wmlro.com "longest ever sentence in white collar case"

One has to ask the question: what's the point in sending someone to jail to 100 years, especially when he's already 65 years old?

OK, so Ponzi organisers are scum. But given that California is broke, why is it creating a long-term liability for itself?

It's obvious that there is a dynamic at play that US courts don't get. Once a likely sentence reaches the point where a person has nothing to lose, there is no deterrent effect of imposing ever longer sentences.

In short, the sentences lose all serious impact, turning instead to a cause of mirth.

Richard Monroe Harkness ran a Ponzi scheme through a business name MX Factors. His scheme ran from 2000 until late 2003.

Judge Virginia A Phillips told Harkness that his actions caused “every kind of grief and loss imaginable" and that his lack of remorse indicated to her that he “would commit his crimes all over again if given the chance.”

He was ordered to repay USD35,479,310 to the(approximately) 600 victims who lost money as a result of the scam.

He was convicted in July 2009 on three counts of mail fraud, three counts of wire fraud and one count of money laundering.

Harkless and a team of salespeople at MX Factors raised funds by telling potential investors that MX Factors provided short-term loans to commercial construction companies that had guaranteed, government-backed contracts. Harkless created the company, controlled its bank accounts, hired and paid agents to solicit investors and created MX Factors promotional literature.

Investors were promised returns of up to 14 percent every two or three months, at which time investors could either receive their investments back or roll over their investments into the next investment period. The vast majority of MX Factors investors were “reloaded,” meaning that they were convinced to invest money more than once. At trial, several victims testified that Harkless and his co-conspirators encouraged potential investors to try out the MX Factors program, investing in one 60- or 90-day cycle and then withdrawing their money to see if it worked. Once victims felt more comfortable with the program, Harkless and his co-conspirators encouraged them to invest even more and to get their families and friends to invest as well.

As the scheme began to collapse, Harkless diverted millions of dollars of investor money to Belize and Mexico. In the final months of the scheme, once Harkless knew that he was under investigation by various state regulators, he accelerated his fundraising and accelerated the transfer of funds to his own accounts in Belize.

During the scheme, the bulk of the money raised from investors was used to pay off earlier investors, to pay agent commissions, to fund Harkless’ crabbing business in Ensenada, Mexico and to pay for various personal expenses. Over the course of the scheme, approximately 600 victims invested and lost money with MX Factors.

Harkless fled to Mexico shortly after the Ponzi scheme collapsed and federal authorities executed search warrants in February 2004. Harkless was arrested by special agents with IRS-Criminal Investigation two years ago when he traveled to Phoenix. At this summer’s trial, Harkless represented himself in court.

Three of Harkless’ sales agents—Daniel Berardi, Thomas Hawkesworth, and Randall Harding—pleaded guilty and received sentences of up to six years in federal prison.

The investigation into MX Factors was conducted by IRS-Criminal Investigation, the United States Postal Inspection Service and the Federal Bureau of Investigation.

It's an excellent case, well put together and a good decision, and demonstrates what co-operation between agencies can achieve.

But 100 years in jail? It's just plain silly. It's going to cost a fortune - especially as he ages and needs increased medical care.

In fact, a ten to fifteen year sentence would mean more: it would mean that he is returned to the outside world at exactly the time that he needs the most support - the support that many of his victims will struggle to provide for themselves as a result of his crimes.

That's a real life, harsh penalty. And a bit of a bargain for those who would otherwise have to pay to keep him fed, watered and healthy (perhaps beyond the years he would survive outside) for decades to come.

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