Bruce Donner Gets 18 Months in Prison for $80 Million Leasing Ponzi Scheme

Bruce Donner, the owner of a medical equipment company, was sentenced to 18 months in prison for his role in a medical equipment-leasing Ponzi scheme that cost investors $80 million and that he exposed to prosecutors.

Donner, 52, blew the whistle in July 2010 on a fraud run by Allied Health Care Services Inc. founder Charles K. Schwartz, who later pleaded guilty. Schwartz was sentenced in November in federal court in Newark, New Jersey, to 16 years in prison.

Donner, who owns Donner Medical Marketing Inc., provided phony invoices that helped Schwartz bilk lenders who put up $135 million, prosecutors said. Lenders were defrauded of $80 million, including Sun Bancorp Inc., which lost $13 million. The judge agreed to a request by Donner and prosecutors for leniency.

“You should be commended for turning yourself in and allowing the government to proceed with their criminal investigation,” U.S. District Judge Susan Wigenton said today. “It’s puzzling to me, and I’m sure it’s puzzling to others, why you would even get involved in an eight-year conspiracy when you were successful in business.”

Donner, of Berkeley Heights, New Jersey, pleaded guilty in October to mail fraud. He admitted that he generated invoices that falsely said Donner Medical was providing medical equipment to Allied, based in Orange, New Jersey.

‘Terribly Remorseful’

“I’m terribly remorseful, obviously, for what I’ve done, and especially for what I’ve done to my friends and family,” Donner told the judge before she imposed his sentence.

Assistant U.S. Attorney Joseph Mack said that Donner’s cooperation was “substantial, it was swift, it was immediate.” After revealing the fraud, Donner made recordings of Schwartz for authorities that helped lead to his guilty plea, Mack said.

Mack said Donner made $4 million to $5 million as a result of the fraud. Wigenton said she will impose restitution later, and hold a hearing by May 14.

Donner attorney Keith Biebelberg said his client wanted to atone for his “grievously poor judgment.” He said Donner had liquidated a retirement account and was selling real estate to help pay for his restitution.

Biebelberg said Donner had feared for his safety because Schwartz had an arsenal of firearms and a tray of ammunition.

“Those bullets were labeled with the names of various individuals for which Mr. Schwartz bore ill will,” the lawyer said. Donner’s name wasn’t on the bullets, he said.

The case is U.S. v. Donner, 11-cr-671, U.S. District Court, District of New Jersey (Newark).

To contact the reporter on this story: David Voreacos in Newark, New Jersey, federal court at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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