Florida Criminal Defense Lawyer Blog
Mario “Sammy” Levis, a member of the family that founded Puerto Rican bank-holding company Doral Financial Corp., was sentenced to five years in prison for securities fraud when he worked as Doral’s treasurer.
Levis was convicted in April of one count of securities fraud and two counts of wire fraud, for lying to investors about the value of mortgage-related assets held by the company.
“I do not believe that the five-year sentence will be disabling,” U.S. District Judge Thomas Griesa in Manhattan said during today’s sentencing. “I do not wish it to be.”
Griesa rejected prosecutors’ arguments to impose a prison term of as long as 34 years.
“It is inconceivable to me that that kind of a sentence would ever be seriously considered,” Griesa said.
Levis’s lawyer, Roy Black, said in a statement today that his client will appeal and that he will prove he’s innocent.
Prosecutors claimed Levis manipulated the value of mortgage-related assets to inflate the price of Doral stock. In March 2005, the Levis family owned 8.2 percent of the company’s shares, prosecutors said.
Doral, based in San Juan, Puerto Rico, announced in September 2005 that it would restate its finances up to the end of 2004 and cut shareholder equity by $720 million because of overvalued assets. The company eventually paid $129 million to settle an investor lawsuit and a $25 million fine to the U.S. Securities and Exchange Commission.
Levis, whose wife, parents and siblings were in the courtroom for his sentencing, asked Griesa to treat him leniently.
‘That’s Not Me’
“I never, never, never intended to do any harm to anyone,” Levis said. “That’s not me.”
“I am pleading with you now to be just,” he said.
In addition to the five-year sentence, Griesa ordered that Levis serve two years of supervised release. He didn’t impose a fine and deferred a ruling on restitution for the victims of the fraud.
Levis’s fraud caused a $4 billion decline in shareholder value when it was disclosed, prosecutors said. Griesa said he was unable to determine, for sentencing purposes, the precise amount lost by victims or gained by Levis from the fraud.
“I can’t quantify the harm in terms of a dollar amount and I won’t try to do it,” Griesa said.
Family Lender
The Levis family founded Doral as a small mortgage company in Puerto Rico in 1972. The company grew to become Puerto Rico’s biggest residential lender. Many members of the family worked as company executives, including former chief executive officer Salomon Levis, Mario’s uncle.
Prosecutors said that, from 2001 to 2005, Levis caused Doral to inflate the value of “interest-only strips,” or “IOs,” held by the company. Levis misled investors into believing the value of the IOs had been determined by two independent, outside experts, prosecutors said. Levis also falsely claimed that Doral loan-sale agreements contained contractual caps that would limit the company’s losses on IOs if interest rates fell, the said.
The case is U.S. v. Levis, 08-cr-00181, U.S. District Court, Southern District of New York (Manhattan).