Ponzi sentencing: Schemer John Donnelly gets 7 1/2 years

Ponzi-schemer John M. Donnelly will serve seven and a half years for running a Ponzi scheme.
FILE FAMILY PHOTO

John M. Donnelly walked out of federal court Friday morning a free man–- but not for much longer.

The  man who pleaded guilty last spring to running a decade-long multi-million dollar Ponzi scheme from his Charlottesville office was sentenced to seven-and-a-half years in prison November 6. Judge Norman K. Moon expressed disgust for the crime that bilked 30 of John M. Donnelly's friends and motorcycle racing teammates of more than $5 million.

"This defendant knew these victims were making life decisions," said Moon, who referred to Donnelly as "evil" at one point and scoffed when defense attorney John Davidson suggested Donnelly was sorry for the pain he'd caused.

"If they hadn't caught you, you'd be doing it still today," he said.

Early in the hearing, Davidson argued that while Donnelly had undeniably committed a crime, his immediate cooperation with authorities upon his arrest and his future ability to earn money to repay his victims should be weighed in sentencing. Donnelly is currently ordered to repay $5,311,038, although another restitution hearing will be held early next year.

"He can be entrepreneurial and successful," said Davidson, noting that before Donnelly launched fraudulent investment firms that repaid old investors with money from new ones, he ran non-financial service related businesses. In fact, one of his Ponzi companies–- Tower Analysis–- Davidson later revealed, began as a company that maintained the exterior of skyscrapers.

Judge Moon wasn't the only person in the courtroom to offer scathing rebuke. Annie Nash, a Donnelly victim, read a lengthy victim impact statement– and addressed both Donnelly, dressed neatly in a charcoal suit and blue shirt, and his wife, Deborah, sitting several rows behind her husband.

"I have been gutted," said Nash, whose parents both died suddenly several years ago leaving only the Washington, D.C. family home to Nash and her brother. Nash explained to the court that after a close friend recommended him, she invested all the proceeds from the sale of the house with Donnelly, whom she already knew.

"I went with what I thought was the best investment advice," said Nash, admitting she was a novice in money management.

Having lost her entire investment, Nash asked Moon to sentence her former friend to the maximum.

"I do not believe that Donnelly will change, and I firmly believe that he will cause harm again," she said, calling him a "pathological liar and a delusional man."

Following  Donnelly's sentencing, new U.S. Attorney Timothy Heaphy spoke on white collar crime alongside Assistant U.S. Attorney Ron Huber, left, who prosecuted the case.
PHOTO BY COURTENEY STUART

She noted Donnelly drives a Hummer, owns a large house in Crozet, 64 acres in Fluvanna, and multiple motorcycles–- all of which have or will be liquidated to help repay victims. The Donnellys, she said, "lived in luxury on the backs of my dead parents."

Donnelly was last to speak, and rather than speak directly to Judge Moon alone, he turned to address the assembled audience of family, friends, victims and various law enforcement and media.

"I'm sorry," he said loudly in a steady voice, promising, "I can do something about this."

Addressing Nash directly, he said, "I want to help you, Annie; I hope that I can, and I hope that the court will allow me to." And he offered thanks to his wife Deborah and his friend Mike Sheffield for their support.

In an unusual scene following a criminal sentencing, a stoic Donnelly walked out the front door of the courthouse arm in arm with his tearful wife. According to attorney Davidson, he will surrender to officials to begin serving time sometime in the next six weeks, after he finishes assisting with asset recovery. Until that time, he remains on house arrest, monitored by GPS.