A man who tricked hundreds of investors into giving him more than $100 million on a promise of fat profits on diamonds and distressed properties was sentenced Monday to 10 years in prison.
Michael Goldberg, 40, of Wethersfield, was also ordered by a federal judge in Hartford to pay at least $500 a month in restitution after he's released, based on what he can afford, and to undergo substance abuse and mental health evaluations and treatment. He remains free on bail and must report to prison July 18.
Two of Goldberg's victims testified during the daylong hearing while a prosecutor read comments from other victims. Some people lost their homes, some lost their retirement savings and others lost their children's college money.
Yvonne Logan, a 68-year-old retiree from Guilford, said she lost more than $200,000 to Goldberg, about half her retirement savings. She said the investment had every appearance of being legitimate and her lawyer even looked over the contract.
"He gained my confidence and it was all lies," Logan told Judge Robert N. Chatigny. "It was a very bad thing Michael did. I was hurt by it. I may have to sell my house. I'm trying to work."
Goldberg pleaded guilty last year to three counts of wire fraud in a scheme that lured more than 350 investors over 12 years. He told people he would buy diamonds at very low prices in New York City and then resell them at a profit of up to 25 percent. He also claimed to be buying foreclosed and seized business assets from a bank and reselling them to companies. He promised investors returns of 20 percent per quarter.
But Goldberg didn't buy the diamonds or properties, and he paid promised returns to earlier investors with money he received from new investors, prosecutors said. About $100 million changed hands during the scheme. About 120 investors were cheated out of more than $30 million while others made profits.
"This was a case of what I consider epic narcissism, epic ego," said federal prosecutor David Novick, who sought a 12- to 15-year prison sentence. "He needed to feel like he was important. He needed to feel like he was these people's economic savior."
Goldberg on Monday apologized to victims for his fraud, and to his family for the pain and shame he has put them through. He called the scheme a "runaway nightmare" and pledged to do what he can to repay the victims.
"For the rest of my life, I will be pursuing a law-abiding lifestyle," he said. He declined to comment after the hearing ended.
Authorities said Goldberg kept $1 million to $2 million for himself over the 12 years but didn't lead a flashy lifestyle. Goldberg's lawyer, Richard Brown, said his client did occasionally take trips and gamble at casinos, but prosecutors said he bet thousands of dollars on sports. They also said he spent up to $500,000 on a music promotion business. He's now in bankruptcy.
Prosecutors said Goldberg also exposed his friends to possible criminal charges by recruiting them to get investors. No one else has been charged in the scheme, but federal authorities are still investigating.
Authorities also say they're trying to collect millions of dollars from investors who made money in the Goldberg deals. A court-appointed receiver in the case estimated that officials could recoup $10 million to $15 million and that people who lost money could get about a third of their money back.
Goldberg turned himself in to authorities in 2009. There were no criminal investigations into the scheme at the time, but one investor filed a $9 million lawsuit against Goldberg around the same day he surrendered. Brown said the guilt became too much for Goldberg, so he turned himself in. He ended up spending more than 200 hours cooperating with authorities.
But after his arrest and while he was out on bail, authorities said they learned in July of last year that Goldberg tried to lure investors on a promise of big profits on gold, only this time a prostitute named Rain who was solicited to invest alerted authorities.
Goldberg claimed the gold investments were legitimate, but prosecutors said it appeared he made misrepresentations to the prostitute to try to get her to invest. He was not charged in connection with the gold investments.
Chatigny said Goldberg needed a significant prison sentence to deter him and others from committing similar crimes. He said Goldberg deserved credit for his cooperation but called him a danger to people's psychological and financial well-being.
"All these people have been significantly harmed," the judge said. "That's outrageous criminal conduct for which you need to be severely punished."
Another victim, 38-year-old Jason Pierce of East Hampton, wept as he testified about losing hundreds of thousands of dollars. He said he refinanced his house and invested the money with Goldberg after hearing about others' huge profits, with the goal of paying off his, his father's and his brother's debts. He said he asked for some of the money back at one point to pay some bills and Goldberg didn't comply.
"I begged for the money, but I got no response. He was in a position to be judge, jury and executioner in who got the money," Pierce said.