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Frederick Brandau, who was convicted of masterminding a multimillion-dollar scam from South Florida that bilked thousands of mostly elderly investors out of their life savings, says his 55-year prison term is cruel and unusual punishment and should be reduced. Randee Golder, Brandau’s Boynton Beach, Fla., lawyer, argued Tuesday before the 11th U.S. Circuit Court of Appeals in Miami that his sentence violates the Eighth Amendment, because he is a first-time offender and his sentence exceeds others handed down in similar cases. She argues in her brief that while Brandau’s offenses caused a lot of “economic harm” to his victims, none of his actions involved violence or threats. “It is a sad state when someone with no criminal history receives a life sentence, and murderers, rapists and robbers in this country on a first offense do not receive such harsh sentences,” Golder wrote. Brandau, 57, was president of Financial Federated Title & Trust in the tiny Fort Lauderdale, Fla., suburb of Lazy Lake when he took an estimated $117 million from some 4,000 people who believed they were investing in viaticals. In legitimate viatical deals, investors purchase the life insurance policies of terminally ill people with the expectation they will receive the death benefits and earn large returns quickly on their initial investment. Instead, Financial Federated used only about $8 million of investors’ money to purchase viaticals and spent $100 million to buy expensive cars, boats, luxury properties, jewels and a couple of helicopters. Prosecutors contended that Brandau’s looting of investors lasted from February 1996 until August 1999. Another of Financial Federated’s former employees, Ronalee Levy Orlick — the daughter of Raphael “Ray” Levy, who was a key player in the scam — is scheduled to argue her case before the 11th Circuit today. Orlick is fighting to keep her $1 million salary, which the bankruptcy court contends does not belong to her. Orlick, who was not indicted in the criminal case, asserts there was never any conclusive evidence to show the money she was paid came from Financial Federated or that she played a part in the investment scheme. Orlick was employed by American Benefits Services Inc., a company owned by her father, which worked with Financial Federated to connect investors with seriously ill people who needed to sell their life insurance policies. Because her father took the Fifth Amendment in his case, she argues, she was at a disadvantage to prove that the money was paid to her legally and not as part of an effort to defraud investors. ONE OF LONGEST SENTENCES In August 2000, Brandau was convicted of 43 felony charges including money laundering, mail and wire fraud; he was sentenced in January 2001. In addition to receiving 55 years in prison, Brandau was ordered to pay $117 million in restitution. He is serving his sentence at the federal penitentiary in Coleman, Fla. Thirteen Financial Federated executives, including Ray Levy and in-house attorney Garland Hogan, either have pleaded guilty or were convicted of similar offenses and have been sentenced and ordered to make restitution. But it was Brandau who received one of the longest sentences ever given in a white-collar case, according to the U.S. Justice Department. In sentencing Brandau, U.S. District Judge Daniel T.K. Hurley of the Southern District of Florida found that Financial Federated specifically targeted senior citizens by promising them stable investments with high yields of return. They were told that when a life insurance policyholder died, the return to investors would be up to 42 percent over three years. But in reality, many of those who invested lost either a large portion or all of their life savings. In sentencing Brandau, Hurley increased the prison term based on the fact that his victims were elderly and vulnerable. But Golder, in her brief to the 11th Circuit, claims that Hurley “articulated nothing about investors in this scheme that made them particularly vulnerable except that they were looking for safe investments with high yields. Isn’t everybody?” she asked. Rather than asking for a specific reduction in the length of the sentence, Golder is asking that the appellate court determine whether Hurley made an error in how he determined how much time Brandau should serve. If the appellate court rules in Brandau’s favor, the case would be sent back to Hurley for resentencing, she said. Golder noted in her brief that her client was not convicted of any offenses that carried more than 20 years maximum and that Hurley “stacked the sentences.” ‘RATHER BE BEATEN’ But an attorney involved in the Financial Federated bankruptcy case disagrees that Brandau’s offenses weren’t as serious as a violent crime. “If you called some of these people and asked them if they would rather be beaten or lose their life savings in their 70s and 80s, a lot of them would choose beating,” says John Kozyak of Kozyak Tropin & Throckmorton in Miami who is the bankruptcy trustee. “I don’t think it’s any less cruel that they stole people’s life savings.” Miami bankruptcy attorney Arthur Rice, a partner at Rice Pugatch Robinson & Schiller in Miami, echoes that. He says Brandau was nothing more than “a common thief” who preyed on the elderly. “Judge Hurley treated Fred Brandau far better than Fred Brandau treated his investors,” says Rice, who is co-counsel to the bankruptcy trustee and who filed the initial involuntary bankruptcy petition against Financial Federated. “If I had been the one handing out sentences, he would have gotten 150 years.” Since that bankruptcy filing, many of Brandau’s seized cars, boats, homes and other tangible assets have been sold. So far, about $20.8 million of the $117 million lost by investors has been distributed, Kozyak says. The recovery is significantly higher than what the government expected when the case first started, Kozyak wrote in a May 30 letter to Financial Federated’s victims. Initially, the government suggested a 5 percent to 10 percent return. In addition to selling 22 homes, buildings and lots, Kozyak has collected only about $1.3 million as viatical policies matured and about $1 million from the sale of other policies. “Regrettably, the cars and homes Mr. Brandau and others bought for their own use ended up being more valuable than the viatical policies they overpaid for at the very end when the government was closing in on them,” Kozyak wrote.

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