Joanne Schneider and her lawyer, Ian Friedman, at a 2005 court hearing. Photo by: C.H.Pete Copeland/Plain Dealer
Joanne Schneider, who ran what prosecutors call the second largest security fraud ring in state history, was sentenced to three years in prison this morning after pleading guilty to a series of fraud charges.
Schneider and her husband stole about $60 million from investors. The three-year sentence was the minimum for the securities and fraud charges she pleaded guilty to in Cuyahoga County Common Pleas Court. Several people who stole less money in similar, unrelated scams got longer prison sentences.
Judge Eileen A. Gallagher—who earlier sentenced Schneider’s husband, Alan, to probation instead of jail for his participation in the operation—chose to make the sentences for the 13 crimes concurrent. Assistant County Prosecutor Dan Kasaris said he was very disappointed in the sentence, echoing the sentiment of several defrauded investors who attended the hearing.
“She should have gotten more than three years,” Kasaris said. “You steal that kind of money . . .”
Schneider’s attorney, Ian Friedman, presented evidence that the 67-year-old Lakewood woman had health problems and made efforts to help authorities recover money for investors.
Friedman referred to health problems at sentencing and noted that Schneider had been hospitalized after an earlier hearing, but details of her ailments were not discussed in open court.
Gallagher indicated she took those concerns seriously. In discussing the sentence length, the judge told Schneider: “It’s more likely that it will be a death sentence for you, ma’am.”
The Schneiders’ enterprise centered on using investor money to buy, rehabilitate and rent properties. For 20 years, the couple made regular interest payments as high as 18 percent to investors. But the payoffs often came not from profits, but money from new investors in what prosecutors called a typical Ponzi scheme.
At her peak, Schneider owned several buildings, wineries and other companies with nearly 170 employees.
Things unraveled in 2004 when she invested in the failed Cornerstone retail and entertainment development in Parma Heights. Friedman said Thursday that Schneider had been told by Parma Heights officials that she would receive financing for that project and kept taking investments, even as her system was failing, in hopes the project would work out.
Schneider said in court that she regrets investing in Cornerstone and believing in assurances that the project would work.
“I know you all hate me. I never meant to harm any of you,” she said. “I really tried to get your money back and, God willing, that will happen.”
Investors in the courtroom were angry and frustrated at the sentence.
“It’s a slap in the face,” said Lawrence Martin. “When she gets out in three years, she will be a happy person. These other people will be sad the rest of their lives.”
Another investor, Tim Kreuzer, called the sentence terrible.
“Three years in prison is nothing,” he said. “I’d serve three years in prison to live the life she lived. I don’t think the judge handled it well. I think she [the judge] is a weak-willed person.”
The sentence is tied for the shortest from the 13 fraud cases involving more than $1 million since 2000 investigated by the Ohio Division of Securities, which handled the early investigation of Schneider. The other case involved just $2.5 million.
In the six other cases topping $10 million, offenders received at least five years in prison, and two received 20 or more years.