Monday, July 14, 2014

U.S. seeks 11-year sentence, $4.4M for Hopkinton man accused of fraud

U.S. prosecutors want a Hopkinton man who defrauded investors out of more than $30 million to serve 11 years in prison and pay back $4.4 million, court records show.
But the attorney for Craig Karlis is seeking a "radical downward" departure from the typical sentencing guidelines for his client's crimes, citing Karlis's deteriorated health.
Karlis pleaded guilty in March to nine counts of wire fraud and two counts of filing false tax documents. Authorities said he and his business partner misled customers of their foreign currency trading company and siphoned those investments for their own personal use.
In a sentencing memorandum filed in U.S. District Court in Boston, Assistant U.S. Attorney Sarah Walters from U.S. Attorney Carmen Ortiz's office wrote that the government's recommendation that Karlis serve 135 months in prison for those crimes is lighter than such a case would usually demand. She also said prosecutors would not seek to fine Karlis, given his "extraordinary restitution obligations."
"The recommended sentence, however, is reasonable and is sufficient, but not greater than necessary, to reflect the seriousness of the crime while taking into account the defendant’s culpability and significant health issues," Walters wrote.
In his own heavily redacted sentencing memorandum filed this week, Karlis's attorney, Michael Natola, said those "grave medical problems" warranted a much more lenient punishment, pointing to a precedent established in past cases. While the document, which censors every reference to Karlis's ailment, doesn't suggest a sentence, it asks for one that reflects "the most undeniably relevant statutory factor in the unique circumstances of this case: providing him with needed medical care in the most effective manner available."
"Mr. Karlis’s experience of prison has been and will continue to be far more difficult than the normal hardship associated with prison, and will certainly continue to subject him to more than usual inconvenience or danger of deterioration of his health, or even death," Natola wrote.
Documents filed earlier in the case said Karlis has been battling cancer since his arrest in 2010.
Walters said Karlis's health was the primary factor in the government's decision not to seek the typical 14- to 17-1/2-year prison sentence his case would typically warrant. But the government doesn't believe he deserves any additional mercy beyond that.
"This scheme caused massive and devastating financial losses to many individual victims, who thought they were dealing with a legitimate investment company," Walters wrote in her memorandum, which puts the total number of victims at more than 250. "This was a calculated, long-term scheme, rather than a one-time occurrence, and Karlis was one of the two architects of the fraud."
Prosecutors argue Karlis also greatly benefited financially from his crimes, taking at least $1.7 million that he spent on a home in Florida, jewelry, and other personal items.
The sentencing hearing is scheduled June 24 in Boston.
Scott O'Connell can be reached at 508-626-4449 or Follow him on Twitter: @ScottOConnellMW