Saturday, March 17, 2007

Martin Jr. Request for Letters of Support

Request from Martin Armstrong Jr. to help Martin Armstrong Sr.

To all whom are concerned,

I'm writing to you on behalf of my father, Martin Armstrong. Over the years you have all kept a watchful eye and provided much appreciated support as he has fought a seemingly never ending, one-sided legal battle.

As you probably know by now, my father's criminal sentencing hearing
was earlier this week and Judge John Keenan, despite legal authority to do
so, refused to give credit to my father for time served on the civil
contempt towards his criminal sentence of 5 years.

This was obviously very disappointing. For those that wrote letters of
support to the Judge, I want to thank you as it was very much appreciated.

This battle is not over, as my father has a hearing on April 27th in front
of his Judge on the civil case to bring the contempt of court to an end (not
only did Judge Keenan not grant credit for time served on the civil
contempt, he ordered that the 5 years on his criminal sentence not begin
until the civil contempt is complete). If you have not already, but still
feel compelled to do so, it would be greatly appreciated if you could write
a letter of support for my father to the Judge presiding over his all
important civil case.

Below is his information:

Hon. P. Kevin Castel
United States Courthouse
500 Pearl St., Room 2260
New York, NY 10007

In addition, if you could copy my father's attorney, Thomas Sjoblom, on your
letters that would be very much appreciated so that he and my father are
aware of letters that were sent to the Judge prior to the proceedings. You
can do so at the following mailing address:

Thomas V. Sjoblom
Attorney at Law
Proskauer Rose LLP
1001 Pennsylvania Avenue, NW Suite 400
South Washington, DC 20004

or send an email to:

Thank you for your time and your continued support. On behalf of my father
and his family it is very much appreciated.


Below please find the mailing addresses for each of the two judges:

JUDGE ON MARTIN ARMSTRONG'S CRIMINAL CASE: Hon. John F. Keenan United States Courthouse 500 Pearl St., Room 1930 New York, NY 10007

JUDGE ON MARTIN ARMSTRONG'S CIVIL CASE: Hon. P. Kevin Castel United States Courthouse>500 Pearl St., Room 2260 New York, NY 10007

In addition, if you could copy my father's attorney, Thomas Sjoblom, on your letters that would be very much appreciated so that he and my father are aware of letters that were sent to the judges prior to the proceedings. You can do so at the following mailing address: Thomas V. Sjoblom - Attorney at Law - Proskauer Rose LLP 1001 Pennsylvania Avenue, NW Suite 400 South Washington, DC 20004 or send an email to:

Thank you for your time and your continued support. On behalf of my father and his family it is very much appreciated.


Letter from Vicky Armstrong - Martin Sr.'s Daughter

It took nearly 30 years for my dad to develop this model and his refusing to turn over its source code to the government is a big reason why he has been held in jail for over 7 years without a trial. His model was his life’s work and his passion that ultimately landed him in jail. Although it's great to hear people that have benefited from his insight, after seeing what has happened to him I wish he kept it to himself.

There is obviously so much I can say and although I never post messages, I am now reaching out. I could never put into words what this has done to my father and my family. Even as I write to you now and try and express my feelings towards what has happened to him my eyes are filled with tears.

Regardless if you support my father's beliefs or not, I'm asking for your help. As of now his criminal sentencing is set for March 20th (now delayed until April 2007 according to brother Martin - editor) and his Civil Contempt hearing for the end of April. These dates have changed many times since they were originally set in January and they are likely to be pushed back again. My family, friends, old client's of my father, and myself have been sending emails and letters to members of the Judiciary Committee of the House and Senate and the Judges involved. Unfortunately our efforts have gone unanswered and we ask for more help. For those of you that have posted supportive comments and blessings, we thank you. You really have no idea how much your thoughtful words mean. Although my dad is a fighter, sometimes he needs to know he's not alone so I've printed out some of your messages and sent them to him just for this reason and I know it has helped.

For over 7 years he's been living in a cell with a 1-hour weekly visit and 300 minutes a month for phone calls. The visiting hours are on Wednesday and I'm the only one of my family who lives near the city so I get to see him the most. Since my grandmom (his mother) is 88 and lives in south jersey almost 2 hrs away, she relies on my brother and/or aunt near her to drive her up. Given that they have to take the day off of work to do so they don’t get to see him that often.

I’m not looking to change anyone’s views or opinions, I only ask for your help in a situation that should make every citizen of the United States outraged.

I attached the latest NY Times article that explains an accurate account of what has happened and some contact information of people that have the power to do something. This obviously means a lot to my dad and my family for you to share your thoughts with any or all of the people listed below. My deepest appreciation for your help and support.

Thank you,
Vicky Armstrong

The email addresses of the Judiciary Committee Chairmen for the Senate and the House of RepresentativesPatrick Leahy: senator_leahy@leahy.senate.govJohn Conyers Jr.:
House of Representatives Judiciary Committee: General email box
Senate Judiciary Committee: Website that gives their mailing address

In Fraud Case, 7 Years in Jail for Contempt
Published: February 16, 2007
The New York Times

On Jan. 14, 2000, Martin A. Armstrong, a globe-trotting investment manager, was told to produce $15 million in gold and antiquities, as well as documents, in response to a civil suit by the government accusing him of securities fraud involving hundreds of millions of dollars.
When he said that he did not have the items and could not produce them, a federal judge ordered him jailed for contempt of court.
Seven years later, Mr. Armstrong sits in the Metropolitan Correctional Center in Lower Manhattan.
Imprisoned two years before Enron and WorldCom brought corporate crime to center stage, Mr. Armstrong, 57, is the white-collar defendant whom time forgot. Over the years, the losses of his former clients have been repaid by a bank involved in his trades.
Still, he remains jailed on one of the longest-running charges of contempt. In many cases, a federal law limits to 18 months how long someone can be held under civil contempt while the court tries to coerce compliance with an order. Even in cases of criminal contempt, whose goal is punishment rather than coercion, an individual is entitled to the full protections of due process after six months.
“A legal proceeding is supposed to be the quest for truth,” Mr. Armstrong said in a phone interview last week from the 12-story building, which is used mostly as a temporary holding site for prisoners. “But this contempt was used to stop me from going to trial, and it’s been nothing but bad faith from the government ever since.”
How Mr. Armstrong has been held for so many years without a trial is a tangled and bizarre tale. Mr. Armstrong, his lawyers say, has been stuck in a surreal situation in which criminal prosecutors have never had to prove their 24-count indictment at trial while the civil case tied him up. Nevertheless, they have gotten their desired result — a lengthy prison term for Mr. Armstrong.
Last August, he pleaded guilty to one count of conspiracy in the criminal case. He struck that deal with federal prosecutors after he was moved from the 75-square-foot cell he shared with another prisoner into solitary confinement and had not slept for days, his lawyer said. Over the years, prosecutors have said that they were ready to proceed to trial and that civil contempt had nothing to do with their case. Mr. Armstrong countered that his detainment impeded his efforts to mount a proper defense, blocking his access to essential documents and computers as well as the assets to pay counsel.
Because there has been no jury trial in the case, it is impossible to say which side is right: the government, whose indictment in September 1999 contended that Mr. Armstrong misappropriated hundreds of millions in client funds; or Mr. Armstrong, who said that officials at the bank executing his trades generated temporary losses that could have been recovered in the market. (Two of those officials later pleaded guilty to fraud in a related case involving the bank.)

Rick Maiman/Bloomberg News
Martin A. Armstrong, pictured in jail in February 2000, has almost served more jail time for civil contempt than he would have if he had been sentenced to the likely 6.5 to 8 years on conviction of 24 criminal counts of securities fraud, commodities fraud and wire fraud.
Exceeding a Sentence
But this much is certain: Mr. Armstrong’s years in jail for civil contempt will soon exceed the sentence of 6.5 to 8 years that he would have received if he had been convicted of all 24 criminal counts of securities fraud, commodities fraud and wire fraud. “The case sends a very bad signal,” said Bernard V. Kleinman, a criminal lawyer in White Plains who represented Mr. Armstrong until 2004 and argued twice for his release before the United States Court of Appeals for the Second Circuit, in Lower Manhattan. “I think it bodes very ill for anybody held in civil contempt. District court judges can look at this case and feel that the likelihood of the circuit reversing them is small and that time is, in and of itself, no factor in determining whether civil contempt has lost its coercive effect and has become punitive.”
John F. Keenan, the Federal District Court judge overseeing the criminal case, has not yet sentenced Mr. Armstrong. It is unclear whether the judge will give Mr. Armstrong credit for the time he has served. Under federal sentencing guidelines, his lawyers expect a sentence of about five years.
A spokeswoman for the United States attorney in Manhattan said that the office did not comment on open cases.
Judge Richard Owen, the senior district judge who ordered Mr. Armstrong held in contempt, still sits on the bench in the Southern District of New York, where he has been for 34 years. When he ordered Mr. Armstrong taken away by federal marshals, he declared, “Mr. Armstrong has the keys to the jail cell in his pocket by production and telling people where to go to get it and dig it up and turn it over.”
Over the years, Judge Owen would revisit the contempt order every 18 months, guided by the federal statute. He repeatedly said that Mr. Armstrong was motivated by greed and was awaiting his release from jail to retrieve the $15 million that the government said was missing. According to lawyers who worked on the case in the early days, the financier’s headstrong manner irritated Judge Owen almost immediately.
But Judge Owen was moved off the case in November by a panel in the Second Circuit Court hearing Mr. Armstrong’s third appeal on the contempt charge.
The three judges unanimously rejected the appeal to free Mr. Armstrong but found that on the seventh anniversary of his confinement, “his case deserves a fresh look by a different pair of eyes.”
It was the second time in less than a year that the Second Circuit had ordered Judge Owen replaced on a high-profile case. In March, a panel overturned the 2004 conviction of Frank P. Quattrone, the former investment banker at Credit Suisse, because Judge Owen failed to instruct the jury properly; the panel assigned the case to a new judge in the “interest of justice.” Later, the government decided not to retry Mr. Quattrone.
Judge P. Kevin Castel has taken over the Armstrong civil case. A hearing is scheduled on the contempt matter for March 15. A request to interview Mr. Armstrong in person was denied by corrections officials, and Judge Owen did not return a call seeking comment.
A Budding Businessman
At the peak of his career in the mid-90s, Mr. Armstrong oversaw $3 billion in client assets. He was widely quoted in the financial news media, including The New York Times, on interest rate and currency movements. He began working at a coin and stamp dealership when he was 13 and opened a collectors’ store when he was 21. He founded Princeton Economics International, based in Princeton, N.J., in 1981.
Mr. Armstrong, an intelligent and imperious man who claimed to have made his first million by age 15, seems to have begun having trouble in 1999 when trading losses turned up in accounts that were held for the firm at Republic Bank. The problems appeared as the HSBC Group conducted a financial review before acquiring Republic.
The government said that Mr. Armstrong had improperly commingled accounts and overstated the value of the account’s securities in client statements.
Mr. Armstrong said that he did not authorize the transactions that produced losses and that he was not involved with commingling of the accounts. He was indicted in September and released on $5 million bond.
In January 2000, the receiver appointed by the court in the civil case said that Mr. Armstrong had purchased gold coins and other assets with his firm’s money. His lawyers argued that the assets might have been purchased before the suspected wrongdoing.
When Judge Owen ordered the assets returned, Mr. Armstrong delivered 4 of the 5 computers sought, 8 of the 11 requested boxes of documents and gold coins worth $1.1 million. He said that was all he had. The receiver said assets worth about $15 million were missing. Mr. Armstrong’s odyssey in the judicial system began.
His assets frozen, Mr. Armstrong has been unable to pay lawyers. He now relies upon David Cooper and Steven Z. Legon, two lawyers from the Criminal Justice Act panel, set up to help indigent defendants, and Thomas V. Sjoblom, a lawyer at Proskauer Rose, who has received nominal compensation.
“On what grounds can you tie up the system of criminal procedure and civil procedure and hold everything in abeyance during contempt?” Mr. Sjoblom asked. “What about your speedy trial rights? What about the government’s need to move forward in the civil case? You’re using the contempt process to wring a settlement or a plea out of the person. That, to me, is abuse of the process.”
Over the years, more than half a dozen government lawyers have cycled through the case. In 2003, Mr. Armstrong changed his legal approach in challenging the contempt charge, saying that he did not have to produce the assets and citing his Fifth Amendment right.
The receiver, meanwhile, has recovered the vast majority of money said to have been lost by investors in the case. In January 2002, Republic New York Securities, a brokerage firm that housed Princeton Economics’ accounts, pleaded guilty to conspiracy and securities fraud charges. Republic Bank paid $606 million to victims, all Japanese companies. It was “full restitution,” the assistant United States attorney said at the time.
Alan M. Cohen, then a lawyer at O’Melveny & Myers and now executive vice president and global head of compliance at Goldman Sachs, is the court-appointed receiver.
His former colleague, Tancred V. Schiavoni, a lawyer at O’Melveny, said that all the victims had been satisfied. “We tried to do the right thing, and we’ve gotten nothing but grief,” he said. “What this guy wants is to be given credit for time served on the contempt and leave with the money.”
O’Melveny & Myers has received at least $3.9 million to cover its fees and disbursement over the years, according to court filings.
The discovery process was protracted partly because of the complexity — hundreds of boxes of materials had to be examined and data transcribed into digital format — and because Mr. Armstrong was in jail and relying on lawyers working pro bono.
In January 2006, criminal prosecutors said they were eager to put Mr. Armstrong on trial in October. Then in early August, federal prosecutors appeared at the correctional center to strike a plea deal. The visit, Mr. Sjoblom said, came a week after Mr. Armstrong had been ordered into solitary confinement — known as “the hole” — for damaging a vent in a common area.
Mr. Armstrong pleaded guilty to one count of conspiracy to commit securities fraud for failing to keep his investors informed about losses and for agreeing to make investor funds available to Republic to cover Princeton Economics’ unrelated trading losses.
“I think the government just wore Marty out,” Mr. Sjoblom said.
On Dec. 7, Stephen J. Obie, regional counsel for the Commodity Futures Trading Commission, visited Mr. Armstrong, with a settlement offer in which he would sign over some $30 million as a penalty. Mr. Armstrong declined.
The Securities and Exchange Commission and the C.F.T.C. declined to comment on the case.
The government has said that $21 million is still owed. Even if that must be paid by Mr. Armstrong’s firm and not Republic Bank, an estimated $40 million is left in what was once Princeton Economics: $30 million in the United States and $10 million in a British entity. Mr. Armstrong and his lawyers learned of the $10 million three weeks ago.

Fred R. Conrad/The New York Times
Victoria Armstrong visits her father most Wednesdays at the Metropolitan Correctional Center in Manhattan, where he has been held for contempt for seven years.
Weekly Visits
Mr. Armstrong, who is divorced, has two children and an elderly mother who await his release. His daughter, Victoria Armstrong, 30, visits most Wednesdays, spending about one hour with him in a common room with other visitors and prisoners.
“You never stop thinking about where he is and what he goes through,” Ms. Armstrong said in an interview last week.
Her brother, Martin, 31, said he was bewildered at what he sees as the breakdown of due process in his father’s case. “That you can keep someone in contempt for such a long time with so many unanswered questions — that part of it has been a real eye-opener,” he said.
Sonia Sotomayor, a judge on the Second Circuit panel that heard Mr. Armstrong’s appeal last year, seemed to echo this point. “The district court’s finding that Armstrong is motivated solely by greed is not enough to justify disregard for due process,” she wrote. “Courts must exercise caution in their use of the contempt power and must recognize when it has reached the limits of its utility.”

1 comment:

Tacita said...

Interesting to know.