The Eleventh Circuit Court of Appeals agreed that a federal judge was justified in departing from federal sentencing guidelines in handing down the maximum statutory sentence to a Florida man who masterminded a Ponzi scheme that defrauded more than 500 victims out of $19 million. David Lewalski received a 20-year sentence when he was sentenced by U.S. District Judge James Whittemore in November 2011, and asserted a variety of reasons why that sentence was in error - including that the sentencing judge should not have considered a letter Lewalski authored to his girlfriend in which he bragged about "snookering the prosecutor and probation officer in order to receive a lighter sentence."
Lewalski operated Botfly LLC, promising investors they could reap monthly returns of 10% through Lewalski's sucess in trading foreign currencies. Ultimately, Lewalski raised more than $30 million from over 500 investors. However, Lewalski only invested a small portion of these funds, and instead misappropriated millions of dollars in investor funds for a variety of personal expenses that included $45,000 in dental work, $244,000 at luxury retailers such as Gucci and Hermes, $475,000 in private jet service, $616,000 on luxury automobiles including a Porsche and Ferrari, and $144,000 on motorcycles and related expenses. After a complaint by a concerned investor, Lewalski was arrested in April 2010 and later entered into a plea agreement with prosecutors.
Lewalski challenged his sentence for several reasons, including that the sentencing court (1) failed to enforce his plea agreement by sentencing him to a higher range than that contemplated in the plea agreement, (2) improperly considered his pre-sentencing letter to his girlfriend, (3) improperly considered the disclosure by prosecutors that Lewalski had a $100,000 "getaway" fund, and (4) did not adequately explain its decision to make an upward departure from sentencing guidelines. The Eleventh Circuit dealt with each contention in short shrift, finding that the sentencing court was not bound by the recommended sentence and that Lewalski was expressly informed of this possibility. Nor did the sentencing court improperly consider the letter to Lewalski's girlfriend or the disclosure of his "getaway" fund. Finally, the sentencing court's explanation for handing down the maximum sentence was sufficient in that it considered the appropriate factors under 18 U.S.C. § 3553(a) and explained that it had serious concerns about protecting the public from any future criminal conduct by Lewalski and specifically noting his "arrogance and greed." By considering these factors, the sentencing court satisfied its obligations in handing down the sentence.
According to the Bureau of Prisons, Lewalski is currently scheduled to be released April 7, 2028.
The Receivership website for Botfly is here.
A copy of the indictment against Lewalski is here.
A copy of Lewalski's Plea Agreement is here.
A copy of the Eleventh Circuit's opinion is here.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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