Sholam Weiss
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Sholam Weiss
Sholam Weiss
Sholam Weiss.jpg
Born (1954-04-01) April 1, 1954 (age 66)
StatusHoused at Federal Correctional Institution, Otisville; Otisville, New York scheduled date of release: June 10, 2738
OccupationFormer business consultant
Criminal charge78 counts of racketeering, wire fraud and money laundering
Penalty835 years imprisonment (reduced from 845 years in 2009), $123.4 million fine, $125 million restitution (paid in full)

Sholam Weiss (born April 1, 1954) is an American former businessman and philanthropist currently incarcerated at FCI Otisville.[1][2]

On February 15, 2000, the Middle District Court of Florida (Orlando) sentenced Weiss, to 845 years (later reduced to 835 years) in prison for racketeering, wire fraud and money laundering, restitution of $125,016,656, and a fine of $123,399,910, in connection with the collapse of National Heritage Life Insurance Company (NHLC).[3][4] His involvement did not result in any losses to the insurance company or the stakeholders in the company's policies.[5] Weiss fled the country at the end of his trial and was a fugitive for one year, and was subsequently extradited from Austria.[6]

Weiss' sentence is the longest given to a white-collar criminal in the United States. It is also the longest sentence given for a victimless crime.[7][8]

Early life and background

The son of Hungarian-Jewish Holocaust survivors, Weiss did construction work as a young man, and established Windsor Plumbing Supply in 1974, eventually making $20 million a year.[9][10]

After Windsor Plumbing declared bankruptcy in 1989, Weiss became a bankruptcy specialist. Through that business he met New York attorney Michael D. Blutrich, who was "outside counsel" to National Heritage Life Insurance Company, and his partner Lyle K. Pfeffer, also connected to National Heritage, through whom he became involved with National Heritage.[10]

Weiss was indicted on mail fraud charges and found guilty, for which he served eight months in prison.[10] He is an observant Hasidic Jew and has acted as a rabbi to other Jewish inmates while incarcerated.[11][12]

Allegations and conviction

In late 1989, National Heritage reported an operating loss and 27% reduction of capital from a decline of sales, and in 1990 insurance regulators threatened to shut down the company if it did not raise additional capital.[3][13] A group of investors, offered $4 million to satisfy regulators, in exchange for a controlling interest in National Heritage. The group provided a $4 million check, but once in control of National Heritage, transferred $3 million from National Heritage to help cover the check.[14] This began a long series of schemes in which millions were stolen from National Heritage by the group of investors. Bad investments further depleted National Heritage capital creating a $35 million hole plus an additional $10 million for the company.[15][16] In the early 1993, the group decided to cover up all the missing money by a "mortgage-backed bond scheme". Weiss was contracted by the investment group to purchase discounted mortgages with National Heritage funds, which were put into a mortgage-backed bond.[17]

Weiss and NHLC agreed that Weiss through his company South Star would place NHLC money into viable secured investments, which needed to be backed by real property, and be for the benefit of the insurance company. Weiss received approximately $100 million of NHLC funds and bought $177 million face-valued mortgages. They were mostly non-performing but was bought at a deep discount of roughly for $87 million. The mortgages were mostly FDIC-insured and secured by real property.[18] It was believed that the discounted mortgages could be rehabilitated, and thus make a large profit for NHLC. But once the mortgages were purchased and placed in a bond, the managers of NHLC fraudulently placed the bond on National Heritage's books with inflated values to conceal the missing money that was mismanaged or looted by the company's managers.[17] 25,000 policy holders allegedly lost $400 million.[19] But George Piccoli, Deputy Receiver for National Heritage said, "All policyholders were repaid completely by July 2000"[20].

Weiss and other business executives and lawyers working for NHLC either pleaded guilty or were convicted in the fraud case. Some of the executives who were the originators of the crime either received immunity or pleaded guilty with a plea deal for their testimony,[21][22] admitted to forging documents and lying to regulators. In exchange for their testimony against co-defendants like Weiss, the prosecutors would drop their criminal counts and recommend a reduction of their sentence.[23]

Weiss claims that if he were re-sentenced today under current sentencing guidelines, without losses attributed to him, he would receive a sentence of no more than 37 months.[24] Additionally, Weiss claims that the satisfaction of restitution was satisfied with the proceeds of the mortgages that he bought for the benefit of NHLC at a substantial discount from its face value (53% discount). The receivers settled these mortgages and collected the full face value, realizing a large profit for the insurance company.[25]

Sentencing

The rules of the sentencing guideline (§2B1.1, Application Notes: (D) Exclusions from Loss and (E) Credits Against Loss (iii), "In a case involving collateral pledged or otherwise provided by the defendant, the amount the victim has recovered at the time of sentencing from disposition of the collateral, or if the collateral has not been disposed of by that time, the fair market value of the collateral at the time of sentencing").[26] While at sentencing, the receivers claimed they had collected only $65 million, however no credit was given.[27] Three weeks after sentencing the receivers had collected a total of $175-$200 million, yielding a profit of $50-$100 million.[28] It took the government 16 years to file a satisfaction of restitution.[29]

At Weiss's sentencing on the National Heritage charges in February 2000, Judge Patricia C. Fawsett sentenced Weiss to 845 years in prison, with a fine of $123.4 million and ordered $125 million in restitution (which is jointly and severally with other co-defendant, and has fully been paid.[30][29])

Weiss is currently serving his sentence at the medium security prison, FCI Otisville, in Otisville, New York. His projected release date is June 10, 2738.[31]

Extradition

Weiss was arrested by Austrian authorities in the fall of 2000,[32] and was extradited back to the United States in 2002.[33] The extradition was challenged at the United Nations Human Rights Committee, and the European Court of Human Rights, both of which noted that the United States provided assurances that Weiss would receive a full appeal and a full re-sentencing.[34][35] The extradition was also raised in the Parliamentary Assembly of the Council of Europe, also noting the U.S. assurances.[36]

According to a 2017 letter from Austrian Chancellor Christian Kern to US President Donald Trump, under Austrian law, Weiss would have received no more than a 10-year sentence, and Austria granted extradition on assurances from the United States that Weiss would receive a full appeal and full re-sentencing.[37] Austria has requested Presidents Bush, Obama, and Trump for a commutation of sentence to time served.[38]

Weiss challenged his incarceration in federal court, arguing that the United States violated its extradition treaty with Austria by not providing a full re-sentencing and a full appeal (denied under the fugitive disentitlement doctrine), which United States assured Austria to effectuate the extradition.[39] In 2009, a judge restored his right of appeal to satisfy the treaty obligation, and took ten years off his sentence.[40] Weiss argued that the United States was also required to provide a full re-sentencing, but was denied for procedural reasons, with the court commenting that it was up to the Executive branch to satisfy the international obligation by a commutation of sentence.[41]

See also

References

  1. ^ "Find an inmate".
  2. ^ Herald-Record, Chris McKenna,Times. "Convicted thief paid for religious school". recordonline.com. Retrieved .
  3. ^ a b United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Judgment Doc. 1372.
  4. ^ Whitney, Sally (1 September 2000). "Anatomy of a Failure". Best's Review. pp. 96-104. Archived from the original on 23 March 2006.CS1 maint: BOT: original-url status unknown (link)
  5. ^ "Satisfaction of Restitution 2016" (PDF). Retrieved 2016.
  6. ^ https://www.orlandosentinel.com/news/os-xpm-2000-10-26-0010260287-story.html
  7. ^ Palazzolo, Joe. "Top 10 white-collar prison sentences". MarketWatch. Retrieved .
  8. ^ "The Galleon Insider Trading Case: How To Sentence a Seemingly Victimless Crime? - The Network". sites.law.berkeley.edu. Retrieved .
  9. ^ "Sholam Weiss | Longest White-Collar Sentence 845 Years". freesholamweiss. Retrieved .
  10. ^ a b c Rashbaum, William K. (9 March 2000). "845 Years in Prison, If the Authorities Can Catch Him; F.B.I. Says Fugitive Has a Flair For Fraud and Hiding Stolen Cash". The New York Times. Retrieved 2009.
  11. ^ Rashbaum, William K. (26 October 2000). "Fugitive Arrested in Austria After a Year on the Run". The New York Times.
  12. ^ "About | Free Sholam Weiss". freesholamweiss. Retrieved .
  13. ^ Whitney, Sally (September 2000). "Anatomy of a Failure". Best's Review. p. 96. Archived from the original on March 23, 2006. Retrieved 2018.
  14. ^ Whitney, Sally (September 2000). "Anatomy of a Failure" (PDF). Best's Review. p. 97. Archived from the original (PDF) on March 23, 2006. Retrieved 2018.
  15. ^ Whitney, Sally (September 2000). "Anatomy of a Failure" (PDF). Best's Review. pp. 97-98. Archived from the original (PDF) on March 23, 2006. Retrieved 2018.
  16. ^ "PSR 16" (PDF). docs.wixstatic.com.
  17. ^ a b Whitney, Sally (September 2000). "Anatomy of a Failure" (PDF). Best's Review. p. 100. Archived from the original (PDF) on March 23, 2006. Retrieved 2018.
  18. ^ "Anatomy of a Failure". Best's Review. Archived from the original on 2006-03-23.
  19. ^ https://www.masslive.com/news/2011/04/judge_reduces_sholam_weiss_845.html
  20. ^ Sally, Whitney (September 2000). "Anatomy of a Failure". BEST'S REVIEW. p. 104. Archived from the original on March 23, 2006. Retrieved 2020.
  21. ^ "Insurance Fraud Case Defense Has Say|last".
  22. ^ Rashbaum, William K. (2000-03-09). "845 Years in Prison, If the Authorities Can Catch Him; F.B.I. Says Fugitive Has a Flair For Fraud and Hiding Stolen Cash". The New York Times. ISSN 0362-4331. Retrieved .
  23. ^ "Strip club owner who ratted out mobsters won't go into hiding". nypost.com. 5 March 2018.
  24. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 2454
  25. ^ "Anatomy of a Failure". Best's Review. September 2000. Archived from the original on 2006-03-23.
  26. ^ "2016 GUIDELINES MANUAL". United States Sentencing Commission. September 2016.
  27. ^ Sholam Weiss PSR, 74, "some of the assets (valued approximately $65 Million) purchased with these fund were recovered".
  28. ^ Rashbaum, William K. (9 March 2000). "845 Years in Prison". The New York Times.
  29. ^ a b "Satisfaction of Restitution 2016" (PDF). Retrieved 2016.
  30. ^ Notice to the court, filed by the U.S. Attorney for the Middle District of Florida, to the Middle District Court of Florida. United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 2446.
  31. ^ "U.S. Bureau of Prisons Inmate Locator". Retrieved .
  32. ^ https://www.orlandosentinel.com/news/os-xpm-2000-10-26-0010260287-story.html
  33. ^ https://www.recordonline.com/article/20020701/NEWS/307019996
  34. ^ "University of Minnesota Human Rights Library". hrlibrary.umn.edu.
  35. ^ Sholam Weiss v. Austria, Communication No. 1086/2002, U.N. Doc. CCPR/C/77/D/1086/2002 (2002)
  36. ^ Parliamentary Assembly, Extradition of Sholam Weiss, Written Question No. 415 by Lord Russell-Johnston (Doc. 9578) April 1, 2003.
  37. ^ "Letter from Austrian Chancellor to President Trump, 2017" (PDF). 7 August 2017.
  38. ^ "Letter from Austrian Chancellor to President Bush, 2008" (PDF). 22 October 2008.
  39. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 168
  40. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 189
  41. ^ United States v. Weiss, Case No. 6:98-cr-99-PCF-KRS. Doc. 198

External links


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