William Foster, convicted for his part in a $22 million real estate investment fraud, was sentenced to three years in prison.
Foster, 70, was one of three men convicted of cheating investors in a network of companies named Cobalt, which claimed to have interests in residential real estate developments throughout the U.S. The sentence came less than three months after one of Foster’s codefendants was sentenced to 85 years.
U.S. District Judge Kimba Wood in New York, who sentenced both men, said she rejected guidelines that called for a life sentence for Foster because of his poor health and his lower level of criminal responsibility compared with the other defendants.
“Mr. Foster, everyone agrees, had a much lesser role than his two co-conspirators,” Wood said.
Foster, Irving Stitsky and Mark Shapiro were convicted by a jury after a three-week trial that ended in November. Each was found guilty of two counts of securities fraud, one of mail fraud, one of wire fraud and one of conspiracy.
According to the government, the men defrauded more than 250 investors by inventing a false history for Cobalt; failing to disclose that the company was owned and controlled by Stitsky and Shapiro, who were convicted felons; and misstating Cobalt’s property interests.
Stitsky was sentenced in July to 85 years in prison after Wood called him an “inveterate con man.” Shapiro is scheduled to be sentenced Oct. 14.
$22 Million Restitution
In addition to the three years in prison, Wood sentenced Foster to three years’ probation and ordered him to pay $22 million in restitution to the victims of the fraud. She declined Foster’s request to remain free while he appeals the conviction.
Lawrence Gerzog, one of Foster’s defense attorneys, tried to persuade Wood to spare his client prison time.
“It breaks my heart that anyone would think that I entered into this intending to defraud anyone of any money,” Foster, who has chronic obstructive pulmonary disease and used an oxygen canister, told the judge. “I wish there was something I could do about it. I am heartbroken over it.”
David Rubenstein, who said he lost $25,000 in the fraud, asked Wood to sentence Foster to the maximum prison term.
“My wife left me because of this,” Rubenstein told Wood. “This was like the straw that broke the camel’s back.”
The case is U.S. v. Shapiro, 06-cr-357, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: David Rovella at email@example.com.