A federal judge in Utah, adamant that prison is necessary to deter potential white-collar criminals, Friday sentenced a certified public accountant to two years behind bars for securities fraud.
"I don't see one single reason to incarcerate Mr. (Lawrence) Penrose, except for deterrence for others," Judge David Winder told the defendant, who pleaded guilty last November to charges he sold shares in a company set up solely to raise money to cover other business debts."I do think a message gets out with a prison sentence," Winder said in ordering Penrose to surrender by March 15. In exchange for his guilty pleas, prosecutors dismissed two other securities fraud counts and a single count charging him with devising a scheme to defraud investors and obtain money for tropical plant nursery companies.
The indictment said nearly 50 limited partnerships organized and marketed by FP Industries Inc., of which Penrose was director, contracted with Agricultural Research and Technology Group Inc., Honolulu.
By 1985, Agricultural Research was experiencing sales problems and was unable to make promised payments to investors.
In the spring, about 760 people invested $5.67 million in the public offering of FPI Nursery Partners, prosecutors said. The defendant did not disclose the money would be pumped into the existing partnerships to keep them from failing, the indictment claimed.
U.S. Attorney for Hawaii Daniel Bent had said the entire fraud was the largest of its kind in Hawaii, involving limited partnerships, with losses of about $60 million.
Max Wheeler, Penrose's lawyer, said, although his client recognized he committed a crime, "it was not done for profit."
"There is a lot of money involved, but he's lost everything. He's lost his initial $500,000 investment and he's subject to civil lawsuits," Wheeler said, adding Agricultural Research and FPI are in federal bankruptcy court in Hawaii.