Ex-NY Islanders co-owner loses bid to cut 20-year prison term

Reuters News
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Posted: Nov 20, 2014 1:33 PM

By Jonathan Stempel

NEW YORK (Reuters) - Stephen Walsh, a former co-owner of the New York Islanders hockey team, has been ordered to begin a 20-year prison term over an estimated $554 million fraud, after a federal judge rejected his renewed bid for leniency after he pleaded guilty.

In a brief order on Wednesday, U.S. District Judge Miriam Goldman Cedarbaum in Manhattan ordered Walsh, 70, to report to prison on Jan. 5, 2015.

The defendant had been surprised on Oct. 29 when Cedarbaum imposed the maximum 20-year sentence, and got her permission to consider withdrawing his guilty plea.

He concluded there was no point doing that because he accepted responsibility for his crimes and did not want a trial, and prosecutors would not offer a more favorable agreement.

Instead, he sought to reargue his sentence, which he thought should not exceed two years, but Cedarbaum denied that request in her order. Walsh has also agreed to forfeit $50.7 million.

Michael Tremonte, a lawyer for Walsh, did not immediately respond on Thursday to a request for comment.

Prosecutors accused Walsh and Paul Greenwood, also a former Islanders minority owner, of having from 1996 to 2009 bilked university foundations, charities and other investors through their firm WG Trading Co, where Walsh was chief executive officer and Greenwood was chief operating officer.

The men were accused of issuing bogus securities to cover losses, and using investor money to help Walsh's children run businesses, cover payments to Walsh's ex-wife, and enable Greenwood buy a horse farm and a stuffed teddy bear collection.

Greenwood, 67, pleaded guilty in July 2010 to six criminal counts and is being sentenced on Dec. 3.

In a Thursday court filing, his lawyers sought a prison term of no more than five years, citing Greenwood's efforts "to demonstrate his genuine remorse and to make amends" to victims. They also submitted 84 letters from family members, friends and others supporting leniency for Greenwood.

The office of U.S. Attorney Preet Bharara in Manhattan did not immediately respond to requests for comment.

The case is U.S. v. Greenwood et al, U.S. District Court, Southern District of New York, No. 09-cr-00722.

(Reporting by Jonathan Stempel in New York)