Sky Capital Holdings Ltd. founder Ross Mandell was sentenced to 12 years in prison for operating what prosecutors alleged was an eight-year scheme that defrauded investors of $140 million.
Mandell, of Boca Raton, Florida, was found guilty in July of conspiracy, securities fraud, wire fraud and mail fraud -- all the counts against him -- after a trial before U.S. District Judge Paul Crotty in Manhattan. At a hearing today, Crotty also ordered Mandell to serve three years’ probation, pay $10,000 fine and forfeit $50 million. Mandell, who is free on bail, must report to prison on June 18, Crotty said.
Mandell, 55, asked Crotty for mercy in sentencing him, saying that he and his family have suffered continuously since FBI agents raided Sky in November 2006. He told the judge he never intended to cheat anyone, blaming his conviction on false testimony by witnesses given in exchange for leniency.
“This is supposed to be about the truth,” said Mandell, who didn’t testify at his trial. “The people who cooperated here perjured themselves. They lied.”
Prosecutors accused Mandell and his co-defendants of using the money for personal expenditures including private jets, strip clubs, luxury hotels and expensive Swiss watches.
Adam Harrington, of Miami, a former broker at Sky Capital who was tried with Mandell, was convicted of the same four counts. He will be sentenced tomorrow. The government asked for “significant sentences” for both men.
A presentence report by federal probation authorities called for Mandell to get 30 years in prison.
Mandell, who has a wife and two daughters, ages 12 and 8, submitted letters from more than 125 people in his support, including people he’d helped through Alcoholics Anonymous.
Mandell, Harrington and others at Sky Capital also used the money to award themselves excessive commissions and pay off other victims who’d lost money through prior purported investment opportunities, prosecutors argued during the trial.
The U.S. said the two solicited millions of dollars from victims for what they claimed were restricted stock offerings or private placements that promised large returns.
More Guilty Pleas
In addition to Mandell and Harrington, four other men charged in the case and have pleaded guilty. Two of them, Robert Grabowski and Michael Passaro, both former Sky Capital brokers, testified against Mandell and Harrington at trial.
In the trial, jurors heard several recordings made by the Federal Bureau of Investigation, including one in which Mandell was heard telling brokers, “You have to lie, you have to paint a rosy picture. That’s your choice.”
In another conversation, Mandell warned his brokers they couldn’t tell the truth about their investment schemes, saying, “If Sky goes belly up, we’re all going to be embroiled in a big scandal.” He added, “There will be no one, no one that’s safe.”
Prosecutors said company records showed that Mandell paid himself a salary of more than $7.3 million and charged more than $440,000 in personal expenses to the New York-based company’s American Express card.
“My family has suffered for years and years now,” Mandell told the judge with his wife, mother and brother looking on. “We’ve lost everything but each other.”
The case is U.S. v. Mandell, 09-cr-00662, U.S. District Court, Southern District of New York (Manhattan).
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