Marian Morgan would not play ball with the U.S. government, and she paid dearly for that decision – a 405-month (almost 34-year) prison sentence. Her codefendants both wound up with very different fates.
Marian Morgan and her husband, John Morgan, ran a Ponzi scheme in Sarasota, Florida, called “Morgan European Holdings,” scamming people out of millions of dollars. They were indicted along with two others, but on more serious charges: one count of conspiracy to defraud the United States, seven counts of wire fraud, five counts of transfer of funds taken by fraud, six counts of money laundering, and three counts of falsifying income tax returns.
John Morgan took a plea deal, which got rid of all but two counts against him. He was sentenced to 121 months (about 10 years) in prison. Stephen Bowman, who was also part of the Ponzi scheme, took a plea deal, which also eliminated all but two counts against him. He received only 51 months (a little more than 4 years) in prison. The last partner in this crime, Eli Hecksher, is still at-large in Denmark.
Marian Morgan, however, took no plea agreement, pleading not guilty instead and going to trial. She was found guilty of all 22 counts and wound up with what amounts to a life sentence.
Most people accused of committing federal crimes – more than 95 percent – resolve them through plea bargaining, a testament to how airtight the government’s case usually is. But there is also another reason, one that is virtually unknown to those outside of the criminal justice system but better explains the true reason why the vast majority of criminal defendants plead guilty: a downward departure at the time of sentencing.
Defendants who plead guilty and accept responsibility are entitled to a two or three-level downward adjustment, which has the potential to drastically reduce their overall sentence. U.S.S.G. § 3E1.1. The adjustment is two levels if the offense level prior to adjustment is 14 or lower. But the adjustment is three levels if the level is 16 or greater and “upon motion of the government stating that the defendant has assisted authorities in the investigation or prosecution of his own misconduct by timely notifying authorities of his intention to enter a plea of guilty …” Id.
There is no denying the fact that there is an inherent risk in going to trial. Indeed, no criminal defense attorney – not even F. Lee Bailey – can guarantee a defendant an outright acquittal. As I tell my clients time and time again, “I will fight for you vigorously, but your fate lies in the hands of twelve total strangers.” In Marian Morgan’s case, not only did she lose favor by pleading not guilty, but she lied on the witness stand, an action that sealed her fate.
Not only is Marian Morgan’s sentence significantly longer than her codefendents’ sentences, but her 405-month sentence is the longest of the three prosecuted Ponzi schemes in Sarasota during that time.
Beau Diamond who ran a Ponzi scheme called Diamond Ventures LLC was convicted and is serving a 15 1/2-year sentence on 18 felony counts, including wire and mail fraud and money laundering. Arthur Nadel got caught with his fingers in the cookie jar in a classic Ponzi hedge fund scheme of his own – a rather expensive cookie jar I might add, as the amount pilfered was nearly $ 162 million. He received 14 years in prison after pleading guilty to 15 federal counts in 2010. He died in 2012 while in prison.
The Morgans’ Ponzi scheme ultimately scammed 87 investors in the United States and Canada to the tune of $28 million from 2005 to 2009. When the jig was up, the Morgans tried to run. In a case that spanned two continents, involved international law enforcement agencies, and generated worldwide media attention, the Morgans fled to Europe but were later caught when trying to enter Sri Lanka.
Although John Morgan and Bowman played ball with the government, Marian Morgan did not. She was offered a plea deal, which she turned down. She was then offered a second plea deal, albeit not as attractive as the first, which was conditioned upon her pleading guilty to tax evasion, likely resulting in a sentence of 18 years in prison. She rejected that plea offer as well, and the judge dished out the harshest possible sentence after the trial ended.
As unfair as this might seem, this is the harsh reality of our criminal justice system, which has as its primary goal deterrence. At the same time, the fact that the federal sentencing guidelines are only advisory – and not mandatory – means that judges may depart either “upward” or “downward” from the sentencing guidelines’ range based on a careful weighing of the aggravating and mitigating factors. This discretion sometimes inures to the defendants’ benefit, as it may result in a sentence below the guidelines’ range.
One such case illustrating how courts have deviated from high advisory guidelines is United States v. Pellegrini, 2008 WL 5061829, at 6 (D.N.J. Nov. 26, 2008). There, the defendant pleaded guilty to a single count of structuring and fifty-three counts of causing or attempting to cause banks not to file a CTR. Based on Mr. Pellegrini’s offense level and his criminal history category, the guidelines provided for a sentencing range of between sixty-three to seventy-eight months. Little did Mr. Pellegrini know that the toothbrush and extra pair of boxers that he packed with him to go to court on his sentencing day would not be needed. Very simply, he got an early Christmas present.
Notwithstanding the presumptive prison sentence contemplated by the sentencing guidelines, the judge spared Mr. Pellegrini from an unpleasant visit to “Club Fed,” instead imposing a sentence of probation with home confinement and a $ 15,000 fine. Pellegrini, 2008 WL 5061829, at 6.
Needless to say, such a radical departure from the guidelines is the exception, not the rule. In the vast majority of cases, judges tend to impose a sentence within – and not outside – the sentencing range provided for by the guidelines.
The important lesson to be learned here is how critical it is for a defendant to evaluate his exposure when it comes to sentencing before making the critical choice of pleading guilty or going to trial. Indeed, this is potentially the most important decision that a person who has been ensnared within the coils of the criminal justice system will make in his entire life.
Let’s face it. The choices facing a defendant are not as vast as the entrees on the menu of a five-star Italian restaurant in midtown NYC. Nor are they as scrumptious. He or she must often choose between bad, the plea deal, or worse, going to trial and risking what could amount to a staggering sentence. From that perspective, a defendant must choose “the best of the worse.” But one thing defendants can be sure of is: if their case goes to trial and they lose, the penalty will be stiffer than if they played ball and took the plea deal.
The case of U.S. v. Marian Morgan demonstrates just how draconian the punishment can be for a defendant who loses at trial versus one who accepts a plea deal. The difference could mean several years or more in the penitentiary compared with the possibility of receiving only probation.
If you are faced with this type of decision, always seek the advice of an experienced criminal defense attorney who specializes in white-collar crime issues. A lawyer can help provide you with practical and sound advice, while steering you in the least risky direction.
Original Post By: Michael DeBlis
Subscribe to TaxConnections Blog
Enter your email address to subscribe to this blog and receive notifications of new posts by email.