Federal prosecutors are asking that former Urbana money manager Timothy J. Roth be sentenced to nearly 11 years in prison for mail fraud and money laundering.
They're also asking U.S. District Judge Michael Mihm to order Roth to pay more than $16 million in restitution to his victims.
Roth, 57, pleaded guilty to the two federal charges on Oct. 25, 2011. He is scheduled to be sentenced Jan. 31 in U.S. District Court in Peoria. Sentencing had been set for Dec. 17, but the date was recently postponed for a fourth time.
Roth's attorneys have asked for leniency, offering a letter of contrition from Roth as well as character references from several people, many of them family members.
Court documents list 12 victims of Roth's actions, with Virginia-based Sentara Healthcare suffering an approximate loss of $7.6 million.
Among other large victims: Colorado-based TIC Holdings, more than $2.9 million; and Wisconsin-based Great Lakes Higher Education, nearly $1.8 million.
In their filing, prosecutors said federal sentencing guidelines call for a 14-year prison term. But they recommended a sentence of 131 months — just short of 11 years — because Roth cooperated with them.
Roth's attorney, Theodore Poulos, urged the judge to consider prosecutors' recommendations and perhaps think about an even lighter sentence — between five and 11 years.
Roth's letter to the judge said he notified his employer, Comprehensive Capital Corp., on Feb. 25, 2011, of his theft of client funds to help pay for his own business ventures.
He said none of his friends or colleagues knew about the crimes until he reported them — even though the crimes had been going on for years.
"It started off a little at a time, but as the global financial crisis hit in 2007, I began taking more and more," he wrote. "I knew it was absolutely wrong, but I had lost so much of my clients' money, I was making risky bets hoping, and actually believing, I could turn a profit to pay back all the clients."
Roth said that, from 2004 to 2007, he took money from the first of 12 victims mentioned in his plea agreement. Roth invested the money in a startup company he was funding, and said he would guarantee its return.
When that didn't work out, he misappropriated more money from her. According to Roth's letter, the woman thought the money was going to her son's startup business. It was actually going to businesses Roth was starting.
"I intended to pay it back with interest when my business grew to profitability," he stated in the letter. But in early 2011, he still owed her estate $229,595.
Roth said he misappropriated $1.26 million from two other victims, even though he knew that money was supposed to provide financial protection for later years in life.
He said he also misappropriated $218,000 from a college student organization, for which he served as treasurer.
"I initially misappropriated this money as a loan to my outside businesses," he said. The theft ended up hurting the organization's ability to offer scholarships to future students.
Roth dug an even deeper hole in 2008, after the financial crisis hit.
"Late in the year of 2008, I believed the financial panic was nearing its end and a once-in-a-lifetime financial opportunity may arise for making huge money from stock investments," he wrote.
"I thought I could 'borrow' mutual funds from some of the corporate accounts I had advisory agreements with," he stated.
Roth figured he could use them as collateral for margin requirements to make money trading stocks as stock prices recovered.
If successful, he reasoned, he could return all the money he had misappropriated from the first five victims — which he believed was about $1.5 million — and invest more money in the companies he founded.
So in December 2008, he fraudulently moved money from Sentara Healthcare to use as a margin.
After initial success, "I continued like an addicted gambler for the next two years, completely losing myself in these illegal activities by constantly convincing myself that the next trade would get me there," he wrote.
He also thought money raised through a public offering or sale of his companies — or money from their profits — would get him out of his hole.
Roth said fear of jail and being caught was secondary to trying to "stay in the game" and get the money back.
So between December 2008 and February 2011, the fraud amount increased from $1.5 million to more than $16 million. "A huge percentage of that sum" was taken in the months just preceding February 2011, he said.
He used most of the money for two businesses he thought would generate the money needed to pay everyone back.
His businesses included Champaign-based Mezolink, a data services company, and Evanston-based VCN Celect, which marketed online services to fraternal, business and faith-based organizations.
In his letter to the judge, Roth said those companies — or their successors — are bearing fruit.
He said ContinuityX, the successor to Mezolink, had more than $17 million in revenue and nearly $4 million in profits this past fiscal year.
"It is my understanding ContinuityX is now employing over 35 employees," he wrote.
Roth said the software and clients of VCN Celect were sold to a private firm that licensed them to National Church Services. That company has hired several VCN Celect employees.
In a court filing, Roth's attorney portrayed his client as generous. Roth coached youth basketball teams, counseled an employee with severe alcohol problems to get treatment and persuaded his college fraternity to stop hazing practices.
Roth also served as an immigration sponsor to two young women from Cameroon, the filing stated.
An accompanying letter from Roth's brother, Fred — an attorney in Naperville — said Tim's passion was to create businesses and pointed to Tim's lifestyle.
"There are no million-dollar homes or penthouses, priceless artwork or tales of fantasy trips, vacations or birthday parties," Fred Roth wrote. "Virtually all funds taken were used to fund salaries of hard-working employees and to finance operations."
Fred Roth also alluded to an earlier bump in Tim Roth's business career.
"I am reminded of a prior experience of Tim's in 1990 when crooked investors forced his company into bankruptcy and leveled unfounded and untrue accusations at Tim. ... In the end, the investigator appointed by the trustee advised the bankruptcy judge that Tim was the one with honesty and integrity who told the truth," Fred Roth wrote.
"Yet 154 employees lost their jobs, and the crooked perpetrators walked away with their combined net worth of $50 million intact, despite the fraud they perpetrated," he added.
Fred Roth stated in his letter that his brother has a talent for creating wealth.
"I know if given the opportunity, Tim will work the rest of his life to pay back every last cent. And, if given enough time, I know he will pay it all back."
But Tim Roth cast doubt on that assertion in his own letter to the judge.
"I know past or future accomplishments by me can never remove the pain and suffering I have caused, nor is it reasonable from anyone's perspective that I am capable at my age of full restitution," he wrote.