26, 2020.
  21. ^ "Insurance Fraud Case Defense Has Say|last".
  22. ^ Rashbaum, William K. (2000-03-09). "845 Years in Prison, If the Authorities Can Catch Him; F.B.I. Says Fugitive Has a Flair For Fraud and Hiding Stolen Cash". The New York Times. ISSN 0362-4331. Retrieved 2018-03-09.
  23. ^ "Strip club owner who ratted out mobsters won't go into hiding". nypost.com. 5 March 2018.
  24. ^ National Association of Criminal Defense Lawyers, (NACDL) (October 13, 2020). "NACDL Trial Penalty Clemency Project Submits First Set of Petitions to White House". Retrieved December 11, 2020.{{cite web}}: CS1 maint: url-status (link)
  25. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 2454
  26. ^ "Anatomy of a Failure". Best's Review. September 2000. Archived from the original on 2006-03-23.
  27. ^ "2016 GUIDELINES MANUAL". United States Sentencing Commission. September 2016.
  28. ^ Sholam Weiss PSR, 74, "some of the assets (valued approximately $65 Million) purchased with these fund were recovered".
  29. ^ Rashbaum, William K. (9 March 2000). "845 Years in Prison". The New York Times.
  30. ^ a b "Satisfaction of Restitution 2016" (PDF). Retrieved 28 July 2016.
  31. ^ Notice to the court, filed by the U.S. Attorney for the Middle District of Florida, to the Middle District Court of Florida. United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 2446.
  32. ^ "U.S. Bureau of Prisons Inmate Locator". Retrieved 2009-07-02.
  33. ^ https://www.recordonline.com/article/20020701/NEWS/307019996
  34. ^ "University of Minnesota Human Rights Library". hrlibrary.umn.edu.
  35. ^ Sholam Weiss v. Austria, Communication No. 1086/2002, U.N. Doc. CCPR/C/77/D/1086/2002 (2002)
  36. ^ Parliamentary Assembly, Extradition of Sholam Weiss, Written Question No. 415 by Lord Russell-Johnston (Doc. 9578) April 1, 2003.
  37. ^ "Letter from Austrian Chancellor to President Trump, 2017" (PDF). 7 August 2017.
  38. ^ "Letter from Austrian Chancellor to President Bush, 2008" (PDF). 22 October 2008.
  39. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 168
  40. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 189
  41. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 198
  42. ^ Tweet, Support (January 18, 2021). "Tweet supporting Sholam Weiss from CAN-DO Foundation".{{cite web}}: CS1 maint: url-status (link)
  43. ^ Tweet, Support (January 18, 2021). "Tweet supporting Sholam Weiss from Tzedek Association".{{cite web}}: CS1 maint: url-status (link)
  44. ^ a b c d full text on Freedomforsholam.com
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