New York lawyer gets prison after detailing fraud in suicide note

Reuters News
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Posted: May 19, 2016 5:34 PM

By Nate Raymond

NEW YORK (Reuters) - A New York lawyer was sentenced to five years in prison on Thursday for running a more than $5 million Ponzi scheme that he detailed in a lengthy suicide note that authorities discovered when they rescued him from the Hudson River.

Charles Bennett, 58, wept after some of the friends and family who were victims of his years-long scheme urged U.S. District Judge Laura Taylor Swain in Manhattan to take no pity on him despite his suicide attempt.

"The scar is too deep, but prison time will help with the healing," said Hope Mullan, one of several members of her family that counted among his victims.

Bennett, who lives in Minnesota with his mother, a victim of the scheme, pleaded guilty in October 2015 to securities fraud and wire fraud. In court, he called himself a "criminal, a thief and a liar" and said he could not explain his conduct.

"I just can't say enough how sorry I am," he said. "I deserve to be punished."

Prosecutors said Bennett began the scheme in 2008, telling family members and friends that he had access to an investment opportunity with an acquaintance's hedge fund.

He lured over 30 investors with promises of up to 25 percent returns and misleading claims that a New York state governor and his then-wife were also investors, according to prosecutors and the U.S. Securities and Exchange Commission.

The description of the governor matched that of ex-New York Governor Eliot Spitzer, whose ex-wife Silda Wall Spitzer has confirmed she once worked with Bennett at the law firm Skadden, Arps, Slate, Meagher & Flom.

The fraud came after Bennett launched his own law practice in 2001. But it was an "abysmal failure," his lawyer, Julia Gatto, wrote in court papers, and after initially surviving on savings, his finances were hit by a cocaine habit.

"What started in a cloud of cocaine use, a sudden fall into insolvency, and a crippling insecurity snowballed into a years-long Ponzi scheme from under which Mr. Bennett could not escape," Gatto wrote.

Bennett's November 2014 leap into the Hudson River came after investors began demanding repayment, prosecutors said.

Police officers recovered a suicide note Bennett signed entitled "A Sad Ending to My Life." In it, he confessed that he "managed to completely squander the hard-earned money" of his family and friends, court documents said.

"It was a Ponzi scheme pure and simple," Bennett wrote.

The case is U.S. v. Bennett, U.S. District Court, 15-cr-00020.

(Reporting by Nate Raymond in New York; Editing by Cynthia Osterman and Dan Grebler)