Prison for Main Line developer in fraud case
Michael Pouls, a Main Line developer whose name had for many become synonymous with the borrow-and-spend excesses of the early 2000s, saw his wave of prosperity come crashing down Friday as a federal judge sentenced him to eight years in prison for bank fraud.
U.S. District Judge Paul S. Diamond cut down arguments that Pouls' prosecution was motivated by postrecession "class hatred" and instead referred to the 52-year-old as a "liar and a thief" caught by the economic downturn.
"He's not being punished for his success," the judge said. "He's being punished for stealing $12 million."
The prison term Diamond imposed exceeded federal sentencing guidelines by more than a year. He also ordered Pouls to pay $11.9 million in restitution to banks for loans he secured by lying about his assets.
Pouls pleaded guilty in December 2012 to charges of wire and bank fraud and making false statements, stemming from two loan applications he submitted in late 2007.
As the real estate bubble began to burst that year, the developer sought $13 million in loans from the National Penn and Wilmington Trust Banks in hope of keeping his empire of six businesses and $100 million in property holdings afloat.
He faked statements showing he had $28.5 million in investments to use as collateral, when the account had less than $3,500. His $10 million default on debts owed to Wilmington Trust has been cited as one of the questionable loans that led to the bank's collapse in 2011.
"Foolishly, I thought I could ride out the recession, use my business skills to get back on my feet and pay what I owed," he told the court Friday.
But not even a legal team led by led by former Montgomery County District Attorney Bruce L. Castor Jr., now a county commissioner, could convince Diamond of Pouls' good intentions.
Castor spent much of Friday's hearing lauding his client as a sterling example of up-from-the-bootstraps American entrepreneurial spirit.
Pouls made his fortune signing up college students for credit cards, and later expanded his business interests to include companies that resold tickets to sporting events, distributed cellphones to children, and developed properties across New Jersey and Delaware.
The recession hit him hard. But even as he falsified loan applications, he did so with the full expectation that he could generate enough money to recover once the storm passed, Castor said.
"This is still America," he said. "We think working hard and enjoying the fruits of your labor is something to be admired."
Diamond deflated that narrative with a single cutting remark.
Working to pay off his losses, "Mr. Pouls chose not to go into bankruptcy," Castor had said.
Diamond fired back: "No, he chose to steal money instead."
The judge humored attempts from a handful of witnesses to paint Pouls as a paragon of charity - a list that included a 9/11 widow, a cantor who delivered a sermon in court on Jewish law, and the adoptive mother of a special-needs child who repeatedly referred to herself and Pouls as "givers" and kindred spirits.
But Diamond's patience wore thin when it came to the testimony of former Bronx, N.Y., prosecutor Saydie Ladov, who compared the developer's crimes to that of "a man stealing a quart of milk to feed his family."
"This man has pleaded guilty to stealing $12 million, and you analogize that to a man stealing a quart of milk?" the judge asked incredulously.
Ladov had represented Pouls in his legal fight with Patricia Tollin, a former teacher at Baldwin who sued the developer, his wife, and the school in 2007, alleging she lost her job because Pouls was unhappy with the way she treated his 7-year-old daughter in class.
Tollin accused the school of giving in to the whims of the wealthy when the Poulses threatened to pull a multimillion-dollar donation unless she was fired. Both sides waged a public-relations war in newspaper and magazine pages. The case with the school was settled, but the legal fight between Tollin and the Poulses continues.
Speaking of Tollin's lawyer in court Friday, Ladov remarked: "If Michael was a lesser person, he would have reached across the table and ripped out his throat."
Pouls' fortunes have fallen considerably since those heady days. Last year, the family sold its Gladwyne estate - featuring an indoor pool with water jets to body surf, elevators, a private ice cream parlor, and an observatory - for $3.2 million and moved to California at a nearly $16 million loss.
Although Pouls has begun to again earn income through a new company, prosecutors said Friday he had been conducting business under a false name.
Pouls acknowledged Friday that a name that once stood for opulent wealth had been left in tatters.
"I'm determined to make amends," he said. "I'm determined to build a new reputation on hard work and honesty."