845 YEAR SENTENCE IN 2000
37 MONTH SENTENCE TODAY (2018)
Due to the changes in sentencing guidelines, Mr. Weiss would receive a maximum of 37 Months in a prison for the same crime committed in 2000... a sentence disparity of 841 years.
Sentencing Sholam Weiss in 2000
During sentencing, the district court found that Mr. Weiss was personally responsible for money laundering involving $100 million, with “losses or intended losses” of $125 million to National Heritage. Restitution, based on the losses, was set at $125 million and he was sentenced to 845 based on the mandatory sentencing guidelines. (See, the United States v. Booker)
Sentencing after 2001 (sentencing guidelines changed)
If Mr. Weiss were to be convicted of the same offenses today, his sentence would be calculated by different guideline standards than the guidelines used during his sentencing in 1999.
In 2001 Congress has recognized that the previous sentencing guidelines standards have caused inconsistencies in sentencing and has cause inhuman sentences to some individual offenders. In 2001 Congress has changed the way sentencing should be viewed and calculated.
If Mr. Weiss were to be convicted of the same offenses today, his sentence would be calculated by different guidelines than what was used during his sentencing in 1999. United States Sentencing Guidelines (USSG) §2S1.1(a)(1), which became effective November 1, 2015, provides that the base offense level for money laundering is the "offense level for the underlying offense from which the laundered funds were derived." In this case, the underlying offenses from which the laundered funds were derived are wire fraud (18 U.S.C.1343) and transportation of stolen goods (18 U.S.C.1314)
Pursuant to §2B1.1(a)(1), Mr. Weiss' unadjusted offense level would therefore be 7, In addition to the base offense of 7, §2B1.1 would require a 4 level increase for "substantially jeopardize[ing] the safety and soundness of a financial institution" (§2B1.1(b)(16)(B)). The enhancement for leadership (4), enhancement for obstruction of justice (2) and a history category score of III, would still apply as they did in the original sentencing. With a total offense level of 17 and a criminal history category score of III, Mr. Weiss' criminal sentence range would be 30-37 months. The current guidelines (under §2B1.1) focuses on money losses as the main sentencing enhancement for money laundering convictions. With no losses, Mr. Weiss’s sentence would be a relatively low 30-37 months, which he has served many times over.
Mr. Weiss’ Actions Did Not Cause actual Loss or intended For National Heritage
During sentencing, the district court found that Mr. Weiss was personally responsible for money laundering involving $100 million, with “losses or intended losses” of $125 million to National Heritage. at that point losses was not an underlying factor of sentencing which is under today's sentencing guideline, under the previous guidelines the definition of actual loss and intended loss had a different definition, under today's guidelines, the judge shall apply "Credits Against Loss", if..( see below §2B1.1 section 3.)
New Rules applicable to Weiss's losses
which would adjust his underlying losses
(1) The money returned by the defendant before the offense was detected,...... would be credited to losses.
(2) In a case involving collateral pledged, If the collateral has not been disposed of by that time, the fair market value of the collateral at the time of sentencing..... would be credited to losses.
(3)in the case of a fraud involving a mortgage loan, if the collateral has not been disposed of by the time of sentencing, use the fair market value....... would be credited to losses.
(see full text below)
3. Loss Under Subsection (b)(1).—This application note applies to the determination of loss under subsection (b)(1). (see.)
(A) General Rule.—Subject to the exclusions in subdivision (D), loss is the greater of actual loss or intended loss.
(i) Actual Loss.—“Actual loss” means the reasonably foreseeable pecuniary harm that resulted from the offense.
(ii) Intended Loss.—“Intended loss” (I) means the pecuniary harm that the defendant purposely sought to inflict; and (II) includes intended pecuniary harm that would have been impossible or unlikely to occur (e.g., as in a government sting operation, or an insurance fraud in which the claim exceeded the insured value).
3. (E) Credits Against Loss.—Loss shall be reduced by the following: (see.)
(i) The money returned, and the fair market value of the property returned and the services rendered, by the defendant or other persons acting jointly with the defendant, to the victim before the offense was detected. The time of detection of the offense is the earlier of (I) the time the offense was discovered by a victim or government agency; or (II) the time the defendant knew or reasonably should have known that the offense was detected or about to be detected by a victim or government agency.
(ii) 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.
(iii) Notwithstanding clause (ii), in the case of a fraud involving a mortgage loan, if the collateral has not been disposed of by the time of sentencing, use the fair market value of the collateral as of the date on which the guilt of the defendant has been established, whether by guilty plea, trial, or plea of nolo contendere.
In such a case, there shall be a rebuttable presumption that the most recent tax assessment value of the collateral is a reasonable estimate of the fair market value. In determining whether the most recent tax assessment value is a reasonable estimate of the fair market value, the court may consider, among other factors, the recency of the tax assessment and the extent to which the jurisdiction’s tax assessment practices reflect factors not relevant to fair market value.
All of those mortgages purchased by South Star for the benefit of NHLC were transferred out of Weiss’s control (from South star) and put in trust for the benefit of National Heritage before the government began its investigations on the crimes for which Mr. Weiss was convicted. Under today’s new federal guidelines in determining actual losses, these mortgages bought by South Star would be credited towards the calculation of losses imposed on Weiss, resulting in Weiss not being responsible for any losses.
Furthermore, even if Weiss could not have returned the mortgages to the insurance company before the crime has been detected, all the mortgage were backed by an underlying asset and the government would need to place a fair market value to these mortgages. The (PSR at 74) indicates that the receiver has collected $65 million dollars from selling just a part of the mortgages, but Weiss did not get any adjustment on the losses attribute to him (or any co-defendant) from the sale and income of these mortgages, (in 2000 loss were not a factor to determinant a sentence).
Further, part of that $125 figure represents “intended loss”. Under today’s federal guidelines, a sentencing court would not find “intended looses” because the guidelines now require a showing of intent to “purposely seek to inflict harm” on the victim. Even under the Government's theory of the case, Weiss did not "purposely seek to inflict harm" in his business dealings with National Heritage, because he sought to restore the financial health of National Heritage, and thereby profit from his $23 million investment in the NHLC. Weiss received 906 thousand shares of NHLC preferred class E shares for $26 per share (see PSR 10 & 32), if the company would go out of business these shares would become worthless, which it did.
Developments after Weiss's 2000 sentencing, demonstrate that although Weiss was responsible for the money laundering (as explained above), his involvement with National Heritage did not cause losses to National Heritage.
Williams v. UFH Apartments, Inc
The first development was the findings of a New York district court, reviewed by the Second Circuit Court of Appeals, in Williams v. UFH Apartments, Inc., C02.0000463 (2nd Cir. 2002) This was a civil case brought by the Receiver of National Heritage against a New York company, UHF Apartments. Weiss's company, South Star, bought the “Tudor City Portfolio”, consisting of 212 Mortgages and 320 co-op apartment units, pursuant to its contract with National Heritage, and sold the co-op apartments to UFH. Because South Star allegedly purchased the Tudor City Portfolio with illegally obtained money from National Heritage, the sale of the co-op apartments to UFH was considered a fraudulent transfer, and the Receiver sought the value of those assets as well. The district court determined that UFH and South Star were “jointly and severally” indebted to National Heritage in the amount of $8,817,854, representing the purchase price of the Tudor City Portfolio (and certain transaction and administrative costs). But the district court also found that the Receiver had already realized $14,600,000 from the mortgages, showing a large profit, and demonstrating that UFH and South Star were not in debt to the Receiver of National Heritage. (Id. at 4,8.) This case demonstrates that the discounted mortgages that Weiss’ company purchased for National Heritage did not loose value, but instead grew substantially in value. The mortgages Mr. Weiss’ company purchased for National Heritage resulted in a profit, not a loss.
The district court further found that Receiver applied “excessive discount” to the value of the Tudor City mortgages it still owned and had not liquidated, and in general that evidence the Receiver presented to the district court was so unreliable as to be of “doubtful admissibility”. ( Id. at 5). This suggests why the sentencing court in 2000 found that of sentencing only $65 million of mortgages had been recovered (see, PSR 74) – the district court relied on inaccurate accounting by the Receiver, without any independent accounting. In fact, as the findings of the NY district court demonstrated one year later, the value of the mortgages returned was more than the “losses and intended losses”.
Receivers accounting filed in 2009
Documents submitted by the Receiver in another related civil case in 2006 supports this. These documents state that the Receiver recovered (and distributed) a total of $235.6 million dollars. Id.
Accounting Inquires for the past 16 years
The Receiver has refused requests by Mr. Weiss to give a detailed accounting of the source of those recoveries. However, according to testimony from trial by the attorney for the Receiver during the liquidation of National Heritage, the mortgages that Mr. Weiss (through his company South Star) purchased for National Heritage were “the largest asset” of National Heritage.
Satisfaction of Restitution
Finally, on July 28, 2016, the district court (Middle District of Florida), entered an order declaring that Mr. Weiss’ restitution of $125 million dollars had been paid in full. (see satisfaction of restitution)