Man sentenced for investment fraud

Role in scheme cost customers $6 million

May 01, 2004|By Lisa Goldberg | Lisa Goldberg,SUN STAFF

A former Ellicott City investment adviser convicted of bilking his clients out of nearly $6 million by selling them fraudulent investments was sentenced yesterday to nearly six years in federal prison.

Michael P. Keating's sentence comes nearly seven years after state and federal securities officials stumbled onto a nationwide Ponzi scheme - a setup where new investor money is used to pay off old investors - while looking into a complaint filed by a Keating investor.

Although not the central player, authorities have said that Keating, the 13th person charged as a result of the investigation, was an "important figure" in the scheme, which defrauded more than 600 investors out of $43 million.

At a hearing yesterday in Cleveland, where the case was prosecuted, U.S. District Judge James S. Gwin read from victim-impact statements filed by many of the 103 victims linked to Keating, relating their tales of ruined finances and altered lives, lawyers said.

Many were elderly and retired, and some were forced to return to work to make ends meet, said Assistant U.S. Attorney Christian H. Stickan, who prosecuted the case.

Short of maximum

Gwin sentenced the 45-year- old Woodstock resident, who pleaded guilty in February to charges of conspiracy and securities fraud, to five years and 10 months in prison - one month shy of the maximum called for in federal sentencing guidelines.

The judge also ordered Keating to pay more than $5.9 million in restitution.

"I'm very pleased by it," Stickan said. " ... I think it makes a good statement with respect to people like Keating who defraud investors - particularly elderly investors."

Lesser term sought

Keating's Ohio lawyer, John S. Pyle, argued for less prison time - the guidelines called for a minimum sentence of four years and nine months. His client is penniless and his marriage is at an end, Pyle said.

"Of course, the judge reviewed all the victim-impact statements and there are some pretty sad stories," Pyle said after the hearing. Keating, he said, "knew it was coming. He was hoping for the best, but he knew the potential for the judge to view this as a ... top-end case."

Pyle said it will be "virtually impossible" for his client to make full restitution; Keating's in-laws have already paid back about $47,000, Pyle said, to account for money that went toward a house.

"If you look at the losses that everyone had, it's a pretty small sentence," said Simon Jarosinski, 82, a former Keating investor who figures he lost more than $1 million through fraudulent investments and risky placements that later went bankrupt.

For Terry Mullen, 53, attending Keating's sentencing yesterday provided some closure. Mullen, a home furnishings salesman from Annapolis, estimates he lost about $200,000.

"My only regret is that Keating did not look at me. ... I wish he had the courage to look up," he said. " ... I would have liked Keating to have known somebody cared enough to show up."

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