Fox v. Cochran
No. 5102
In 2009, Bud Fox turned 15, and already had accumulated a reputation as a cunning criminal. Since the tender age of 8, he had been in and out of juvenile detention center on charges of burglary, robbery, computer hacking, and fraud. He was, according to one Detective of the 123rd precinct, a born con man—savvy beyond his years.
After finishing his latest term of incarceration, Fox hatches a grand Ponzi scheme involving the rather downtrodden and uneducated people from his neighborhood. Fox comes back from his detention center raving about the education he received, and begins to dazzle his neighbors by explaining why the low person on the totem pole is always hurt more when the economy goes into recession. “The muckety-mucks, the big kahunas, the bigwigs don’t pay the price”, his patter goes, “because they have security.” He then takes some time to describe how more well-off people manage to secure their money from taxes and loss through a hedge fund. “A hedge fund, you see, offsets losses so that the fat cats don’t lose no cash.” To have a hedge fund, you only need someone smart to run it, and of course, you would have to pay him a small fee for his time and effort. Most people distrusted Bud, but one or two gave him a little of their extra cash to see what it meant to be in a hedge fund. Bud “invested it” and then promptly gave them a statement showing a large return. He then convinced the few investors to reinvest their earnings.
Once word spread that folks were making money, Fox began to “earn” his fees. The later investors’ money paid the dividends to the early investors and so on. This worked for quite awhile, but the trouble with a Ponzi scheme, as Bernie Madoff can attest, is that it is destined to run out of money. This realization finally dawned on Bud, after he took on a new client, Gordon Gekko. Fox was not sure how Gekko found out about his fund. Gekko was known for finding unusual and lucrative investments; he was, by all accounts, a corrupt and ruthless Wall Street banker with serious mob connections. He was not someone to cut out of his expected payday. Since Gekko came into the scheme late, the money was starting to dry up and some “early investors” had started to pull out because they had made enough and wanted to use the money for other things.
So Bud decided to tinker with the scheme to get Gekko his payout early and then shut down and go back to school. His tinkering did not work, and instead the entire scheme collapsed. Many of his investors were left without anything. They had risked their meager savings and were now more destitute than they had been before. Several of the investors, including Gekko, complained to the police.
Bud was arrested and charged with the following felonies: endangering the welfare of a vulnerable elderly person in the second degree (5–10 years); scheme to defraud in the first degree (3-7.5 years); insurance fraud in the second degree (5–12 years); computer tampering in the first degree (7.5–15 years), falsifying business records in the first degree (5–10 years), and theft (5–7 years). The initial reaction of the District Attorney’s office was to turn the case over to the juvenile division, but the complexity of the scheme compelled a probe into Bud’s record. A review of his juvenile file and the amounts of money involved in the current charges tipped the scales in favor of trying him as an adult. Once the district attorney made this decision, Bud Fox’s attorney was notified: Bud Fox would be tried as an adult.
The trial was held in timely fashion; both the defense counsel and prosecution performed their jobs with the highest level of professionalism. Consequently, neither the defense nor prosecution had any reason to raise any additional objections; the whole trial process was a textbook example of constitutional principles at work. The judge issued all of the correct directions to the jury and the jury entered into serious deliberations for the next six hours. After reaching a verdict, the jury was returned to the courtroom and the foreman read the unanimous verdict: “Guilty”. Bud was immediately remanded to the officers pending his sentencing hearing.
The prosecution began preparing the presentation for the sentencing hearing by interviewing many of Bud’s victims. Given the general circumstances of most of his victims, few were able to take the time off of work to come to court and provide a victim impact statement. The District Attorney suggested that the group could have just one or two members serve as representatives in court. Two victims volunteered, and the group agreed that they would provide the statements as their experience mirrored that of most others.
At Bud’s sentencing hearing Ms. Ida Hoe and Ms. Hope Springs-Eternal came to court and spoke under oath and on the record to the judge. Bud’s lawyer objected to these statements as irrelevant to sentencing in a noncapital case. The judge overruled the objection. Ms. Hoe is an elderly woman with no living relations and a rather dubious past. As a younger woman, she had earned her living by prostitution and minor drug trafficking. Her son had joined a gang at the age of 14 after dropping out of high school. At this point, Ms. Hoe decided she should insure his life and made herself the beneficiary. After three years in the gang, her son was slain in a drive-by shooting. His insurance policy provided the money for her investment with Bud. After paying her debts, buying a small, 600 square-foot studio apartment and endowing a local program to help prostitutes and gang members become educated, productive, and law-abiding citizens, Ms. Hoe gave the last $25,000.00 of the life insurance money to Bud. She told the judge “When I came into money, it was from awful circumstances and I used most of it to try and undo the wrongs that me and my son had done. For myself, I didn’t want to be no burden on no one. I have a small place and the investment was goin’ to help me with my day-to-day livin’. I ain’t got no social security. Now, I don’t know how I can buy me my necessary prescription drugs. I guess I’ll have to do like some of my neighbors and choose between drugs and food or start eating cat food.” There were twenty other elderly victims that would be similarly affected.
Ms. Hope Springs-Eternal is a 40-year-old recent widow; her husband died after a long battle with cancer. She has two children: John Jr., age 17, and his younger sister Janice, age 15. Before the cancer diagnosis, Ms. Springs-Eternal and her husband earned a good living, including a nice apartment, a car, and college savings accounts for both children. Medical insurance only paid 80 percent of her husband’s bills, so Hope had to file for bankruptcy. She was just beginning to crawl out of the medical debt when she lost her job. To keep the family afloat, she took a part-time job cleaning offices at night and moved to a smaller apartment in a less expensive part of town. She had not been able to put any funds into the college accounts since her husband’s diagnosis and the accounts had been dwindling in the poor economy. John Jr. and Janice were honor-roll students at their schools. They spent their afternoons participating in church activities and volunteering at the local Boys and Girls Club helping other children with their homework. They had dreams of going to medical school and finding a cure for the cancer that ravaged their father’s body. Believing that she must help them achieve their dreams, Ms. Springs-Eternal cashed out their college accounts and gave the money to Bud. “I lost everything,” she told the Judge, “and now John Jr. ain’t goin’ to no college. I had to send him to a shrink, he was so low. The shrink said he suffers from PTSD due to the trauma of his daddy’s death and that he thinks he let him down because he didn’t watch out for us. He blames himself for this terrible mess.” The prosecutor then mentioned that there are fifteen other victims with similar stories and gave some other examples of the hardships faced by hard-working and church-going families ,due to Bud’s fallacious investment advice. Bud’s lawyer tried to counter the effect of the statements by noting that it is incumbent upon the investor to make a wise decision. “Caveat emptor and all applies here just as it does on Wall Street.”
Given the scope of the scheme, the impact on the lives of the victims, the judge sentenced Bud to the maximum penalty allowed for each of the many charges against him. The shortest maximum term for any of his crimes is two years and the longest is fifteen years. His prior criminal history adds another fifteen years to his sentence even though he was treated as a juvenile for those offenses. The judge also makes the sentences run consecutively rather than concurrently. Overall Bud is sentenced to serve 61.5 years in prison. When Bud gets out of prison, he will be more than 76 years old and will have no retirement or social security to aid him in his old age. In handing down the sentence, the judge makes note of the “heart-rending financial carnage wrought by the defendant.” He goes on to note that, “The defendant has destroyed his victims’ lives as surely as if he had hacked them with an axe. He deserves to be punished to the fullest extent of the law.”
After Bud is incarcerated, he reads up on Supreme Court precedent and files an in forma pauperis petition claiming that his eighth amendment rights have been violated in two ways. The Supreme Court appoints Carter Phillips to act on Bud’s behalf. Phillips argues that judges and juries in non-capital cases should not consider evidence relating to the character of the victims or the monetary and emotional effects of the crime. Second, the sentence is overly harsh and disproportionate. His prior crimes were as a juvenile and should not carry the same sentencing weight as an adult’s would and all of his crimes were nonviolent. A consecutive sentence over the sixty-year time span is equivalent to life in prison and defines cruel and unusual punishment. The state counters that Bud showed the forethought and mental capacity of an adult and career criminal in constructing his scheme and defrauding the public. The sentences provided by the judge are within the limits of the state of Nogero’s sentencing guidelines and given the constitutionality of three-strikes laws and the multiple charges here, the sentence is fully within the boundaries of the law.
Relevant Cases
- Pointer v. Texas
- Solem v. Helm
- Gregg v. Georgia
- Kennedy v. LA
- Payne v. Tennessee