(Updates with wife’s sentence in 10th paragraph.)
Sept. 14 (Bloomberg) -- Kenneth Marsh, the “mastermind” behind the Gryphon Holdings Inc. boiler-room scheme on New York’s Staten Island, may be able to withdraw his guilty plea after objecting to a 10-year prison term, a judge said.
At an Aug. 11 hearing on Marsh’s sentence, U.S. District Judge Jack Weinstein in Brooklyn, New, York, said he leaned toward a five-year term and then heard from seven victims of the scam. Weinstein said at a hearing today he planned to impose 10 years, prompting a protest from Marsh’s lawyer. The sentencing was postponed to Sept. 20.
“I have now seen this crime in its full depth and what it’s meant to all these people,” Weinstein said.
Marsh, 44, pleaded guilty in April to one count of securities fraud, admitting he misled investors into paying for phony stock tips. Gryphon charged clients as little as $99 and as much as $250,000 for access to its investment recommendations, according to a related civil lawsuit by the U.S. Securities and Exchange Commission. Gryphon defrauded almost 5,500 people out of $20 million, according to the government.
All 18 defendants in the Gryphon scheme, including members of its sales force, pleaded guilty. Weinstein sentenced other Gryphon defendants today, some ranging from three months to 25 months in prison.
“It’s possible for him to withdraw the plea,” one of Marsh’s lawyers, Alan Futerfas, said after the hearing today. “We are cautiously optimistic that the court will reconsider all of the proceedings, including some of the sentences he has imposed today. His sentence should be proportional to some of the sentences imposed.”
Jail Since November
Robert Nardoza, a spokesman for U.S. Attorney Loretta Lynch in Brooklyn, didn’t have a comment on today’s postponement.
Marsh was charged in April 2010. He has been in jail since November, after he was accused by prosecutors of engaging in conduct similar to actions that led to his arrest and he was unable to raise the additional bail required.
Gryphon falsely claimed to have a trading desk and a $1.4 billion hedge fund, according to the government. The company sometimes told investors its office was in the New York Stock Exchange when it was in a strip mall on Staten Island, according to prosecutors.
Seven former salesmen and Marsh’s ex-wife, Nicole Marsh, who ran Gryphon with him, cooperated with prosecutors, assistant U.S. attorneys Roger Burlingame and Patrick S. Sinclair wrote in an Aug. 8 letter to Weinstein. She was sentenced today to three months in prison.
Marsh “is the mastermind behind a devastating fraud,” Burlingame and Sinclair wrote.
The criminal case is U.S. v. Marsh, 10-cr-00480, and the SEC case is SEC v. Gryphon Holdings Inc., 10-cv-01742, U.S. District Court, Eastern District of New York (Brooklyn).
--Editors: Mary Romano, Peter Blumberg
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