Martin T. Sigillito, 63, Webster Groves, Missouri, an attorney and clergyman, will spend the rest of his life in prison for leading a fraud conspiracy that stole more than $56 million from its victims.
The defendant will be sentenced on December 28, 2012, to 40 years in federal prison without parole by U.S. District Judge Linda Reade of the Northern District of Iowa. The court issued a sentencing memorandum on Thursday, December 20, 2012, stating the intent to impose a penalty that would be the equivalent of a life sentence, which will be imposed at the sentencing hearing later this month.
As previously reported by Mortgage Fraud Blog, on April 13, 2012, Sigillito was found guilty of 20 counts charged in an April 28, 2011, federal indictment and has remained in federal custody since the trial. A sentencing hearing was held on October 3, 2012, and the court took the matter under advisement.
The court’s sentencing memorandum noted that federal sentencing guidelines recommend a sentence of life in federal prison. In this case, the court could have imposed a sentence of 325 years by imposing the statutory maximum sentence on each count of conviction and running the sentence on each count consecutive to all other sentences imposed. It is within the discretion of the court to determine how many years is sufficient to ensure an effective life sentence. Because Sigillito is 63 years old, the memorandum states, a 40-year sentence has the effect of a life sentence. In this case, the court stated, there is little to no practical difference between a 40-year sentence, a sentence of 325 years, and a life sentence.
The court will also order Sigillito to pay $30,670,714 in restitution, which is the collective actual loss amount of his victims. The court found, however, that the intended loss amount of the scheme was much higher. When the scheme collapsed in May 2012, 111 lenders were owed a total of approximately $56 million, which includes their original loans plus the interest they should have received. “It could be convincingly argued,” the court’s memorandum states, that the intended loss actually exceeded $70.5 million.
The court also announced its intent to order Sigillito to forfeit to the government property that was seized by law enforcement officials, including hundreds of antique books, antique maps and prints, antique jewelry, antique coins, antique artifacts, six Persian rugs, dozens of bottles of cognac champagne, whiskey and wine, a 2006 Volvo S40, $19,500 in cash, $19,237 from bank accounts, and residential property in Marthasville, Missouri. A preliminary forfeiture order was issued on October 18, 2012, and the court announced its intent to issue a final forfeiture order.
Sigillito was found guilty of participating in a conspiracy to commit wire and mail fraud. During a 10-year period from 2000 to 2010, more than 140 investors in the United States loaned a total of $52.5 million to co-conspirators through a Ponzi scheme that was known as the British Lending Program (BLP). Victims believed they were loaning money for legitimate real estate development projects in England, but in reality, most of their money was kept by Sigillito and co-defendant James Scott Brown, 67, Leawood, Kansas (or used to pay interest and principal to other lenders). Sigillito gained more than $6.3 million from the fraud scheme and used it to support an affluent lifestyle.
Sigillito was also found guilty of nine counts of wire fraud. On nine separate occasions, Sigillito wired funds across state lines as part of the fraud scheme. The wire transfers typically involved hundreds of thousands of dollars and, in one case, a transfer of $15 million. The jury also convicted Sigillito of four counts of mail fraud related to documents that were mailed to lenders and six counts of money laundering related to financial transactions with funds illegally obtained by wire fraud.
Brown and co-defendant Derek J. Smith, 68, Oxfordshire, United Kingdom, each pleaded guilty to their roles in the conspiracy. Brown was sentenced to three years in federal prison without parole, and Smith was sentenced to five years of probation. As part of their guilty pleas, each was required to forfeit significant real estate holdings.
The court found that Sigillito‘s criminal conduct involved primarily vulnerable victims. Sigillito intentionally sought out victims who were at or approaching retirement age in an attempt to gain control of savings that were in IRAs. Although the loans were primarily for one-year terms, Sigillito knew that IRA holders would incur penalties if they withdrew their funds early. Thus, they would be less likely to demand repayment of their principal and would give the conspirators additional time. Many BLP lenders placed a great deal of trust in Sigillito and Brown based on their claimed expertise, their status as attorneys, affinity through family connections and private organizations, and particularly Sigillito‘s mastery of multiple languages, his status as a board member of The Racquet Club and his status as a bishop. Sigillito took advantage of several lenders who were particularly vulnerable due to age, friendship, lack of financial expertise, family circumstances, and faith.
Sigillito used high-pressure tactics to persuade some lenders to loan funds to Smith. As part of his sales tactics, Sigillito often avoided giving direct and specific answers to questions about documentation and his claimed due diligence in the BLP. Once loans were “closed,” Sigillito avoided direct contact with lenders.
Many victims loaned funds that had been saved for retirement and were held in Individual Retirement Accounts. Many IRA lenders let their “interest” accrue and also rolled their loans over annually for years, each time receiving a signed loan agreement for a new, larger amount. Thus, many IRA lenders were led to believe that their IRA accounts were growing and that they could be relied upon in retirement.
David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced the sentence.
This case is being prosecuted by Jess Michaelsen, Steven Holtshouser, and Richard Finneran, Special Attorneys to the U.S. Attorney General. It was investigated by the FBI and IRS-Criminal Investigation.
“Sigillito’s criminal conduct was calloused and calculating,” the court stated in yesterday’s sentencing memorandum, “causing fear and anguish to the people who trusted him. Sigillito has not taken responsibility for the economic and emotional damage that he has caused to his victims…Sigillito had many years of prestige, luxury, and comfort at the expense of the victims.”