Ronald Hutchison spent 22 years guarding inmates. Now he’ll spend time on the other side of the gates, thanks to a sentence from a federal judge tasked with sorting out who deserves how much jail time for helping to bring us the Great Recession.
The judge, Janet Hall, sentenced Hutchison in U.S. District Court on Church Street Monday to 28 months in jail. She also ordered him to pay $2.6 million in restitution to cheated lenders.
Hutchison previously pleaded guilty to conspiracy to commit mail and wire mortgage fraud. Prosecutors called him one of three leaders in one of New Haven’s largest-ever real estate scams. In dozens of home sales between 2006 and 2008, scammers bought multifamily houses in struggling New Haven neighborhoods. They created fake legal documents and falsely inflated the true sales prices. They pretended to make downpayments and deposits that they didn’t really make. They collected mortgages based on the inflated prices to cover the fake downpayments and deposits; then they split the proceeds. They privately kept separate, accurate, versions of the documents. The sham deals cheated lenders out of more than $7 million, according to the government. Most of the properties went into default. The scam left behind a trail of blight in Newhallville, the Hill, and Fair Haven during last decade’s Great Recession.
Federal sentencing guidelines (which are recommendations, not mandatory) called for Hutchison to receive between 78 and 97 months in jail; Hall has consistently departed downward from those guidelines in sentencing members of this scam.
Hutchison, a U.S. army vet who worked from 1989 to 2011 as a corrections officer in Westchester County, N.Y., appealed to the judge to spare him prison time, period.
“I am not a perfect man. I have not had a perfect life. I stand before you responsible for my actions,” Hutchison (pictured) told Hall. Hutchison had found his way into investing in New Haven properties as a sideline to his corrections job. He made money so quickly, and easily, that he drew five coworkers into the scheme. He introduced the mortgage broker who guided him to the orchestrator of the scam, realtor Joseph Menachem “Yossi” Levitin. In the end, Hutchison made $300,000 — $100,000 in secret cash paybacks on his own transactions, $200,000 in referral fees on the deals involving his coworkers.
Those introductions and referrals proved his undoing in court Monday.
His attorney, a New York former prosecutor-turned-criminal defense lawyer named Ikiesha Al-Shabazz, argued that Hutchison wasn’t truly a leader of the scam. She argued he should receive probation and/or home arrest rather than a jail sentence. She called Hutchison’s crimes in this case an “aberration” from a lifetime of honesty and public service. Unlike, say, the scam ring co-leader Andrew Constantinou, whom Hall sentenced to five years in jail, Hutchison pleaded guilty rather than fight the charges and did not have a previous record of financial shenanigans.
Hall agreed that Hutchison has otherwise led an upright life. She said trying to calculate fair sentences for different members of a white-collar conspiracy has been a challenging task. But she also said it’s important that a “serious” penalty follow a “serious” crime. A crime that she said had caused people to lose trust in the financial system and, in this case, contributed to the mortgage crisis and the Great Recession.
She said that two years of repeated fraudulent transactions involving fake documents and pocketed cash can’t count as “an aberration.” And the fact that he brought together two of the scam’s ringleaders, made more money than all but one of the scam’s participants, and recruited other participants, ended up tying him to 53 transactions, not just the 13 in which he directly bought property. So he was on the hook for $7.8 million in losses that lenders suffered.
“At some point everybody has to know that you can’t lie,” Hall said. “He has to know that was wrong. He might have gotten caught up in it. But got enthusiastically caught up in it” and recruited others.
Hall said she couldn’t spare Hutchison jail when she handed down approximately two-year sentences to lawyers who performed “single-digit” closings and “made very little money.”
Hutchison’s supporters wrote letters to the judge arguing that broker Constantinou (pictured above) “maliciously tricked” and “manipulated” Hutchison, who didn’t have experience in real estate.
“I don’t see it that way,” responded Hall (pictured at left). When someone signs a paper stating he’s bringing, say, $25,000 to a closing, but is bringing no money and in fact getting $25,000 back, “something has to tell him that’s wrong.” Especially when he then invites his “friends” into the scam.
“It is not my view that he was taken advantage of,” Hall said.
Attorney Al-Shabazz pressed a sentencing-disparity argument by citing Jacques Kelly (pictured), another Westchester corrections guard who bought and sold properties in New Haven through Yossi Levitin. Hall sentenced Kelly to 15 months. Hall responded in court Monday that Kelly made $56,300 compared to Hutchison’s $300,000; spent nine months in the conspiracy rather than two years, never recruited other participants, and didn’t introduce Constantinou to Levitin.
Curiously Al-Shabazz did not bring the case of Levitin himself. Levitin made a half-million dollars in the scheme. He brought all the parties together. Like Hutchison, he pleaded guilty rather than take his case to trial. Hall sentenced Levitin to 22 months in jail. The big difference: Levitin, unlike Hutchison, testified at other defendants’ trials. The feds said he was crucial to their successful prosecutions. In effect, Levitin benefited because he was more involved in the conspiracy’s workings and could help the government jail the people he originally recruited.
Unlike at Levitin’s sentencing, where supporters filled the pews on one side of the courtroom and several spoke to the judge, Hutchison’s sentencing was a quiet affair. Three family members sat on one side of the courtroom; three FBI agents on the other. Most pews were empty.
But when the judge called a five-minute break before handing down the sentence, Hutchison’s supporters prayed, as Levitin’s did at his sentencing. Hutchison, attorney Al-Shabazz, Hutchison’s wife and two other family members formed a circle. They held hands and called on the Lord to spare Hutchison prison time.
The prayer went unanswered.
Previous articles about this case and a related New Haven mortgage-fraud case:
• “Teshuvah,” & Cooperation With Feds, Pay Off
• Will White-Collar Crime Bring Jail Time?
• Facing 30 Years, Scammer Turns Star Witness
• Scammer, Awaiting Sentence, Rebuilds
• Patsies? Or Schemers?
• Fraud Defense: Banks Were The Real Crooks
• Jury Convicts 2 In Mortgage Scam
• Kwame & Straw Buyer Leave Trail Of Blight
• Mortgage Fraudster Gets 15 Months
• 1 Mortgage Fraud Ring Down, Feds Turn To 2nd
• “Big Liberal” Gets 5 Years For Ripping Off Poor
• White-Collar Criminals Sent To Slammer
• Judge Baffled By Two Morris Olmers
• Feds Will Retry Avigdor
• 4 Convicted In Fraud Scam; Mistrial For Rabbi
• Jury Can’t Agree In Scam Trial
• Avigdor’s Final Plea: Follow The Money
• Claire: The Rabbi Is Kosher
• Wednesday The Rabbi Took The Stand
• Straw Buyer Lured Into A Wild Ride
• After Big Fish Plead, Smaller Fry Point Fingers
• Slum-Photo Doctor Makes A Call
• What Happened At Goodfellas Didn’t Stay At Goodfellas
• Fraud Trial Opens With Oz-Like Yarn
• “Partying” MySpacer Lined Up Scam Homebuyers
• “Straw Buyer” Pleads Guilty
• Neighbors, Taxpayers Left With The Tab
• FBI Arrests Police Commissioner, Slumlord, Rabbi
• One Last Gambit Falls Short
• Was He In “Custody”?
• Is Slum Landlord Helping The FBI?
• Feds Snag Poverty Landlord
• Police Commissioner Pleads
• Mortgage Fraud Mastermind Gets 10 Years
So the lenders are getting their monies back. What about the neighbors of these properties? THAT's where the restitution should be focused. Lenders received their federal bailouts. The Community Members of New Haven need to be made whole.