Appeals panel upholds five-year prison term for investment fraud

Published: Friday, Oct. 11, 2013 - 11:26 pm

Federal prosecutors won the second round in the slugfest over the sentencing of prominent Sacramento businessman Collins Max “Collie” Christensen Sr.

A sharply divided federal appellate panel on Friday upheld the five-year prison term meted out two years ago by U.S. District Judge John A. Mendez.

Christensen, 55, pleaded guilty to fraud through the use of wire communications in connection with a real estate investment scam.

It is the only criminal case in which former U.S. Attorney McGregor Scott has appeared for the defense since he left office almost five years ago.

While the sentencing turned into a dispute between Scott and Assistant U.S. Attorney Russell Carlberg, the proceedings devolved into hostility between Scott and Mendez.

The five years behind bars is more than two years beyond what a plea deal called for and more than a year and a half above the high end of the advisory sentencing guidelines range.

When Scott noted that his client saved the court a lot of resources by agreeing to a plea bargain even before he was charged, Mendez said the move also avoided a trial, where all the ugly details of his wrongdoing would likely be exposed publicly.

“That’s not a proper consideration for sentencing,” Scott told him.

He accused the judge of “shifting the focus” of the hearing from Christensen’s personal use of investors’ funds to the plight of the victims after Scott presented case law that blunted as a valid sentencing factor how ill-gotten gains are used.

Mendez even dredged up Christensen’s 28-year-old felony fraud conviction in state court as evidence he may not have ever been rehabilitated.

In a published opinion authored by William H. Stafford Jr., a federal trial judge from Florida sitting on assignment at the 9th U.S. Circuit Court of Appeals, ruled the record supports Mendez’s conclusion that the guidelines “did not properly take into account the harm caused by the egregiousness of the defendant’s conduct.”

Stafford wrote the first 22 pages of the opinion and was joined by Circuit Judge Jay S. Bybee to form a majority.

Circuit Judge A. Wallace Tashima wrote a biting 14-page dissent, in which he suggested a failure of intellectual honesty on the part of both Mendez and the two-judge appeals majority.

“We are considering all our options,” Scott said, “but we don’t think this is the end of the road, especially in view of Judge Tashima’s dissent.”

Scott can ask for another hearing before the same three judges, or request a hearing before an enlarged circuit panel.

The majority opinion found no support for the arguments by Christensen’s attorneys that Mendez failed to resolve conflicts in the record regarding victim impact and loss amounts; failed to provide advance notice of the grounds for going above the guidelines; and relied on erroneous information, speculation and unreliable victim statements.

Tashima fired back that Mendez “committed prejudicial, significant procedural error in imposing an upward variance on the basis of investor losses that were not attributable to” Christensen.

Paraphrasing an appellate opinion in 2008 warning circuit judges not to “turn a blind eye when a district court distorts the sentencing process,” Tashima declared “that is precisely what the majority does” in the Christensen appeal. Because of that, “I respectfully dissent.” He said the matter should be sent back to Mendez for resentencing.

Christensen received more than $2.3 million from 14 individuals who agreed to invest in one or more of his projects. He later admitted he looted $985,994 for undisclosed real estate ventures. His deception had nothing to do with the more than $1.3 million invested and lost due to market forces, a deteriorating economy or even the investors’ own poor judgment.

Tashima said Mendez “either mistakenly believed that the losses in question did result from Christensen’s criminal conduct, in which case the sentence was predicated on ‘clearly erroneous facts,’ or (he) knowingly increased the sentence based on the impact of non-criminal conduct.”

The judge said Mendez even took into account the loss suffered by one investor who is not considered a victim by the prosecutors.

Read more articles by Denny Walsh



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