CHAMPION-CAIN SENTENCING DELAYED UNTIL NEXT JANUARY
Postponements likely related to continued cooperation
When Gina Champion-Cain pleaded guilty in July to criminal charges of conspiracy, securities fraud and obstruction of justice, U.S. Attorney Robert Brewer promised that her $400 million Ponzi scheme would cost the former restaurateur her freedom.
Champion-Cain, at one time well known for her collection of Patio restaurants, has yet to be incarcerated, and her sentencing, which originally had been scheduled for this week, has been postponed until Jan. 19. While she is facing potential prison time of 15 years, she is also cooperating with federal prosecutors in their ongoing probe, part of a plea deal that could extend her sentencing date well beyond next January.
Several dozen investors have already
settled with Chicago Title, the target of multiple lawsuits, claiming that the company, which handled the escrow accounts for the investor funds, was complicit in the Champion-Cain lending program.
The latest sentencing postponement was requested by one of Champion-Cain’s attorneys, Angela Marie Machala, but the docket for the federal case does not include any documentation explaining the reason for the request. Up until early this month, the sentencing date had been scheduled for Nov. 16.
Machala did not respond to multiple requests seeking an explanation for the postponement, and the U.S. Attorney’s office said Wednesday it could not comment on the reason for the sentencing change. Champion-Cain remains free on $100,000 bond.
San Diego attorney Charles LaBella, a former federal prosecutor who at one time was deputy chief of the U.S. Department of Justice’s Fraud Section, said it is not at all uncommon for sentencing to drag on for some time in a case of this magnitude where the accused is cooperating with law enforcement authorities.
“It’s the nature of what happens when someone is cooperating,” said LaBella. “Unless they’re an extreme f light risk or a danger to the community, they’re usually out on bail and the government wants as full a record as possible on the cooperation so the sentencing judge will take that into consideration.”
The long-running “Fat Leonard” bribery case is an example of how sentencing can be delayed for years as San Diego-based federal prosecutors pursue multiple defendants. Leonard Glenn “Fat Leonard” Francis, who pleaded guilty more than five years ago to
his role in the Naval bribery scandal and agreed to cooperate with investigators, has yet to be sentenced.
LaBella noted that as long as Champion-Cain’s sentencing remains in limbo, it gives the U.S. Attorney’s office more leverage in extracting cooperation that could lead to the potential prosecution of co-conspirators.
“As a practical matter, prosecutors want to wait until the cooperation is complete to make sure the witness continues down the path of cooperation and doesn’t decide to stop cooperating and not provide further information to the government,” LaBella explained. “It’s a quid pro quo.”
Once a prominent restaurateur, Champion-Cain was accused more than a year ago by the Securities and Exchange Commission of bilking dozens of investors whom she enticed to participate in what was then described as a $300 million liquor license lending scheme. Instead of using investor money to make high-interest loans to individuals seeking alcohol licenses, she directed the bulk of the money to companies she controlled, the Securities and Exchange Commission alleged.
According to the plea agreement filed by the U.S. Attorney’s office, the liquor license lending program ensnared hundreds of individuals and institutions who invested more than $400 million between 2012 and 2019.
Just how Champion-Cain is cooperating in the federal criminal probe remains unknown. Attorney Steve Strauss, who represents Chicago Title, sought to cast doubt on any information she may be providing.
“Whatever she is saying to the authorities about Chicago Title, it’s self-interested and should not be believed because it’s intended to reduce her sentence,” Strauss said.
The already approved settlement with Chicago Title allowed some 48 investors to recoup 65 percent of their nearly $23 million in losses. In addition to the growing number of suits targeting Chicago Title, the court-appointed receiver who is overseeing the assets of Champion-Cain and her companies wants to file a suit of its own against Chicago Title.
U.S. District Judge Larry Burns, during a hearing in late August to consider the receiver’s request, decided to not grant the request, saying he wanted to first see the outcome of planned mediation talks between Chicago Title and some of the investors that are suing the company. He said he would revisit the issue during a hearing scheduled for Dec. 7.
Strauss said that Chicago Title is currently in mediation talks with some investors and plans to give judge Burns a status report in early December.