Former Mayer Brown partner Joseph P. Collins was sentenced Thursday to serve seven years in prison for helping Refco Inc. executives defraud investors of $2.4 million -- crimes the judge said were motivated by "excessive loyalty" to his client.
Collins, 59, of Winnetka, Ill., who had sought a sentence of mostly community service, shook his head as Southern District of New York Judge Robert P. Patterson said that "the significance of what transpired here is the reason for the sentence."
Patterson agreed with defense lawyer William J. Schwartz of Cooley Godward Kronish that Collins did not profit from the fraud even though Assistant U.S. Attorney Christopher Garcia pointed toward the millions in legal fees accumulated by Mayer Brown from the Refco account.
"I don't believe Collins committed these crimes for greed or money because he would have been paid through his firm" anyway, Patterson said. "I think this is a case of excessive loyalty to his client."
Collins resigned from the firm shortly after his conviction in July 2009 of conspiracy and two counts each of securities fraud and wire fraud for drafting the documents and giving legal advice used by Refco principals to hide the financial services company's true financial condition and enrich themselves in the process.
According to the government, the documents were used to confuse auditors and defraud Thomas H. Lee Partners, which purchased a majority stake in Refco in 2004, and investors who bought shares in an initial public offering by the futures trader in 2005, just before the fraud was unmasked and the company collapsed.
Lawyers for Collins argued at his two-month trial that he had been unaware of the fraud. Jurors were unable to reach a verdict on nine counts against him.
Collins has filed a motion for a new trial focusing on what it called a credibility contest at trial between him and Jay Tabor of Weil Gotshal & Manges, who represented Thomas H. Lee, over a conversation they had in 2004. (Read the government's opposition memo to Collins' request for a new trial.)
"Since the trial, a wealth of new evidence has been produced by the Weil Gotshal law firm that had previously been withheld on grounds of privilege and was thus unavailable to the defense [at trial]," Collins' legal team argues.
At sentencing Thursday, Schwartz made an impassioned plea for leniency.
"This is not just another case we take in our routine practice as criminal defense lawyers -- this is a cause and man who have touched us very deeply," Schwartz said.
He described Collins as someone who "took great pride in his profession and took great pride in being a member of one of the largest law firms in the world. That's gone."
Collins' background as a former Air Force captain, his dedication to his family and community, and his charitable works were all cited by Schwartz, who kept coming back to the fact that "it is a very rare thing" for a defendant to appear for sentencing in a white-collar fraud case who did not make "one cent" from the fraud.
"That sets this case far apart from Madoff and Ebbers," Schwartz said. "That's another universe."
'ABUSE OF TRUST'
Garcia, the prosecutor, lost an argument that forfeiture should be used to force Collins to make good losses from the fraud because he was unable to convince the judge that Collins had directly benefited.
But he carried the day when he pressed Collins' prominent role in the offense, his false testimony at trial and the use of his status as a lawyer to help former Refco Chairman and CEO Phillip Bennett and others cook the books to hide more than $1 billion in losses.
"The fact that Collins was a lawyer at a top-flight law firm ... meant something to people on the other side of these transactions," Garcia said. "This defendant was a critical, critical player in one of the largest frauds this country has ever seen."
Garcia also cited the recent decision by the 2nd U.S. Circuit Court of Appeals vacating the low sentence given to former criminal defense attorney Lynne Stewart for providing material support to a terror conspiracy by illegally passing messages to her imprisoned client, Sheikh Omar Abdel Rahman.
Garcia said that in the Stewart case the 2nd Circuit "very succinctly and clearly ... talks about the significance of [their] status as a lawyer" and how serious it is "when [they] trade on their law license" to commit a crime -- "when they use that law license" to further a conspiracy.
He also insisted that Collins "lied not once, but repeatedly over the course" of several days at trial.
Judge Patterson calculated that Collins faced 85 years in prison under the U.S. Sentencing Guidelines based on the huge dollar amount of the fraud. But he rejected that number as absurdly high.
Read the government's memo on sentencing.
Examining one of the guiding principles behind the sentencing guidelines -- the need to avoid unwarranted disparities in sentencing among similarly situated defendants -- Patterson said, "I don't think there is any case that is so much on all fours with this case to find an unwarranted sentence disparity with other defendants."
But Patterson agreed both that Collins had perjured himself at trial and that he should be held accountable for using his status as a lawyer, even after he said Collins was "an extraordinary man" who showed "characteristics we should all aspire to."
"The position that he held was of a lawyer in a large public transaction and that's an abuse of trust in this case such that it requires deterrence," the judge said.
"Lawyers have a special role in these kind of transactions," Patterson said. There is a "need to deter other lawyers to do more than conduct a cursory examination of what clients are claiming."
Collins remains free on bail.