Former Islanders co-owner gets 10 years in prison

AP News
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Posted: Dec 03, 2014 2:44 PM

NEW YORK (AP) — A former money manager and one-time partial owner of the New York Islanders was sentenced Wednesday to a decade in prison for a more than half-billion-dollar financial fraud carried out over more than a dozen years.

Paul Greenwood, 67, was sentenced by Manhattan U.S. District Judge Miriam Goldman Cedarbaum, who told him "many people today lost many thousands of dollars as a result of your fraud."

Greenwood must report to prison Feb. 9.

Greenwood pleaded guilty in 2010 to securities fraud, admitting that he cheated charities, schools, pension funds and others out of hundreds of millions of dollars. He used a portion of the money to buy collectible teddy bears and to invest in $100,000 horses.

"You really wanted to have a lot of money," the judge told Greenwood, who cooperated with the government in the prosecution against Stephen Walsh. Walsh eventually pleaded guilty and was sentenced weeks ago to 20 years in prison.

Prosecutors submitted a letter to the judge on Greenwood's behalf that earned him leniency from what would have been a more severe sentence.

The government said Walsh and Greenwood carried out the fraud from 1996 through February 2009, cheating institutional investors. During those years, the men operated a securities business while Greenwood lived in North Salem, Connecticut. The businesses included WG Trading Co. LP, based in Greenwich, Connecticut, and Westridge Capital Management Inc. in Santa Barbara, California.

Three years ago, Greenwood moved to Southern Pines, North Carolina, where his lawyer, Fred Hafetz, said he regularly tutors veterans and performs other charity work.

"He certainly did not help his investors," the judge said, interrupting Hafetz as he described Greenwood's good works.

Just before his sentence was announced, Greenwood apologized.

"I've lied. I've cheated and I've stolen," he said. "Words cannot express my remorse for what I've done."

In court papers, prosecutors said Greenwood and Walsh each took money from investor accounts for themselves.

"Greenwood acknowledges that he used the funds to finance his lifestyle," prosecutors said. "Among other things, Greenwood used investor funds to build his house, buy and operate a horse farm, and buy antiques and collectibles."

They said Greenwood took approximately $80 million for his personal benefit while Walsh pocketed about $50 million.

Greenwood, a college professor for four years before entering business in 1975, bought a controlling interest in the New York Islanders in August 1992, along with Walsh and two others, the government said.

Prosecutors said Greenwood acknowledged Greenwood and Walsh put up $2.6 million from WG Trading investor funds to buy the NHL team without telling investors.

The men profitably sold their Islanders interest in October 1996 because the Islanders had a favorable television contract, prosecutors said.

Hafetz said outside court that investors are expected to eventually recover 99 percent of their principal investment.

A 2008 magazine article said Greenwood's collection of teddy bears included more than 1,350 Steiff toys. Among them were 74 bears plus birds, cats, insects, dinosaurs, kangaroos, seals, squirrels and many other types of stuffed animals.