Pittsfield builder angles to avoid prison time in credit union fraud
PITTSFIELD — To the government, Jeffrey Pierce, of Pittsfield, was a "knowing and willing participant" in a $3.55 million fraud, and for that, he ought to be jailed for nearly four years.
But to friends and allies, the homebuilder was a pawn in a devious banker's scheme more than a decade ago to bleed millions from Greylock Federal Credit Union to sustain the official's high-flying lifestyle.
After months of sentencing delays following his guilty plea last June, Pierce will learn Friday what additional price he will pay for doing business with Michael DiCenzo, a former Greylock executive whose financial malfeasance was detected soon after he left the institution in 2009.
Five years later, DiCenzo was charged by the U.S. Attorney's Office. And nearly five years after that, using information obtained from DiCenzo, the government came after Pierce, saying he engaged in a conspiracy to defraud the credit union.
The U.S. Attorney's Office is asking U.S. District Court Judge Mark G. Mastroianni to sentence Pierce to 46 months in jail, followed by five years of supervised release, plus restitution of more than $3.77 million.
In the government's sentencing memo, Assistant U.S. Attorney Steven H. Breslow brushes aside claims that Pierce was played, calling him "the main beneficiary by far" in the fraud, a claim at odds with views of a former Greylock executive and forensic accountants who mined financial records.
The requested jail time, Breslow said, is needed "to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense."
But Pierce's lawyer, Lori H. Levinson, of Great Barrington, argues in court filings that the government is wrong to make an example out of Pierce, when DiCenzo is the one who did wrong.
Levinson says DiCenzo took advantage of Pierce after meeting him at a charity golf tournament. Pierce looked up to the banker, seeing him as a father figure, his attorney says, and trusted him to manage Pierce's business affairs.
On that point of culpability, the credit union's own internal investigation agreed.
"We have concluded that DiCenzo exercised dominion and control over Pierce," reads a report by a forensic accounting firm commissioned in 2010 to examine the fraud.
The report, by Sobel & Co. LLC, said DiCenzo took control of the loans he issued to Pierce and Pierce's businesses, "even handling monthly payments by taking draws against other lines of credit."
DiCenzo solicited Pierce as a borrower and manipulated him into transactions designed to hide the fraud, several inquiries concluded.
"Every loan made by DiCenzo to a Pierce entity after [Sept. 7, 2006] was designed to encumber Pierce to a level beyond any reasonable expectation of his being able to successfully repay," the Sobel report says. "Every loan modification made by DiCenzo on Pierce entity loans after that date was designed to make available to DiCenzo a vast pool of Pierce monies from which he could misappropriate."
That description points to DiCenzo being in a position to benefit from the fraud, Pierce's lawyer notes, and not her client.
The Sobel report says it was "common knowledge" that DiCenzo was in personal financial trouble, in part because of a family member's "overspending at casinos and on family gifts."
Based on interviews and travel records, Sobel accountants concluded that "DiCenzo enjoyed an extravagant lifestyle with regular trips to Florida, Myrtle Beach, South Carolina and Las Vegas, where he reportedly owned condominiums or timeshares."
In all, DiCenzo's "wrongful and dishonest conduct" created a financial loss of $3,556,422, the Sobel report says.
DiCenzo himself faces punishment, after pleading guilty in July 2014 to nine criminal counts in U.S. District Court in Springfield. His sentencing has been delayed at least nine times from its original date of October 2014, leapfrogging past changing dates for Pierce's sentencing.
Kristina Mastropasqua, a spokeswoman for the U.S. Attorney's Office, declined to comment on the reason for delays in DiCenzo's sentencing, saying it is "not public information."
When he began transactions with Pierce in 2006, DiCenzo had authority to lend up to $350,000 on his signature alone — rules that changed in March 2009, six months before DiCenzo left Greylock for a job with MountainOne bank.
From 2006 to 2009, according to the Sobel report, DiCenzo engaged in "wrongful conduct for his personal benefit."
The picture the report provides expanded when the U.S. Attorney's Office brought charges against DiCenzo in 2014. Together, the investigations show DiCenzo manipulating Pierce's financial life for his own ends.
DiCenzo created a Greylock "front" account — CAD Home Design — employing his wife's initials and used that in an attempt to conceal thefts from Pierce and other credit union customers.
"The sole purpose of the CAD Home Design," the Sobel report says, "was to facilitate DiCenzo's unethical/illegal acts at Greylock."
Also caught up in the banker's schemes were UNICO, which he served as a past president and treasurer, and the East Side Men's Club, among other local businesses.
To work around Greylock's loan policies, DiCenzo had Pierce apply using different business names to mask the size of one borrower's indebtedness. He persuaded Pierce to build homes on "spec," and when they didn't sell quickly enough, DiCenzo arranged loan modifications that dug a deeper financial hole for Pierce and Greylock, records show.
Along the way, Pierce was persuaded by DiCenzo to pay $134,733 into the "front" account, for which DiCenzo had full control. DiCenzo also asked Pierce for loans, once to rake in $30,000 to help with expenses related to a daughter's wedding. He also obtained free use of a BMW paid for by a loan tacked on to Pierce's debt.
Levinson argues in her sentencing memo that the government overlooks DiCenzo's thefts of money from Pierce in its statement of facts.
"This court should be aware that not only was DiCenzo authorizing loans to Pierce and his entities in violation of [Greylock's] loan policies, and preying on him for personal loans using the loan funds, but also was actually stealing from Pierce," she writes.
After the fraud was detected in 2009, Levinson says, DiCenzo urged Pierce to lie about aspects of it to investigators, including the reasons he wrote checks to the "front" account. That resulted in Pierce facing a charge of making false statements. Levinson notes that her client decided on his own to come clean.
"Feeling sick about having lied Pierce himself contacted investigators to inform them that he had lied ," Levinson writes.
Pierce, his attorney says, was "a naive and unwitting victim of a sophisticated and well-respected banker."
That is backed up by a statement from Charles Bercury, a former chief loan officer at Greylock. Bercury says that even after the losses Greylock suffered, the credit union allowed Pierce to remain a customer.
"Had we thought he had been involved in the theft, we would not have restructured his personal borrowings," Bercury said of Pierce in a March 8 letter of support filed with the court. Bercury handled Pierce's accounts after DiCenzo left the bank.
"My personal feeling then and now was that Pierce was not involved in the embezzlement," Bercury wrote. "I strongly feel that Pierce was an unwitting victim of a dishonest lender who preyed upon his total trust."
What's more, Bercury says, Pierce's transactions show no grand plan to profit illegally, since his companies were on the hook for money loaned.
"If he was benefiting from [the fraud], he sure made himself personally liable for a lot of debt," Bercury notes.
Appeal for leniency
Because Pierce entered a guilty plea last June, his only hope to avoid jail is to convince the U.S. District Court judge that his case merits a dramatically lesser punishment than what is spelled out in sentencing guidelines. Those standards recommend a sentence of 46 to 57 months.
Levinson, Pierce's attorney, is asking the court to consider other factors. They include his devotion to family and "his naivete in financial matters that made him an easy target for a sophisticated banker," she writes in a sentencing memo.
Levinson mines an April 2010 interview that the FBI conducted with Pierce for examples of her client's shallow understanding of the banking system. Pierce, an FBI memo says, "operated under the belief that, if DiCenzo approved the loans, then it meant that Pierce qualified for the loans."
"I realize now that it was a big mistake," Pierce said in a sworn statement in 2010.
Today, one of Pierce's biggest supporters is Rick Baehr, a longtime friend and business associate who runs Appalachian Contractors Inc. in Richmond.
"He's my friend. I'll stand next to him, side by side," Baehr told The Eagle. "He didn't get a single penny out of any of this. He lives simply and takes care of his mother and children. He pleaded guilty under duress. He's been honest as the day is long."
Baehr leads off as a character witness in the stack of 20 letters Levinson filed with the court.
The only evidence against Pierce, Baehr writes, "was the testimony of a corrupt, indicted bank official. ... Jeff turned over to the bank every asset. He turned over all the properties. He forfeited all the profits from all of his construction projects. He got nothing. He still has basically nothing. I believe he panicked and pled guilty due to the threat of a long and expensive trial that he couldn't afford and which might still result in an uncertain outcome. He was not guilty of any wrong doing, he was a victim of a charismatic, trusted, highly thought of banking predator."
The letters include thoughts from two people familiar with Pierce's work in business.
"I can tell you this with certainty. Jeffrey does not know how to `conspire,' " writes Maureen E. Meier, a self-employed bookkeeper who worked on jobs involving Pierce. "He lives a simple modest life. He is a man anyone would be lucky to have as a friend or a neighbor."
Johanna Shaw, owner of ServiceMaster of the Berkshires, says she got to know Pierce through Baehr, who formerly owned her cleaning company. She says in her letter that Pierce's downfall lay in his lack of business acumen, particularly with bookkeeping.
"We feel Jeff fell victim to someone who knew & took full advantage of this," Shaw writes. "Mike [DiCenzo] knew that Jeff did not have anyone carefully & regularly looking over & balancing his books & knew that he could use that to his advantage."
In her sentencing memo, Levinson notes that DiCenzo's own punishment has been postponed until after her client's, which, she said, suggests that DiCenzo is in line for a reduced sentence based on providing information against Pierce.
"We can only say that it is our belief that DiCenzo deserves to be treated more harshly than Pierce for his role in involving Pierce in his own nefarious schemes," Levinson writes. "The government chose to get in bed with the wrong actor with respect to the crimes committed in the commercial lending department of [Greylock Federal]."
Breslow, the assistant U.S. attorney, argues that, regardless of the circumstances cited by Pierce's defense or "an impressive array of letters from friends, family, and community members who attest to his otherwise good life," Pierce should be sent to jail.
As of Wednesday, Pierce's sentence is scheduled to be imposed at a court hearing that starts at 11 a.m. Friday.
After yet another postponement from March, DiCenzo's day in court is now set for 2:30 p.m. April 12 in the same Springfield courtroom.
Larry Parnass can be reached at firstname.lastname@example.org, at @larryparnass on Twitter and 413-496-6214.
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