Lawyer: ‘Three Hebrew Boys’ don’t deserve stiff sentences

One of three South Carolina men convicted of swindling more than $80 million from thousands of investors says a sentence of 30 years to life is far greater than in other fraud cases — including on Wall Street involving more than $1 billion, the man’s attorney argued in court documents Monday.

“These Wall Streeters had no less culpability, indeed maybe more culpability, than Mr. Pough and the Three Hebrew Boys doing business on North Main Street in Columbia, South Carolina,” federal public defender Parks Small wrote in a sentencing memo about his client, Tony Pough. “The North Main Street boys’ fraud should not be treated differently than Wall Street boys’ fraud.”

Small was reacting to a U.S. Probation Office report saying the guidelines of a sentence between 30 years and life in prison should be used for Pough. He and two other men were convicted in November 2009 of nearly 60 charges each, including conspiracy, mail fraud and money laundering.

The federal jury also ordered Pough, Joseph Brunson and Timothy McQueen to forfeit $82 million.

The men called themselves the “3 Hebrew Boys” after the biblical tale of three men who were thrown into an inferno after refusing to bow to a statue, but emerged unscathed because of their faith. Prosecutors say they preyed on debt-plagued investors to ensnare them in a Ponzi scheme. The men called their scheme a ministry, telling people their mailed-in investments would earn fantastic rewards that would pay off their debts.

Despite almost no financial training, they convinced at least 7,000 people they knew the secret of how to make money on the foreign currency exchange market. However, they invested less than 0.01 percent of their collections there, instead paying themselves million-dollar salaries and spending millions on condos, luxury suites at football stadiums, a Gulfstream jet and limousines, prosecutors said.

Investors from across the country, plus soldiers serving in Iraq, gave the men money beginning in 2004. Authorities seized $17 million when the operation was shut down less than three years later. Their attorneys argued the three intended to honor the contracts and paid out more than $22 million to early investors. Contract clauses warned the investment was risky, they argued, but prosecutors said the three lied about how they would invest the money.

In his 30-page memo, Small pointed out 26 fraud cases in which defendants were all sentenced to less than their guideline range. Among them was Bernard Ebbers, the former WorldCom chief who went to prison in September 2006 on a 25-year sentence for his role in an $11 billion accounting fraud that toppled his telecommunications company. Ebbers’ guideline range of 30 years to life was exactly the same as Pough’s, Smalls noted.

“The less-than-guidelines sentences given to so many of the Wall Street powerful, set out in this memo, who abused great resources and power intrusted to them and were then given lesser sentences, speaks volumes about the unfairness of the present advisory guidelines and their focus on dollar amounts,” Small wrote.

Bond for all three men was revoked after their convictions. They are scheduled to be sentenced Dec. 14 in federal court in Columbia.

Related Topics: Fraud Charge Tracker