Fraud scheme costs Wise 42 months in jail
Aspenite Michael R. Wise was sentenced yesterday to three and a half years in a federal prison for embezzling $8.7 million from 44 investors, many of them local.
He was also ordered by Judge Walker D. Miller in Denver’s U.S. District Court to pay restitution in the amount of $8,747,649. Wise is the former president and CEO of the Aspen-based mortgage brokerage firm Cornerstone Private Capital, and former head of the failed Silverado savings and loan.
The sentence pales in comparison to the 24-year sentence former Aspenite Lynda Mae Fratis received in March for embezzling approximately $1.7 million from Boogie’s Diner between 1992 and 1997. The sentence was handed down by Judge J.E. DeVilbiss in Pitkin County’s District Court.
Judge Miller turned down requests from Wise’s attorney, Gary Lozow, for a lighter sentence, saying Wise tried to avoid responsibility for his crimes until the end.
“You felt, `If I could just regain the … success I had in Silverado, the car, the house … I would be happy’,” Miller said. “Responsibility was accepted when you were confronted with reality.”
Wise, 54, told Miller he was sorry for his crimes and apologized to those he hurt. He said he was willing to pay the price for what he had done.
“I’ve hurt a lot of people,” he told the judge. “I’m deeply, deeply sorry.”
Miller said gave Wise a stiffer sentence than the minimum 37 months because he believed Wise “should be punished more severely.” He urged Wise to take advantage of this experience and once again become a productive member of society.
Assistant U.S. Attorney Tom O’Rourke urged Miller to impose the maximum 46-month sentence, calling Wise “a man of many talents but completely lacking in self-restraint,” who surrendered “not to his intelligence … but to greed.”
Of the sentence, Lozow said: “Mr. Wise felt the sentence was fair and appropriate under the guidelines.”
Wise must “self-surrender” himself to U.S. marshals on Aug. 2 and begin serving his sentence, according to Lozow. It is likely he will serve his prison term in Leavenworth, Kan., at a facility that has “the lowest security setting for federal prisoners,” Lozow said. He added that the Department of Prisons will make the final decision on where Wise will serve his time.
“The good-time calculation is 15 percent off, so Wise will serve roughly 36 months,” said Dick Weatherbee, public information officer with the U.S. Attorney’s Office. “Then he will be under supervised release for three years following his prison term. So that’s six years to pay restitution.
“The reality is that once he’s not under supervision, it’s very difficult to require further payments – civil litigation is the typical recourse for parties still owed money.”
“There are some very complex issues concerning restitution,” admitted Lozow. “The court found about $8.7 million in losses, and there’s an obligation for Mr. Wise to comply with payments of that restitution. The short of it is that he’ll have to pay restitution as he can in prison and upon his release.”
Wise has already submitted to the liquidation of his personal property and assets – estimated in excess of $3 million – but Weatherbee said he isn’t sure of the exact balance Wise still owes in restitution.
Wise built Silverado in the 1980s from a suburban savings and loan into a $2 billion thrift, the third largest in Colorado. Federal authorities claimed Silverado executives went on a lending binge that led to the thrift’s collapse in 1988 during the national savings-and-loan crisis.
The Silverado case became well known because one of the institution’s directors was former President Bush’s son, Neil. The collapse cost taxpayers $1 billion.
In February 1993, after prosecutors spent four years assembling their case, Wise was acquitted of charges that he used nearly $500,000 of a loan from the thrift for personal expenses.
But federal thrift regulators banned Wise and other Silverado executives from the banking industry for life and imposed mild restrictions on Bush.
Wise then moved to Aspen, where he set up the investment firm.
Investors were alerted to the thefts in August 1998 when a woman tried to change an address and no records were found. Wise initially told board members he had borrowed $450,000, but later admitted it was more than $8 million and said he couldn’t repay the money. He pleaded guilty on April 2, 1999, to two counts of federal wire fraud.
– The Associated Press contributed to this report.
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