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Chances are, Ponzi schemer won't get maximum sentence

POSTED: August 16, 2009 12:09 a.m.
SCOTT ROGERS/The Times

U.S. District Court Judge William C. O'Kelley

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A grid of numbers on a sheet of paper will play a big part in how much time Wendell Spell serves in prison for the biggest fraud in Hall County history.

With Spell scheduled to appear Thursday in U.S. District Court in Gainesville for sentencing by Judge William C. O’Kelley, the judge will rely on recommendations from a federal probation office report that breaks down a defendant’s life and transgressions into categories, zones and offense levels. Points are added for aggravating factors and subtracted for mitigating factors, like Spell’s acceptance of responsibility. The final “custody score” on the grid will show the range of months Spell may spend in a federal prison, with the judge free to give more or less time.

Government prosecutors say Spell defrauded more than 50 investors in Gainesville and elsewhere of at least $60 million in a Ponzi scheme through his Aviation Boulevard heavy equipment company, North Georgia Equipment Sales.

But though Spell faces up to 20 years in prison after pleading guilty in March to one count of wire fraud, he’s unlikely to get the maximum sentence.

“Theoretically you could be sentenced up to the maximum, but that never happens,” said Ann Fitz, an Atlanta-based federal defense attorney. “Usually your sentence is within the (federal sentencing) guideline calculations.”

The federal sentencing guidelines are a ridged set of mathematical formulas that serve to advise a judge on the appropriate length of a sentence. Since a 2005 U.S. Supreme Court ruling, the guidelines have been advisory and not binding, though courts generally adhere to them.

“Federal sentencing is much more structured than state court,” veteran federal defense attorney Barry Lombardo said. “It relates to the facts, and in that regard, it is more focused.”

A presentencing investigation by the federal probation office takes an in-depth look at the offender’s life, from any personal issues that might have affected his judgment to how often he victimized others. A confidential report is given to the judge prior to sentencing.

“The guidelines are good about one thing,” Lombardo said. “They bring out everything that ought to be considered in sentencing.”
And while Spell pleaded guilty to only a single count of wire fraud involving a $200,000 bank transfer from Alabama, the government can bring all the other alleged thefts in as similar and relevant conduct.

“Don’t think that just because he was allowed to plead to one count that the other provable conduct will not be considered by the court, because it will,” Lombardo said.

Spell, though his attorney, has disputed the $60 million figure. It will be up to the judge to decide whether the government has proven through a preponderance of the evidence that Spell stole that much.

“It’s a lower standard of proof than beyond a reasonable doubt, so it’s a higher hurdle for the defense to overcome,” Fitz said. “Going into it, the government is going to have all the evidence they need to back up their numbers.”

O’Kelley, a senior judge in the Northern District of Georgia, was appointed to the federal bench in 1970 by President Richard Nixon. O’Kelley has made no secret of his disdain for the sentencing guidelines, first imposed by Congress in 1984.

From the bench, O’Kelley has complained that the guidelines take discretion out of the hands of judges and rely too much on mathematical calculations. Yet he generally sticks to them, and on the occasions he departs upward or downward from the guidelines, it is not dramatically.

“Judge O’Kelley stays fairly close to the guidelines, unless there’s extraordinary circumstances,” Lombardo said.

Federal prison sentences for fraud have varied in the Northern District of Georgia in recent years. Since March 2008, at least three Ponzi scheme operators have been sentenced in the court.

Travis Correll of Atlanta was sentenced to 12 years for a scheme that defrauded investors of $29 million. Manyu Oagale of Jacksonville was sentenced by Gainesville’s Richard Story to 10 years for a $23 million scheme. And James G. Ossie of Atlanta got seven years in prison for a wire fraud scheme that bilked investors of at least $18 million.

Other wire fraud cases that were not specifically identified as Ponzi schemes include the case of Anthony G. Christou, who was sentenced to nine years for taking clients for $15 million, and Frederick Barton, who is serving six years in prison after cheating investors of $2 million.

Based on the base offense level for wire fraud, with points added for the number of victims, the amount of money and Spell’s criminal history — he was convicted of taking money under false pretences in Virginia in 1997 — attorneys not connected to the case speculate that Spell, 50, is looking at between 11 and 14 years in prison.

But O’Kelley will make the ultimate decision, and isn’t likely to feel pressured by public sentiment in what could be an emotion-filled sentencing hearing.

“Judge O’Kelley’s pretty comfortable with making his own decisions and not letting what other people think affect the way that he rules,” Fitz said. “He rules the way he wants to rule.”



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