Lawrence Leland “Lee” Loomis admitted he was guilty, agreeing to a plea deal in January that could send him to prison for up to 18 years for running what prosecutors said was one of the biggest Ponzi schemes in the region, one that siphoned millions of dollars away from dozens of families.
He signed the plea agreement on Jan. 29, agreeing that he was satisfied with his lawyers, that he would pay $462,299.28 in restitution from two bank accounts seized by the government and that he would cooperate with prosecutors as they pursued the case, which affected investors in six states.
Then came time for Loomis’ sentencing on Tuesday in federal court in downtown Sacramento, and he apparently had a change of heart.
Instead of accepting a sentence from U.S. District Judge John A. Mendez, Loomis essentially fired his lawyers, Kresta Daly and David Fischer, and asked to fight on in court.
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Loomis, 59, told the judge he wanted to represent himself in further proceedings and withdraw his guilty plea to one count of wire fraud. Mendez cleared the courtroom and spoke with Loomis, Daly and Fischer, then reopened the courtroom and agreed to allow Loomis represent himself, court documents state.
The judge also set a hearing for October to consider his request to withdraw his guilty plea, which could expose him to prosecution on the original 50-count indictment on mail fraud and wire fraud charges.
Daly did not respond to a request for comment Wednesday and Assistant U.S. Attorney Paul Hemesath declined to comment, other than to confirm three of Loomis’ alleged victims were sitting in the courtroom at the time waiting to speak.
Defendants have the right to represent themselves in court, although judges discourage the move and lawyers say it rarely ends well for the accused.
“I’ve been practicing 36 years, and I don’t remember a single time where a person representing themselves improved their situation,” Sacramento defense attorney William Portanova said Wednesday. “It’s uncommon for someone to try to represent themselves in federal criminal court cases. Frankly, it’s almost rare.”
Portanova represents Loomis’ father-in-law, John Hagener, who lost $870,000 investing in Loomis’ ventures and is awaiting sentencing after agreeing to plead guilty to conspiracy.
Up until Tuesday, it appeared as though Loomis would move forward with his plea agreement. His lawyers filed documents last month seeking a lighter sentence for him, noting that he has been in custody since his indictment in 2012 and declaring that Loomis’ “overall goal has always been to help people save for retirement and improve his customers’ lives.”
Prosecutors filed a sentencing memorandum last week painting Loomis in a different light.
“Loomis was the leader and architect of the scheme that resulted in millions of dollars of losses to dozens of families,” prosecutors wrote. “He stole the retirement funds of victims that had been earned over decades and spent it within months of receipt.”
Loomis, a Granite Bay resident, “lived in a million-dollar home, he supervised dozens of employees and he portrayed himself as a financial and personal success,” prosecutors wrote. “This image helped to convince victims that Loomis was trustworthy.”
But prosecutors also noted that Loomis is 59 and that the proposed 18-year sentence “will cover a large part of his remaining life.”
They added that Loomis “provided limited substantial assistance” in giving up information about his co-defendants, and suggested that he face a sentence of 16 years rather than 18.
The case itself was so complex that federal agents spent four years investigating before charging Loomis, who was accused of concocting a scheme to use seminars at hotels and casinos to promise investors 12 percent returns on investments and get them into condominiums and homes that were to generate monthly income for them.
Prosecutors say Loomis’ empire collapsed after the 2008 housing crisis and that he began using new investors’ cash to pay dividends to previous investors and keep his operation afloat.
“In this way, Loomis depleted almost all of the money he solicited from investors,” prosecutors wrote. “The final investor provided Loomis with $174,400 on Aug. 14, 2008.
“That money was depleted almost immediately on payroll obligations and a $40,000 cash withdrawal.”
As the feds moved in, at least four other suspects fled the country, including one later found in Ireland and another who chartered a jet and loaded it up with $5 million in gold and $500,000 in cash and ended up in Lebanon.
That suspect, Christopher Jared Warren, later was arrested crossing back into the country from Canada with $70,000 stuffed into his cowboy boots and received a 14-year, seven-month sentence.
Now that Loomis has won the right to represent himself, he must find a way to do so from his cell at Wayne Brown Correctional Facility in Nevada City, where he has been housed since March.
Portanova suggested such a task will not be easy.
“It’s like asking, ‘How do you remove your own appendix in your garage?’ ” he said.