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Steven Allan, the former chief financial officer of failed high-tech company Media Vision Technology Inc., was sentenced Friday by Senior U.S. District Judge D. Lowell Jensen to 3 1/2 years in a federal prison. Although the U.S. Probation Department recommended 10 years, and Allan would have been looking at even more under current white-collar crime guidelines, Jensen gave Allan a lesser sentence because of his exemplary record in the community and Jensen’s belief that the prosecution’s star witness was the key figure behind the fraud. “I’ve never seen so many letters,” Jensen said. “They tell you about a Steven Allan that ought not be in this position. … It is out of character and it is aberrant in any real sense.” Allan was convicted for his role in an early 1990s financial fraud at Fremont, Calif.-based Media Vision. In an effort to drive up its stock price, contracts were backdated and unsold merchandise was concealed on offshore barges. When the scheme was revealed in 1994, the company spiraled into bankruptcy, costing investors many millions of dollars. In court Friday, Allan thanked his family but blamed his pending prison term on Paul Jain, Media Vision’s former chief executive officer, who cut a deal with the government in exchange for testimony. “If I hadn’t taken the Media Vision job,” Allan said, “obviously I wouldn’t be here today.” Assistant U.S. Attorney John Hemann urged Jensen not to show leniency to Allan and disputed Jensen’s contention that Jain was the real culprit. “It was his job, more than any other person at the company, to assure that the information that was reported to the marketplace was not false,” Hemann said. Allan’s potential sentence for convictions on three counts of wire fraud and two counts of making false statements to investigators was escalated by the loss to investors. The government argued that it could be in excess of $300 million. But Arthur Lemann III, Allan’s lawyer, said the decline in company value could be due to bad business decisions as much as financial fraud, and argued that assigning a dollar amount to the fraud would be difficult, if not impossible. There is apparently little case law on the issue. Hemann said the court shouldn’t try to separate the two. “The fraud that indisputably took place at Media Vision was designed to cover up the bad business decisions,” Hemann said. “You cannot, in this case and in most financial fraud cases, separate the fraud from the bad business decisions.” Ultimately Jensen set aside arguments on that point, saying that no matter how it’s sliced, the loss exceeds the maximum of $80 million contemplated by the guidelines. That got Allan an 18-level increase under the sentencing guidelines. But later Jensen pared away at the enhancement, saying the loss must be shared by all defendants — he called it “relative culpability.” “I think that it is simple reality” that responsibility for loss should be split among the defendants, Jensen said. The judge will begin sentencing other defendants this week. Jensen declined to revisit a pretrial ruling allowing the trial to go forward just as Congress was considering stiffer white-collar penalties following a spate of financial fraud scandals. Lemann argued that the climate last summer could have poisoned the pool of potential jurors — some of whom did admit they could not be impartial given the nature of the charges. “The sting was so real at that time,” Lemann said. But Jensen declined to reconsider, saying care was taken during voir dire to find a fair jury.

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