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Wednesday, August 12, 2009

Ind. Decisions - "Crown Point businessman given plea agreement in fraud case "

Here is the story from August 10th, by Susan Brown of the NWI Times; it begins:

Nearly five years after alarmed investors first alerted authorities, Lake Criminal Court Judge Diane Boswell reluctantly accepted a complex plea agreement Monday for business owner Daniel Swift, a former Crown Point School Board president.

Swift was arrested in December 2004 at his business, High School Sports Publication Inc., and charged with defrauding at least 13 Indiana and Illinois clients of more than $900,000 by selling them unregistered securities, that promised to pay interest rates of up to 14.8 percent.

Individual investments ranged from $3,000 to $250,000. Investors included a single mother, a person who lost a home and was forced to move to Michigan, a man who invested his wife's inheritance and a Purple Heart recipient.

The Indiana secretary of state's prosecution assistance unit undertook an investigation in September 2003, working with Lake County prosecutors and Crown Point police.

In June, Swift, 63, finally entered into a plea agreement with special prosecutors in which he pleaded guilty to eight felony counts in connection with 58 securities-related charges.

Swift agreed to pay partial restitution of $423,264.33 -- less than half of what he allegedly bilked from investors -- and serve a 16-year sentence that includes no prison time. He will serve half the time at the Kimbrough Work Release Facility and spend the remaining eight-years on probation.

Three failures to make timely restitution payments would cost Swift, who is self-employed, from 30 to 120 days in the Lake County Jail. A fourth lapse would result in Swift's serving the full 16-year sentence in state prison.

Victims long have criticized the length of the state's investigation and what they consider a lenient plea agreement.

During Monday's protracted and emotional sentencing hearing, Boswell herself probed the state's reasoning and impatiently challenged defense arguments.

Given that they stand to receive only a fraction of the money Swift squandered, Boswell said victims may well be seeking "satisfaction" rather financial return.

In an emotional statement to the court, Nancy Schultz, who worked for Swift at the high school publication, said she and her husband lost their $180,000 retirement nest egg, forcing them to sell their home and move to a small town in Michigan.

"But most of all, I have to live with the guilt of knowing that I was the one that convinced my family and friends to invest their money, and that is something I have to live with every day," she said. "They trusted me, and I trusted Dan Swift."

Boswell dismissed Swift's statement apologizing to the court and his plea for forgiveness. "It is an abomination and a disgrace to take your friends' money and misuse it," Boswell said.

Here is a column by Jerry Davich of the Gary Post-Tribune. Some quotes:
According to the plea agreement, Swift pleaded guilty to only eight counts of securities fraud, with the remaining counts dismissed by the state. Plus, he will immediately begin serving eight years at the Kimbrough Work Release facility, with an eight year suspended sentence.

Also, after a one-time payment of $31,000 to his victims, to be divided among them, he is to make regular monthly payments of only $2,000, again divided among them.

For instance, his biggest victims, Tim Roeske of Hebron and Nancy Schultz of Michigan, would receive $327.91 and $539.28 a month, respectively, each figure based on the amount of restitution owed by Swift.

Of course this is a drop in the bucket compared to what they "invested" through Swift.

At Monday's sentencing hearing, Roeske -- by far the most outspoken victim in this case -- left the courtroom early, either out of frustration, anger, or exhaustion.

Schultz and fellow victim Dennis Smith made a victim impact statement, as did the husband of the couple swindled for a quarter million dollars. He didn't plan on speaking. He felt compelled to say his peace.

He told Boswell the plea agreement should be tossed aside and Swift should be tossed in jail, as simply, justly, and righteously as that. But the machinations for Swift's justice were already set in gear months ago, possibly years ago.

One victim told me he lays full blame of this long-lingering case with the Indiana Secretary of State's Office. And politics may be at play.

The victim alleges Republican Secretary of State Todd Rokita purposely "dumped" this high-profile case on the Lake County prosecutor's office.

"The state bungled this case years ago knowing that no one in Lake County was qualified to handle it," the victim said. "And it turned out to be true."

Earlier this year, the case was transferred from the Lake County prosecutor's office to the Indiana Secretary of State's Office. Before that, Lake County Deputy Prosecutor Robert Neumaier was removed from the case after complaints from Swift's victims to the Indiana Commission on Judicial Qualifications.

Jim Gavin, spokesman for Rokita's office, told me Monday his office is pleased with the sentence, considering the circumstances.

"It's a rare sentence but a strong sentence," Gavin said, noting that it included the restitution of every penny ordered by law. "It also guaranteed a conviction."

Meaning if the case went to trial there is the chance Swift could have received a lesser sentence and the case could have dragged on for even more months or years.

Initially, the case involved up to 58 felony charges against Swift for up to $900,000 in securities fraud. Yet that figure of owed restitution was pared down to $423,264.

If Swift fails to make the aforementioned payments, he will serve time in Lake County Jail for 30, 60, or 120 days, or for the remainder of his sentence, depending on how many payments he has missed. But I doubt his victims would be so lucky.

"Has any case ever been handled this inefficiently?" asked Roeske, who has sent me several letters, calls and e-mails through the years venting his frustration.

Yesterday afternoon Davich had this brief story, headed "Indiana Secretary of State disagrees with column on Swift case."

And today the NWI Times has a second story by Susan Brown, headed "Swift case a lesson learned, prosecutors say: Investment fraud cases often leave victims dissatisfied with outcome." Some quotes:

CROWN POINT | Victims have criticized a plea agreement reached with a Crown Point businessman who squandered their life investments, but state and local prosecutors consider the outcome an overall success and a lesson learned for a sometimes-gullible public.

In writing to The Times following Monday's sentencing hearing for Daniel Swift, Indiana Secretary of State Todd Rokita said it's cases like Swift's that have driven his office to become more proactive in making the public aware that if an investment sounds too good to be true -- it probably is.

Similar white-collar crimes have risen by 25 percent in the last year with the economic downturn, according to state officials.

Swift had been charged with defrauding at least 13 Indiana and Illinois clients of more than $900,000 by selling them unregistered securities, in which he promised interest rates of up to 14.8 percent. Investors became suspicious more than five years ago and alerted Rokita's office, which handed the case over to Lake County Prosecutor Bernard Carter as required by law. In February 2009, Rokita said Carter used a new law to appoint members of Rokita's staff as special prosecutors. * * *

Victims said they doubted Swift, at 63 and self-employed, can follow through on the deal, but Jim Gavin, spokesman for the secretary of state's office, said the restitution amount of about $424,000 did represent every outstanding dollar as shown in charges filed by Lake County prosecutors. The state's special deputies, though appointed only in February, achieved a guilty plea within a matter of months, he said.

"(The plea agreement) does guarantee a conviction," Gavin said. "It guarantees a placement and has much stronger consequences than probation, which the judge had the discretion to impose."

Rokita called the outcome "extremely rare and positive" when compared with other white-collar crimes today. Swift's victims are getting far more of a return than those of Bernie Madoff, who received pennies on the dollar after losing billions, he said.

Carter, however, was less effusive, saying he was satisfied with the terms of the plea agreement yet understood the victim's displeasure.

"The plea agreement was brokered with the secretary of state's office with my supervision," Carter said. "Both offices met with the victims. We explained the problems, possibilities and options."

What was emphasized was the role of the prosecutor versus getting the money back, he said.

"Our main purpose is to get a conviction," he said. "We're not a collection agency."

Carter said the $900,000 loss was an accurate figure, reduced to less than half because some losses were found not to be within the five-year statute of limitations. Time had run out to amend the charges, he said. His office unsuccessfully sought Swift's cooperation in including those amounts in the restitution, he said.

Carter said the office was prepared to go to trial within the year required by law and sought only one continuance, unlike the defense, whose strategy was one of delay through repeated continuances.

"People stall for various reasons," Carter said. "The court knows that, and we know that."

Posted by Marcia Oddi on August 12, 2009 08:51 AM
Posted to Ind. Trial Ct. Decisions