Court: Swindler’s sentence too light
Man who got probation for scamming investors could face prison time
A federal appellate court says a judge went too easy when sentencing a former Santa Fe investment adviser for defrauding clients out of more than $1 million to fund a lavish lifestyle.
The 10th U.S. Circuit Court of Appeals overturned Matthew Sample’s sentence, saying he incorrectly got probation instead of prison time because he earned a lot of money.
“The Record is clear that the district court imposed a lenient probation sentence because Sample’s high income allowed him to make restitution payments to his victims,” appellate Judge Carlos Lucero wrote. “Our system of justice has no sentencing discount for wealth.”
U.S. District Judge Judith Herrera sentenced Sample to five years of probation in 2017 after the charismatic con artist — who bilked large sums from a Santa Fe couple and other investors to finance a lifestyle that included a party pad with real gold woven into the wallpaper — pleaded guilty to one count of “fraud and swindles” and one count of wire fraud.
Federal prosecutors wanted Sample sent to prison for five years, but Herrera sided with Sample’s attorney, who argued that the swindler, then 42, would never be able to pay back his victims if he were behind bars.
But Lucero agreed with the U.S. Attorney’s Office in Albuquerque, writing that Herrera gave “improper weight” to Sample’s income and ability to pay restitution and failed to balance that against other factors that judges are supposed to consider at sentencing, such as punishment and deterrence.
“He misappropriated more than a million dollars,” Lucero wrote. “That seriousness alone weighs against the lenient nature of the sentence the trial court imposed.”
Lucero quoted a 2006 federal court decision that noted the importance of minimizing discrepancies between white-collar and blue-collar offenders and “limiting the ability of those with money or earning potential to buy their way out of jail.”
He wrote that a federal sentencing commission considers Sample’s crimes deserving of approximately seven years in federal prison.
Court documents say Sample began working as an investment adviser and registered broker in 1995 and began his career as a confidence man in Chicago in 2006 when he set up “the Vega Opportunity Fund,” which he closed a year later after it lost 65 percent of its value.
“Sample had been diverting money from the Vega fund for his own use,” according to the documents, and providing false account statements to investors.
After closing the Vega fund, Sample moved to Albuquerque in 2009 and “reverted to form,” the documents say, setting up the Lobo Volatility Fund LLC, a similar “scheme” in which he misled investors with phony documents while spending their money as he wished.
Court records say Sample diverted $1,086,453 from investors for his personal use between 2009 and 2012, all the while providing them with false monthly statements that indicated their investments were appreciating in value.
Part of the money, prosecutors said at Sample’s 2017 sentencing, was spent on his “highend, Santa Fe mountain home,” which was featured on the cable network HGTV as “the ultimate party house.”
“Buying drugs can also be very expensive,” Assistant U.S. Attorney Fred J. Federici wrote in a sentencing memo.
Prosecutors argued at his sentencing that Sample’s impact on his victims — who include investors referred to simply as “the Santa Fe couple” who turned over a total of $690,000 — had been “profound.”
“Some lost their entire live savings,” Lucero wrote in his decision, which he reached in conjunction with fellow 10th Circuit Judges Harris L. Hartz and Jerome A. Holmes, “others were unable to retire as planned, and many expressed profound emotional distress as a result of Sample’s betrayal.”
Sample, Lucero wrote, “construed his crimes as an aberration resulting from stress” that arose from a combination of the 2008 global financial crisis, the collapse of his financial practice, his divorce, acceptance of his gay identity, and his move to New Mexico. He began using alcohol, cocaine and ecstasy, which he claimed contributed to his reckless behavior.
“Essentially,” Lucero wrote, “Sample rationalized that he swindled his clients in order to provide for his family and entertain his friends.”
Sample’s attorney, Ray Twohig, said Tuesday he and Sample — who now resides in Texas — are studying the judge’s decision and the underlying facts upon which it was based, and weighing their legal options.
“We’re trying to decide whether to seek reconsideration, file a petition for a writ certiorari from the United States Supreme Court, or simply to prepare for resentencing,” Twohig said.
Twohig said he expects the U.S. District Court in Albuquerque will set a hearing in the next few months to consider the conditions of Sample’s release while he awaits the final resolution of his case.