Judge cuts recommended sentence for builder in Greylock fraud
SPRINGFIELD — Rather than send a Pittsfield builder to prison for nearly four years, the judge handling a bank fraud case cut that by more than half Friday, expressing sympathy for a defendant brought low by a former financial mentor.
U.S. District Court Judge Mark G. Mastroianni ordered Jeffrey Pierce to turn himself in Oct. 21 to begin a 20-month sentence for his role in a conspiracy more than a decade ago to defraud the Greylock Federal Credit Union in Pittsfield.
Mastroianni could be seen to agonize over the proper sentence to impose, alternately praising Pierce as "a very good person" and noting that no one should get "a pass" on fraud that cost a financial institution $4 million.
The judge, after halting Friday's proceedings several times to consult with probation officials and leaving the courtroom to research comparable cases, declared that he could not impose the 46-month sentence requested by Assistant U.S. Attorney Steven H. Breslow, preferring what he termed "a sentence that will not destroy Mr. Pierce and Mr. Pierce's life."
But neither would he sentence the builder just to probation, as requested by Pierce's attorney, Lori H. Levinson, of Great Barrington.
"This case continues to present such an inconsistency of views," Mastroianni said.
By clearing Pierce from the docket, the next Greylock case will center on former credit union executive Michael DiCenzo, who faces sentencing after admitting guilt in a 2014 plea agreement. His case had been postponed repeatedly by the government because he might be needed as a witness against Pierce.
According to Levinson, Pierce will be required to directly serve 85 percent of the sentence he received Friday. An additional three to four months could be removed from the sentence under recently promulgated federal rules, she said, and the final six months could be served in a halfway house.
The best case for her client, she said, would be six months served in custody in a federal facility.
`A simple man'
Just before announcing his decision, Mastroianni invited Pierce to speak. The defendant, wearing khakis, a blue button-down shirt and tie, rose and read from a legal pad. Pierce said he took responsibility for participating in fraudulent loans arranged by DiCenzo.
Pierce then offered an apology to people affected by his actions, including friends and family.
"I consider myself a simple man with a simple life," he said. "And not a great businessman."
The degree to which Pierce conspired knowingly with DiCenzo to defraud Greylock had resulted in a four-month delay in sentencing. That wait began at what was expected to be his sentencing in early April.
From the bench that spring day, Mastroianni had probed Pierce about whether the defendant believed he was guilty of the fraud, including kickbacks paid to DiCenzo, in conduct mapped by Breslow's office.
DiCenzo recruited Pierce as a borrower in 2006. Over time, the banker steered Pierce into transactions designed to conceal the fraud, several inquiries concluded.
The judge's April questions were spurred by Levinson's request for a term of probation, backed up by her claims that DiCenzo, not Pierce, was the mastermind of the fraud.
Those courtroom exchanges led Levinson to file an April motion attempting to withdraw her client's plea agreement, entered in June 2018. That highly unusual move came up short when Mastroianni ruled last month against the withdrawal.
When Friday's hearing began at 2:15 p.m., Pierce was back in the same chair at the defense table in the Springfield court's wood-paneled Franklin Courtroom, with friends and family seated in rows behind him.
Mastroianni noted that the case had returned to where it left off in April — and invited Breslow to explain the government's position on sentencing.
Breslow argued that the wrongdoing Pierce admitted to over a year ago was unchanged.
"The defendant was a knowing and willing participant" in the fraud, he said. "As was Mr. DiCenzo."
Though Levinson has argued that DiCenzo manipulated Pierce, the government suggested that both men were equally guilty of fraud.
"Neither was a leader or an organizer of the other," Breslow said, when asked by Mastroianni who devised the scheme against Greylock.
The government stood by its recommendation of a prison sentence of 46 months, Breslow said, the lowest term on a federal guideline that extended to 57 months. He said Pierce profited personally from fraudulent loans, a claim Levinson disputes.
"There was an internal Ponzi scheme going on," Breslow said of Pierce's financial affairs.
In a pause, Breslow leaned over to confer with an investigator with the IRS seated beside him, then told Mastroianni that Pierce was believed to have used Greylock money to renovate his home and to extend a loan to a brother.
As Breslow ticked off his wrongdoing, Pierce, at the defense table, shook his head slightly from side to side.
The judge asked the prosecutor whether the sentence went too far: "Do you think 46 months is a little heavy is a little too much?"
Breslow observed that even a day in prison can seem long, and said that's why he chose a recommendation from the lowest end of the guidelines. But he said 46 months was warranted by Pierce's actions, by the amount of money involved and by the public interest in having consequences serve as a deterrence to crime.
At one point, Mastroianni observed that it was hard to believe Pierce could be as naive as his attorney has claimed, "given that he's had a successful business."
But a close friend says Pierce, though an able builder, never has run a profitable business.
Means to end
Levinson then argued that Pierce was at no risk of engaging in fraud again, an argument the judge said he accepted.
She reiterated the core argument of her failed attempt to withdraw her client's guilty plea — that he was a naive businessman with no insight into business and had been recruited by DiCenzo to serve as a means to the banker's ends.
DiCenzo left Greylock soon after millions of dollars worth of improper loans were discovered by the institution.
Though Breslow painted Pierce as the overall financial winner in the fraud, Levinson said her client pocketed nothing and that loan proceeds were used to prop up business activities at the outset of the Great Recession.
"There is nothing in this man's history that shows any great wealth. Just a plain and simple lifestyle. He did not run off with $4 million from this bank," Levinson said. "It was never an act of greed or avarice to get these loans only to keep his business going."
"He was very clearly a victim of Mr. DiCenzo. He didn't even know he was being stolen from [by DiCenzo] until the government told us that in a meeting," Levinson said.
That claim is backed up by findings of Sobel & Co. LLC, an outside accounting firm hired by Greylock to investigate loans arranged by DiCenzo. That company determined that Pierce was not to blame for the fraud arranged by his banker.
"We have concluded that DiCenzo exercised dominion and control over Pierce," the Sobel report said. DiCenzo took control of loans Greylock issued to Pierce and to Pierce's businesses, the report said, "even handling monthly payments by taking draws against other lines of credit."
On Friday, Breslow sought to undermine the Sobel report, saying it did not include questioning of DiCenzo.
Mastroianni recommended that Pierce serve his sentence at Camp Deven, a federal facility in Massachusetts. But that decision is to be made by the Bureau of Prisons.
In addition, Pierce was ordered to pay $877,725 in restitution to Greylock and $2.9 million to the insurer that already has covered a substantial share of the credit union's losses. That obligation will be shared with DiCenzo. Pierce also was tagged with forfeiture of $3.8 million.
In reality, those sums will not be paid in full, given Pierce's limited resources.
"That's the unfortunate reality," Mastroianni said of the inability of many defendants to repay such orders. Pierce also was ordered to receive two years of supervised release overseen by the federal probation department.
When given a chance to speak, Pierce said he appreciated the community support he received amid the prosecution, which included dozens of letters provided to the court seeking mercy on his behalf.
"I am thankful to finally put this behind me," Pierce said.
In adjusting the sentence, Mastroianni said he was taking into account the amount of the bank's losses, the fact of the conspiracy and a need to avoid a disparity in sentencing. But he also cited a wish to enable Pierce to return as soon as possible to his family, which relies on his support, and to what he called Pierce's "upstanding life history" and "honorable life."
After pronouncing sentence, Mastroianni looked at Pierce.
"I don't know what else to tell you," he told the defendant. "Good luck, sir."
Larry Parnass can be reached at email@example.com, at @larryparnass on Twitter and 413-496-6214.
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