Fugitive Ponzi Schemers Receive Harsher Prison Sentences

 Posted on April 17, 2014 in Criminal Defense

The worst thing you can do when facing federal criminal charges is to run. The law will eventually catch up with you—and punish you more severely. Nelson and Janet Hallahan learned that lesson all too well.

The “Mini-Madoffs”

The Hallahans lived in Peoria, Illinois, and were known for their wealthy lifestyle. It turned out that lifestyle was financed through fraud. They ran a Ponzi scheme for nearly six years during the mid-1990s, using new investors to finance phantom returns paid to existing clients. A 2012 Huffington Post article referred to the Hallahans as “mini-Madoffs” for their scheme.

Like most Ponzi schemers though, the Hallahans were eventually caught. In 2000, the couple pleaded guilty on charges of conspiracy to commit bank fraud and money laundering. In exchange for their confessions, federal prosecutors dismissed more than a dozen additional charges and recommended a relatively lenient sentence.

The court accepted the plea agreement and planned to sentence the Hallahans in May 2000. They never appeared though. Instead, the Hallahans fled, first to Missouri, and then to Arizona. They lived in hiding for nearly 12 years. After the Hallahans were profiled on “America's Most Wanted,” a television program dedicated to tracking down fugitives, a source alerted United States Marshals as to the couple's whereabouts in Arizona.

The Sentencing

The Hallahans were finally sentenced for their 2000 guilty pleas in November 2012. (They had also been charged with, and pleaded guilty to, an additional charge of failing to appear at their original sentencing.) The court sentenced Nelson Hallahan to 10 to 12½ years in prison; his wife received a sentence of eight to 10 years.

The couple appealed their sentences to the U.S. 7th Circuit Court of Appeals in Chicago. They argued the trial court improperly relied on the 2012 version of the federal sentencing guidelines. Instead, the judge should have used the 2000 guidelines, which were in effect at the time of their original guilty pleas. (The 2012 guidelines recommended longer sentences for the Hallahans' crimes than the 2000 version.)

The 7th Circuit rejected this argument. While the U.S. Supreme Court ruled in 2013 that a defendant could not be sentenced under a harsher version of the guidelines adopted after he or she committed a crime, that rule did not apply here. The Hallahans were ultimately sentenced not just for their 2000 convictions, but also their 2012 guilty pleas in connection with their decision to flee justice. That was a “continuing offense,” the 7th Circuit said, and therefore it was appropriate to apply the 2012 guidelines to their entire sentence.

Defending Yourself the Right Way

Anyone accused of a serious crime should defend themselves to the best of their ability, but running away is never the answer. Instead, you need to work with an experienced Illinois criminal defense attorney who will use every legally available avenue to protect your interests. Contact the Law Offices of Hal M. Garfinkel LLC, Chicago Criminal Defense Attorney today if you have any questions.