Marika Tolz sentenced to 8 years and three months
The 64-year-old Tolz got a small break because of her age and will be allowed to spend 1 1/2 years of the sentence under house arrest.
by John Pacenti of the Daily Business Review
July 27, 2011
Marika Tolz, one of South Florida’s most prolific trustees and receivers before her dramatic downfall last year, says she turned to fraud because she needed money to pay for medical treatment for her ailing mother, a Holocaust survivor.
But U.S. District Judge Jose E. Martinez said no excuse could justify Tolz’s actions in sentencing her to 8 years and three months. Hegave 64-year-old Tolz a small break because of her age and will allow her to spend 1 1/2 years of the sentence under house arrest.
“This is a very difficult case,” Martinez said. “It’s a difficult case because you had a position of trust.”
Tolz is the second high-profile receiver to be sentenced to prison time in the last year. Miami attorney and forensic accountant Lewis B. Freeman is serving a 10-year sentence for stealing $2.6 million from accounts entrusted to him. Freeman dominated receiverships in Miami-Dade County, earning a reputation for hobnobbing with judges who would in turn throw him work.
Tolz apologized tearfully to the court and pointed to long-held properties she is giving up as an example of her contriteness. “I know the things I did were wrong,” she said. “I would undo them if I could.”
Before Martinez pronounced the sentence, he indicated the Freeman remained fresh in his mind. The judge said he was a good friend whom he liked immensely. But like Tolz, Freeman had violated the public’s trust.
Tolz’s mother and her decade long battle with cancer took center stage at the sentencing hearing as her attorneys, Ben Kuehne and Alan E. Weinstein, tried to urge Martinez to go dramatically below the recommended sentencing guidelines.
Martinez, though, repeatedly said that Tolz as a professional appointed to oversee bankruptcies and troubled companies had the same obligation to the court system as a prosecutor or a judge. Tolz was so trusted that the government hired her as caretaker of $1 million in restitution earmarked for victims of Ponzi scheme king Scott Rothstein.
The $1 million disappeared in May 2010 as Tolz tried to make up shortfalls in her other accounts, and soon the U.S. Trustee Office forced her resignation and the investigation was on to figure out just how much she stole.
Assistant U.S. Attorney Luis Perez said Tolz stole from orphans, referring to her involvement in a Broward County probate case. The prosecutor also said she had taken advantage of those who were in bankruptcy. He said she was supposed to take care of people who were “in a bad place.”
“The people she was supposed to help are the people she stole from,” he said.
Both Freeman and Tolz were appointed by judges in state and federal court to take over the finances for individuals and businesses that had run aground whether through financial mismanagement or fraud. Tolz also worked as a U.S. trustee panelist and took jobs with the U.S. Marshals Service as a caretaker of assets, both cash and property, forfeited in criminal cases.
Tolz and Freeman both managed millions of dollars with little or no supervision.
Assistant U.S. Trustee Gary Gebhardt flew in from Atlanta to make a brief statement to Martinez that Tolz’s actions were nothing less than an undermining of the bankruptcy court system itself. “Debtors, creditors and the court expect nothing but the highest degree of integrity from Chapter 7 trustees,” he said.
Prosecutors said Freeman needed the money to live a life beyond his means. Tolz’s attorneys, though, painted her as a saintly woman who eschewed luxury, helped the indigent and was so devoted to her parents that she risked her livelihood and violated her moral values.
Kuehne also said Tolz is an alcoholic who is addicted to prescription pain medication.
He made an additional argument for leniency in motions, saying Tolz suffers from post-traumatic stress syndrome from a stabbing during a carjacking shortly after she was forced to resign.
Assistant U.S. Attorney Perez rejected the arguments.
Perez said over an 11-year period, Tolz misappropriated more than $16 million, pocketing $2.4 million. Perez was ready to refute Tolz’s tale about the carjacking with testimony from police officers in court, but the issue never arose again.
“Statements she made to reporting officers relating to the event were found to be not credible,” Perez said in a court filing. “The government submits fabricated PTSD should not be the basis of a sentence adjustment or variance.”
Kuehne said his client already paid back a substantial portion of the money she stole and that the government has access to accounts that would make up the rest. She has ponied up $400,000 in cash already and eight pieces of property in Hollywood, Hallandale, Fort Lauderdale, New Jersey and North Carolina.
He also noted Tolz’s “extraordinary” restitution. He pointed to more than 75 letters written by friends, relatives and colleagues in her support. but Perez said he doubted the estates and receivership would ever be made whole considering the legal and court costs generated by tracking down the money.
Tolz, like all U.S. trustee panelists, was bonded for $3.6 million — which is now the subject of litigation by her victims.
The child of parents who survived Holocaust death camps, Tolz “lost her way” when her mother took ill, Kuehne wrote in his sentencing memorandum submitted Monday. Tolz’s mother was diagnosed with a brain tumor in 2002 and died six years later.
“The initial reason for her misdeed was to help her ailing mother at a time of great medical distress,” Kuehne wrote. “As this daughter of the Holocaust survivors felt such an overpowering obligation to do everything in her power to assist her mother, whose life had been very nearly snuffed out by the Nazis at the Auschwitz death camp.”
Kuehne pointed to a letter from disability lawyer Rhoda Daniels, who wrote on Tolz’s behalf that she saw the dedication to the ailing mother and “the drive to help a Holocaust survivor survive anew.”
“Daniels understands and has documented the emotional struggle often experienced by children of Holocaust victims, as they try to erase the fears that are everyday present in the lives of their children,” Kuehne wrote.
Perez, though, said he can trace Tolz’s misappropriations back to 1999. Weinstein shot back that he was ignoring a previous diagnosis of breast cancer in 1998 for Tolz’s mother.
“I had to take her to all kinds of doctors and specialists,” Tolz told Martinez. “I had a divided loyalty.”
Tolz seemed to target money from the dead and their survivors, drawing down money from accounts in the bankruptcy case of the late James P. Driscoll and the probate case of James Christenson, who left money in trust for his three surviving children. Tolz also faces three grand theft charges in Broward County for stealing money from the probate case where she was named guardian.
She also took money from accounts tied to two troubled Miami-Dade County developments in which she was named receiver and the defunct Miami wireless company Fuzion Technologies Group that has long been in federal bankruptcy court.
Ann Spalding, a Gunster partner in Fort Lauderdale representing the successor personal representative in the Christenson estate, told Martinez the estate is still owed more than $300,000 from Tolz and she doubts that the bond, which will be subject to numerous lawsuits, will be enough to cover expenses.
“I hope somehow our estate can be made whole,” Spalding said.
She also took offense that with defense’s contention that Tolz has been cooperative in helping track down assets. “We have faced obstruction all along,” Spalding said.
Weinstein, though, took exception of his own to the hyperbole used by Perez in saying that his client stole from orphans in the Christenson case. He noted that the mother of the children is still alive and they are now grown.
“Nobody took the bread out of the mouths of starving children,” he said.
