For the second straight week, I’m going to write about listening to the Chief U.S. District Judge deliver a well-reasoned message on fair play.
This time, I’m not talking about Chief Judge P.K. Holmes III of the Western District, who has not at this writing issued his decision on sanctioning lawyers he suspects of abusing his court. This time I’m talking about Chief Judge Brian Miller of the Eastern District, who sentenced Alberto Solaroli to federal prison because it would have been deeply unfair not to.
Solaroli is a Canadian citizen who was running some kind of business — prosecutors seem to think it was mainly just a scam — in Florida. But he was indicted in Arkansas because his biggest victim was One Bank & Trust of Little Rock.
I’m not sure I’ll ever understand the whole story, but here are the high points:
Back in 2007, Gary Rickenbach, then EVP and chief loan officer of One Bank, got hooked up with Solaroli through a mutual friend, David Crews of Little Rock. Rickenbach invested in Solaroli’s super-efficient engine technology, and shortly thereafter he arranged a $1.5 million line of credit from One Bank.
Solaroli claimed net worth of $170 million on his loan application, which makes me want to rerun my old column about the meaninglessness of big numbers.
Solaroli essentially maxed out the line of credit in three days. He bought two Porsches ($750,000 and $244,276) and gave $380,000 to Crews — presumably to repay a debt, since prosecutors said the money was ultimately for Solaroli’s benefit. And he made a $120,000 wire transfer to his company.
Solaroli never made a single payment on the loan, although he apparently persuaded Crews to make one interest payment early on, and One Bank went into an all-hands-on-deck panic to cover up the dumbest loan by supposedly professional lenders I’ve heard of since the S&L crisis. (Yes, dumber than the loans to Kevin Lewis and Dennis Smiley.)
The mess that was One Bank under its late owner Scooter Stuart eventually unraveled, and Solaroli was indicted for bank fraud. In a sweet plea deal, Solaroli got the charge reduced to money laundering of just the $120,000 wire transfer. That’s all the restitution he’ll have to pay One Bank, although the bank did get a civil judgment for the full amount.
Which brings me back to Judge Miller’s sentencing hearing late on the afternoon of Friday, Feb. 26. Defense attorney Omar Greene boldly asked for a probation-only sentence, pointing out that Solaroli, a first-time offender, is 61 and that recidivism is unlikely after age 50.
“I don’t think he’ll ever do anything against the law again,” Greene told Miller, and the judge didn’t argue.
“As I sit here today, any prison sentence I would give you would not be based on any future crime you might commit,” Miller said. But he shot down Greene’s argument about recidivism with a reminder that Solaroli was in his 50s when he committed his first crime.
Judge Miller seemed to be trying to juggle the magnitude of that crime with the terms of the plea deal, which reduced the value of the crime by 92 percent and completely omitted his breathtakingly dishonest loan application.
“I think when you steal $1.5 million, you deserve prison,” Miller said, coming back repeatedly to the actual amount of the loss instead of the negotiated plea.
“I put postal workers in prison for stealing gift cards,” he said. “How can I look those people in the eye if I let a guy steal $1.5 million and not go to prison?”
The sentencing guideline for a first-time offender who takes responsibility for laundering $120,000 is 12 to 18 months. I think it’s safe to say that Miller thought that lenient.
“To be very honest with you, Mr. Solaroli, if you were a younger person I’d be looking at going above the guideline,” the judge said.
Instead, he went with 12 months and one day, and that extra day was a point of grace. Federal prisoners serving more than a year are eligible for “good time” early release, meaning Solaroli will likely be out in about nine months.
Rickenbach and two other former One Bank executives, Michael Heald and Brad Paul, are still under indictment for allegedly helping cover up the Solaroli default while One Bank applied for and received TARP bailout money.
Heald and Paul are scheduled for trial in May. Rickenbach, who was originally accused of TARP fraud, has offered to plead guilty to misprision of a felony — that is, failing to blow the whistle when Scooter Stuart submitted doctored call reports to federal regulators — in exchange for a probation-only sentence.
His federal judge, Kristine Baker, hadn’t decided last week whether to accept that deal.
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Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com. |