A Look Back: Joel’s Sentencing Brief, Part 2

This post is a multi-part series on Joel’s sentencing brief which was filed on the criminal case docket back in September 2015.  I’ll tag the posts with “Joel’s Sentencing Brief” so if you miss a part, you’ll be able to find it easily.

As usual, all page numbers listed are the PDF’s page number, not the page number listed at the bottom of the printed page.  It’s easier for you to jump to the appropriate page this way.

Part 2 – Joel Invents New Math

I’m skipping forward here since they’re just bleating about corporate veils and stuff.  And then Joel invents a new form of math!

The government’s loss analysis suffers from a separate flaw as well. In calculating loss, the government has included as investor “deposits” both an investor’s original investment, i.e., money not derived from NASI winnings, as well as money that investors profited from NASI and then re-invested back into NASI by purchasing additional ATMs. In doing so, the government has failed to identify in its loss calculation the amount investors actually lost because many investors purchased ATMs with previous winnings.

It sounds to me like Joel is saying that if you used re-invested with prior winnings, then that re-investment shouldn’t come off the amount you’re due. Bullshit. These re-investments he’s talking about are essentially the victim giving him back some of the winnings – so why should they still owe that portion of the winnings? How the hell does he even think the math works on that?

In the off chance that you think that Joel is making some kind of sense. I want you to sit down with 30 pennies.  We’re going to run a simplified Ponzi with two victims, Peter and Paul. The investment amount is a penny and every “year” there is a return on each investment of one penny. So, split those pennies into three stacks. Peter’s stack will have just the one penny, Paul will have 10 and you get the rest.

Year 1 – You convince Peter to invest a penny. Take a penny from Peter.
Year 2 – You pay the returns, so give a penny back to Peter. Peter told Paul about this excellent and totally not a Ponzi scheme opportunity and since Paul is loaded, he decides to invest 5 pennies. Investment totals: Peter 1, Paul 5.
Year 3 – You pay the returns, so give a penny to Peter and give five pennies to Paul. Since Peter is a little more flush, he re-invests one penny. Investment totals: Peter 2, Paul 5.
Year 4 – You pay the returns so give two pennies to Peter and five to Paul.
Year 5 – You pay the returns. Give two pennies to Peter and five to Paul. You’re now running pretty low on cash and will be unable to make the payouts next year, so you convince Peter to reinvest all five of his pennies. Investment totals: Peter 7, Paul 5.
Year 6 – Despite your efforts to raise additional funds, nothing comes of it. You don’t have enough money to pay out the returns so you bounce the checks and spend your last ten pennies on hookers and blow.

So, you can clearly look at what’s in front of you and see that Peter is left destitute. In the end, he’s a net loser for a penny since that’s what he started with and now he’s got nothing. Now, if I’m translating Joel right, Peter is a net winner. You see, he only ever invested one penny of his own money. Each time he invested after that, he was using his ill-gotten gains and that should not come off the amount of his loss. Peter re-invested a total of six times. So, in Joel’s mind, Peter is a net winner for six pennies. The additional problem with Joel’s theory is that you can’t prove whether or not they were really using their winnings to re-invest. Perhaps Peter didn’t really use his winnings. Maybe he spent the winnings on hospital bills and then emptied his 401k for the second investment and then emptied his kid’s college fund for the other five.

And then he explains his absurdity further:

An investor cannot be said to have lost money that was never theirs to begin with.

This here is just Joel trying to make his little conscious feel better.  “I didn’t steal as much as you guys thought!  I swear! Everyone was a net winner according to my math!  I sleep great at night!”

Between September 2007 and October 2014, investors were the source of approximately $355 million of NASI funds, and received approximately $335 million from NASI. Indeed, even accounting for legitimate ATM income, financing, and other investments, 88% of NASI’s total funds were used to pay investors. Since Mr. Gillis and Mr. Wishner intended the overwhelming majority of the money to go to investors, the most reliable calculation of intended loss here is the money Mr. Gillis and Mr. Wishner personally received from their fraudulent activity.

Would they like a pat on the back for only stealing $4 million out of the kitty a year for those last five years? You know, as the scam was readying to implode…and then eventually did. Hell, the Temporary Restraining Order brief states that they were cutting massive checks to themselves as they were bouncing checks to the investors. I wonder how things looked in prior years when Joel was bringing in investors hand over fist and they could pull more money out without it impeding investor payouts?

The most reliable indicator of intended loss is the money Mr. Gillis and Mr. Wishner took from investors and transferred directly to themselves: that is, their annual NASI salaries.


Annual salaries of $300,000 each over the course of this thirteen-year offense equals $7.8 million in intended loss

Are we completely ignoring that between 2013 to shut down, which was about 1.75 years, Ed & Joel pulled close to $1m out of the accounts (Temporary Restraining Order)? How about the $1.5 million that got shifted to Oasis and then disappeared?

There is a small part of me that sees what they mean.  Like a fraction of a percent.  If you steal an x-box and “re-distribute” that x-box to your little sister as a birthday gift, you still fucking stole that x-box even if you never play it or set eyes on it again.  If caught, you are the one held accountable for that action, not little Susie who just wanted to play that Monster High game.

The whole concept behind this is called “intended loss.” This makes sense in some cases, but he literally stole $124 million.  The fact that he didn’t profit $124 million out of it means fucking nothing.  He (and Ed) took $124 million that wasn’t his and redistributed it according to their own whims.  And if this is some way to deflect blame onto the net winners, I’ve got news for him.  Receiving stolen property that you didn’t realize was stolen isn’t a crime.  Sure, you still have to return it and isn’t that punishment enough?

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