It seemed to be done and gone, a high-profile, multimillion-dollar mortgage fraud case that landed a Norwalk businessman a 16-year prison sentence back in 2010. But an appellate court decision has thrown the case back to a federal trial court for resentencing, a move that has captured the attention of some Connecticut white-collar lawyers.
The U.S. Court of Appeals for the Second Circuit recently considered an argument by lawyers for William Trudeau, who claimed the original sentence is far too severe, considering a jury found him guilty of only two charges, for fraud and conspiracy, but acquitted him of nine potentially more serious counts of bank and wire fraud.
In his appeal, Hartford lawyer Ross Garber, of Shipman & Goodwin, argued the punishment handed down by U.S. District Judge Janet Hall was disproportionate to the crimes of conspiracy and fraud and “ran afoul of constitutional protections.”
The appellate court rejected Garber’s most substantial argument, noting that the sentence was well below the maximum allowed under the law. But the Second Circuit remanded the case to Hall for resentencing, noting it was unclear whether she thought the maximum sentence for Trudeau was 20 or 30 years.
The mandate for resentencing, the court wrote, is “solely for the district court to consider whether it would have sentenced Trudeau differently if it had understood the statutory maximum was 20 years for each count.”
Even though the Second Circuit rejected Garber’s argument that the sentence was unconstitutional, the remand was seen as a partial victory by some white-collar defense lawyers, who said it helps bolster their call for sentencing reform measures.
The Trudeau case, they say, is an example of how federal judges often consider factors beyond the charges for which a defendant is convicted when formulating a sentence. Richard Willstatter, a White Plains, N.Y., lawyer who is on a national committee of lawyers who filed a brief in support of Trudeau’s appeal, says that’s not right.
“It should be up to a jury to decide whether a person is guilty of an offense, not judges,” said Willstatter, who serves on a sentencing committee of the National Association of Criminal Defense Lawyers. “I think sooner or later, the Supreme Court should take a look at this issue.”
Trudeau has had a long history of run-ins with the law.
In 2002, as owner of the now-defunct Newtown Oil Co., he was accused of accepting $260,000 in prepayments from customers and then not delivering heating oil. He was found guilty of nine state larceny charges and ultimately sentenced to 20 years in jail, though the sentence was suspended; he ended up with five years’ probation and being ordered to pay restitution.
In a separate instance, Trudeau was indicted and convicted for not paying $232,000 in employment taxes for his oil and auto repair business workers between 1993 and 1997.
His latest legal troubles began in 2005, according to prosecutors, when he and a childhood friend, Wilton lawyer Joseph Kriz, began developing and selling high-end properties in lower Fairfield County. In 2010, Trudeau was charged with 11 counts of fraud, including allegations that he engaged in a broad scheme to defraud bank and mortgage lenders out of millions by submitting false loan documents.
Trudeau went to trial on all 11 counts, but he was convicted only on the fraud and conspiracy charges. When he appeared at his sentencing hearing, Trudeau was expecting to receive just a few months in prison, his lawyer said.
But Hall told Trudeau in court that she had considered the totality of the evidence, including testimony from more than 20 victims. Hall said her conclusion, looking at the “preponderance of the evidence,” was that Trudeau had, in fact, committed all of the offenses for which he was acquitted.
With that, she slapped him with a sentence a few months shy of 16 years.
Trudeau’s lawyer, Garber, declined to comment on the appeal and resentencing because the matter is still pending. One of arguments is that Kriz had admitted he had stolen millions of dollars, but received a prison sentence of only three years. No hearing has been scheduled for the Trudeau resentencing.
Federal prosecutors declined to comment on what recommendations they will make to Hall. Tom Carson, a spokesman for the U.S. Attorney’s Office in Connecticut, would say only that “we just want to draw your attention to the [Second Circuit's] summary order, which clearly states that the sentence was substantively reasonable.”
White-collar attorneys say they would like a case involving white-collar sentences to make its way to the U.S. Supreme Court. But they doubt this is the case, as the Second Circuit rejected the argument that Trudeau’s sentence was disproportionate or improper, said David Ring, a white-collar defense partner at Wiggin and Dana.
Ring, who was familiar with the Trudeau case, said because the Second Circuit’s decision focused on the one particular issue of what Judge Hall understood to be the sentencing guidelines, there will likely be no big change in the outcome. “She might find there was no difference [in the sentence she would have handed out], and not even bring him in,” Ring said.
At the same time, Ring said, some white-collar defendants who have won similar appeals end up with more time in prison. “There are a lot of different ways this could turn out,” he said.
Likewise, Alan Sobol, a white-collar partner at Pullman & Comley, said that any time a case is sent back for resentencing, “all bets are off.”
Jonathan Einhorn, a New Haven criminal defense lawyer, is among those who want judges to stick to the charges that led to a conviction when making sentencing decisions. To allow other factors to be considered, he said, tramples on a defendant’s rights.
“I think it’s blatantly unfair,” Einhorn said. “My thought is, if a person’s sentence is going to be enhanced over considerations of what a jury has found, the sentencing should go back to the jury for their consideration.”•