Former money manager Armstrong stays in jail for contempt

From Bloomberg News Service
via The New York Times
Tuesday, November 28, 2006

http://www.nytimes.com/2006/11/28/business/28trader.html?_r=1&oref=slogin

Martin A. Armstrong, the former money manager imprisoned for almost seven years for contempt of court, will remain behind bars for defying a judge's order that he turn over $14.9 million in rare coins and gold bars in connection with a federal lawsuit.

Yesterday, the United States Court of Appeals for the Second Circuit, in New York, upheld a decision in 2000 by Federal District Judge Richard Owen jailing Mr. Armstrong for failing to surrender the assets.

The Securities and Exchange Commission and the Commodity Futures Trading Commission sued Mr. Armstrong in October 1999 and ordered him to surrender the gold bars and rare coins to the government. Mr. Armstrong has maintained he does not have the assets.

The ruling has no direct impact on a related criminal case against Mr. Armstrong, 57, who pleaded guilty in August to a federal conspiracy charge stemming from what prosecutors said was a $3 billion Ponzi scheme. He faces up to five more years in prison when he is sentenced in that case in January.

"Fifteen million dollars is a life-altering amount of money," the three-judge panel wrote in its 58-page decision issued yesterday. Mr. Armstrong may conclude "that the risk of continued incarceration is worth the potential benefit of securing both his freedom and the concealed property."

No one has been jailed longer on civil contempt charges in a white-collar case, Mr. Armstrong's lawyer, Thomas Sjoblom, has said.

Mr. Armstrong prevailed in one regard yesterday when the appeals court ordered a new judge to oversee his civil case. The same court in March removed Judge Owen from presiding over the retrial of Frank P. Quattrone, a former Credit Suisse First Boston banker, on a charge of obstructing justice. Prosecutors later agreed to drop their criminal case against Mr. Quattrone.

"While we emphasize that we have never found any fault in Judge Owen's skillful handling of this case, we believe that on the seventh anniversary of Armstrong’s confinement, his case deserves a fresh look by a different pair of eyes," the appeals court said.

The court has previously refused to overturn Mr. Armstrong's civil contempt citation.

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