Sholam Weiss (also spelled Shalom Weiss; born April 1, 1954) is a former American businessman, currently incarcerated at FCI Ottisville, Otisville, NY.
On February 15, 2000, the Middle District Court of Florida (Orlando) sentenced Weiss in absentia, to a term of imprisonment of 845 years, for racketeering, wire fraud, and money laundering, a restitution of $125,016,656 (based on total amount of loss attributable to him), and a fine of $123,399,910, in connection to the collapse of the National Heritage Life Insurance Company.
On July 28, 2016, the government announced that Weiss' $125 million dollar restitution had been paid in full.
The National Heritage financial collapse was believed to be the largest insurance failure in history at the time. Weiss fled the country at the end of his trial and was a fugitive for one year. He was subsequently extradited from Austria.
The sentence imposed on Weiss is believed to be the longest known to have ever been imposed for a white-collar crime. It is also believed to be the longest criminal sentence (other than life sentences) ever imposed at the federal level in American history. About a dozen individuals were convicted for involvement in the collapse; another defendant, Keith Pound, received a 750-year sentence, and $139 million in restitution. Pound died in prison in 2004 at age 51. Federal cooperators Michael Blutrich and Lyle Pfeffer received reduced sentences of 200 months (16 years, 8 months) and served their terms in the Federal Witness Protection Program.
Weiss was captured in Austria and extradited pursuant to an international arrest warrant. He was not permitted to appeal his extradition or conviction in accordance with the longstanding precedent that fugitives have flouted the court's authority and thus forfeit their right to appeal.
Video Sholam Weiss
Early life and background
Weiss grew up in Borough Park, Brooklyn, where his father ran a fruit stand. Born and raised Jewish, he was educated in a yeshiva, where he spoke Yiddish, and received the equivalent of a high school education. He did not learn English until he was in his late teens. He began doing construction work as a young man and established a plumbing supply company.
After the plumbing supply firm declared bankruptcy, Weiss began hiring himself out as a bankruptcy specialist. Through that business he met Michael D. Blutrich, who owned the topless club Scores, which then was controlled by the Gambino Crime Family.
In 1994, Weiss was indicted on mail fraud charges, for which he served eight months in prison.
Maps Sholam Weiss
National Heritage Life Insurance
In late 1989, National Heritage reported an operating loss and 27% reduction of capital from a decline of sales, and in 1990 insurance regulators threatened to shut down the company if it did not raise additional capital. A group of investors offered $4 million to satisfy regulators, in exchange for a controlling interest in National Heritage. The group provided a $4 million check, but once in control of National Heritage, transferred $3 million from National Heritage to help cover the check. This began a long series of schemes in which millions were stolen from National Heritage by the group of investors. Bad investments further depleted National Heritage capital.
In 1993, the group decided to cover up all the missing money by a "mortgage-backed bond scheme". Weiss (not part of the original investment group) was contracted to purchase discounted mortgages with National Heritage funds, which were put into a mortgage-backed bond. It was believed that the discounted mortgages could be rehabilitated, and thus make a profit. The bond was fraudulently placed on National Heritage books with inflated values.
In 1994, the Delaware Insurance Department did a full examination of the company and placed it in receivership. Three corporations and 13 individuals were convicted, including Weiss.
The FBI Section Chief for Financial Crimes stated in 2001 that National Heritage was the largest insurance company failure in U.S. history, resulting $450 million of losses. A 2000 New York Times article stated that that Weiss was part of "an immense fraud scheme that siphoned $450 million" from the insurance company. However, "Best's Review", the insurance industry monthly magazine, explains that the losses were due to a mixture of theft and bad investments.
During the liquidation of National Heritage, it had $420 million in liabilities to its policyholders, which was covered by state guarantee funds. At the time National Heritage went into receivership, in 1994, it still had $214 million in assets, according to an order by the Delaware Court of Chancery granting liquidation. Therefore, the $450 million figure for losses cited in media reports and the FBI is the amount of National Heritage liabilities covered by state guarantee funds, before recovery of National Heritage assets. By 2009, the Receiver of National Heritage recovered (and reimbursed state guarantee funds) $230 million dollars, representing 54% coverage of National Heritage liabilities, according to the Receiver of National Heritage in court submissions (exhibit C). The policyholders were fully reimbursed by 2000.
Weiss' Conviction and Sentence to 845 years
On October 18, 1999, after a nine-month trial, Weiss failed to appear while the jury was deliberating, and was declared a fugitive. At Weiss's sentencing on the National Heritage charges in February, Judge Patricia C. Fawsett sentenced him to 845 years in prison. Under federal sentencing guidelines, none of the charges against Weiss carried a maximum of life in prison. Fawsett arrived at the unusual 845-year sentence by imposing a string of sentences of five and 20 years for each count, and ran them together consecutively in order to ensure that he would die in prison. She said that she imposed this sentence because the "magnitude and repeated" nature of Weiss' fraudulent acts, as well as his "disrespect for the law," demanded that he be permanently removed from society. She was also swayed by federal prosecutors' claims that Weiss induced people who would have otherwise never defrauded anyone into taking part in the scheme. She also fined Weiss $123.4 million and ordered him to pay $125 million in restitution. One of his accomplices, mortgage broker Keith Pound, was sentenced to 740 years in prison.
Extradition from Austria
Weiss was eventually apprehended by Austrian authorities in the Fall of 2000. Weiss was extradited from Austria after appeals to the European Court of Human Rights and the United Nations failed to prevent his extradition.
Incarceration and subsequent proceedings
Weiss challenged his incarceration in federal court, claiming that the United States violated its extradition treaty with Austria. Because the courts cannot provide a re-sentencing and appeal, Weiss argued that, under treaty law, the Executive branch of the United States must still provide the benefit of a re-sentencing and appeal and that he was denied that benefit as a result of the fugitive disentitlement doctrine. In 2011, a judge took ten years off his sentence. Weiss is currently serving his sentence at a medium security prison. His projected release date is November 23, 2754.
References
External links
- "Best's Review" article
Source of article : Wikipedia
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