SAN FRANCISCO The former director of a social justice charity was sentenced to just over three years in prison on Tuesday for embezzling $2.5 million from friends and supporters even as the organization he ran was pillaged by a much larger investment fraud scheme.
The sentencing culminates a bizarre saga of greed and betrayal that saw the destruction of the 40-year-old Vanguard Public Foundation and the evaporation of an estimated $30 million.
Calling the situation a tragedy and the stories of loss "wrenching," U.S. District Judge Charles Breyer sentenced Hari Dillon above the 30-month term recommended by federal prosecutors.
Breyer also had tough words for board members of the charity, who the judge said failed to oversee Dillon and monitor the charity's accounts.
"Where were you?" he scolded. "Where were you over the ... years that this massive fraud continued? Where were the checks, the balances?"
Dillon ran the Vanguard Foundation for more than a decade, hobnobbing at events with celebrity supporters such as actor Danny Glover and singer Harry Belafonte.
It was Dillon's hunger to maintain a glamorous lifestyle that led him to siphon money given to his organization for investment to pay for luxury hotel suites, limousine service and expensive meals, prosecutors said.
But, according to prosecutors, Dillon did not know his acquaintance, Samuel "Mouli" Cohen, who had presented the foundation with a seemingly lucrative investment opportunity, was simultaneously scamming the charity's donors.
Cohen posed as the founder of a tech startup on the verge of a deal with Microsoft.
He offered shares in his company, eCast, at low prices and promised their value would increase tenfold after the acquisition.
The entire deal was a sham. But Dillon believed Cohen's promises of an enormous payday and thought he could use his returns to pay back the stolen funds, said Dillon's defense lawyer Garrick Lew, who proposed an 18-month prison term.
"Mr. Dillon's problem was that he thought he came into money, and he started spending it before it arrived," Lew said. "He just lost all sense of who he was."
Dillon, who pleaded guilty to two counts of wire fraud and two counts of money laundering, faced a prison term of more than five years under federal sentencing guidelines.
Prosecutors W. Douglas Sprague and Hallie Hoffman agreed to ask for a reduced sentence to reward Dillon's cooperation and testimony against Cohen, who was convicted at trial and sentenced to 22 years.
"He was not in on Mouli Cohen's scheme and that is a factor that drives the government's recommendation," Sprague said.
Not everyone agreed Dillon deserved leniency.
Shannon Gallagher, an attorney who once worked for Simpson Thacher & Bartlett and counted Dillon as a friend, told Breyer Dillon scammed $1.5 million from her family and destroyed her professional reputation when he forged her name on legal documents.
"Hari Dillon preyed on people people who trusted him," Gallagher said.
But John Levin, a longtime donor to the Vanguard Foundation, said Dillon's crimes should not wipe out the rest of his accomplishments. He added: "I think justice involves redemption."