Monday, January 26, 2015


Federal Sentencing Guidelines table

The US Attorney's Office in Connecticut, in a 46-page Sentencing Memorandum that it filed in its case against Francisco Illarramendi, related in detail how the defendant turned a $5m "hole" (loss) in his hedge fund into a $383m loss, sustained by his investors, creditors and service providers. The memorandum essentially rebuts all the arguments made by defense counsel, who seeks a sentence fo time served, plus a short period of home confinement.

The points made by the Government:

(1) The Guidelines Sentence, which is advisory, was computed at level 43, which is life in prison, due to the amount of loss, but the Government seeks a sentence of a minimum of twelve years. His criminal conduct does not justify time served, which is a short period of pre-trial incarceration. Bogus loan documents, bringing other conspirators into the fraud, lying to government regulators and US law enforcement. His fraudulent conduct was aimed at or motivated by personal gain.

(2) His greed overcame his need to recover the initial $5m loss. He spent $20m of the money on a lavish lifestyle. That is inconsistent with his counsel's statements that he was merely trying to recover from a substantial loss.

(3) Probation's loss calculation was based on only ten victims; the final Receiver's report tabulated over 100 victims.

(4) His criminal conduct was a Ponzi scheme, plain and simple. The defendant, when presented with  opportunities to reduce the deficit, only made it larger, through conscious decisions.

(5) No Downward Departure from the Guidelines is warranted. He did not commit the crimes under  "serious coercion, blackmail or duress."

(6) A multi-year fraud,  during which time the defendant reaped $20m in benefits, and obstructs justice, warrants a 12 year prison sentence.

Members of the hedge fund industry will certainly be watching this case, at time of sentencing; obviously, there is a genuine need for a sentence that will operate as a deterrent, and get their attention. Will Illarramendi get a long sentence, like Stanford, Madoff or Rothstein ? Stay tuned.


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