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A Saratoga lawyer who ran two investment funds has been sentenced in federal court in San Francisco to seven years in prison for defrauding investors of $1.1 million. David Prince, 49, who lived in Saratoga and had a law office in Los Gatos, was sentenced by U.S. District Judge Charles Breyer on Wednesday and ordered to begin serving the prison term that day.
Prince was convicted by a jury in Breyer’s court in October of five counts of wire fraud. U.S. Attorney Melinda Haag said evidence at the trial showed that Prince defrauded more than 30 investors of $1.1 million between August 2005 and January 2007. The two funds he ran were MJE Invest! and the Leopard Fund.Some of the victims lost their homes, their children’s college education funds and their chance to retire, prosecutors said in a sentencing brief.
Prince lied to investors by promising them that their principal would be guaranteed, that they would receive returns as high as 5 to 25 percent per month and that the money would be invested in the stock market, Haag said. Prince lost most of the investors’ money through risky stock options trading. He also used some money given by later investors to repay earlier participants and spent some funds on personal luxuries including a leased Mercedes Benz car, Haag said.
Defense attorney Daniel Barton asked for a two-year sentence, arguing in a brief that Prince’s losses were due to a “flawed business model” and that his concealment of the losses “demonstrates cowardice and continual blind optimism more than an intent to defraud.” But prosecutors, who sought an eight-year sentence, maintained in their filing that Prince’s conduct “demonstrates a pattern of deliberate deception.
“They wrote that Prince “took advantage of people who were not financially sophisticated and who trusted his extravagant promises.” Prosecutors said examples of victims included a hairdresser who lost her house after Prince defrauded her of $40,000 she had told him she could not afford to lose; a couple who were forced to go back to work as janitors in their 60s; a man who was forced to declare bankruptcy and return to work at age 69; and a Christian pastor from Texas who lost nearly $50,000 in college funds for his children. Haag said that in imposing the seven-year sentence, Breyer emphasized Prince’s attorney status and the extremely vulnerable nature of his victims as factors favoring a heavy rather than light penalty.
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