Adam Harrington, a former broker at Sky Capital Holdings Ltd., was sentenced to five years in prison for his role in what prosecutors said was an eight-year scheme that defrauded investors of $140 million.
Sky Capital’s founder, Ross Mandell, who was tried with Harrington and convicted of the same four counts, was sentenced to 12 years in prison yesterday by the same judge, U.S. District Judge Paul Crotty in Manhattan.
The pair defrauded investors with private placement investments in Thornwater LP and Sky Capital and manipulated the prices of the stocks by bribing brokers, prosecutors said. Harrington worked at Thornwater and Sky from 2000 to 2005 and managed Sky’s New York office. He and Mandell were found guilty in July 2011 of conspiracy, securities fraud, wire fraud and mail fraud. Both must report to prison on June 18, the judge said. Harrington was ordered to forfeit $20 million.
“Mr. Harrington did not occupy the role Mr. Mandell did in the scheme,” Crotty said before passing sentence. “But he was more than a foot soldier. He had a leadership role.”
The pre-sentence report submitted to the judge called for a 15-year prison term.
“No one is arguing he played the role of the mastermind,” Katherine Goldstein, an assistant U.S. attorney, told the judge. She said a light sentence would send the “wrong message. In this industry, people pay extremely close attention to these sentences.”
Harrington’s lawyer, Michael Bachner, in his plea to the judge for a lighter sentence, said his client was a recovering alcoholic whose father had walked out on the family when he was a child. “Mr. Mandell fulfilled that role in many ways,” Bachner said.
Harrington, 41, made $3.1 million in the five years he worked at the companies, less than half as much as Mandell made, Bachner said. Harrington, whose wife and friends were in the courtroom, has three sons under the age of seven.
“I cannot tell you the sadness incarceration will bring to my children,” Harrington said in remarks he read to the judge. He added, “I’m so sorry for the loss of the victims who trusted in Sky Capital.”
Bachner said Harrington was “somebody who believed in what he was doing but engaged in illegal conduct in doing it.”
Mandell, who is 55, asked Crotty for mercy at his sentencing yesterday, saying that he and his family have suffered continuously since FBI agents raided Sky in November 2006. He said he never intended to cheat anyone and blamed his conviction on false testimony given by witnesses in exchange for leniency.
During the trial, jurors heard recordings made by the Federal Bureau of Investigation, including one in which Mandell was heard telling brokers, “You have to lie, you have to paint a rosy picture. That’s your choice.” In another conversation, Mandell warned his brokers, “If Sky goes belly up, we’re all going to be embroiled in a big scandal.” He added, “There will be no one, no one that’s safe.”
The case is U.S. v. Mandell, 09-cr-00662, U.S. District Court, Southern District of New York (Manhattan).
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