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Delaware courts: Couple sentenced to prison for fraud, conspiracy
WILMINGTON -- A couple that operated a Delaware lending institution that never lent any money -- while collecting hundreds of thousands of dollars in fees -- were sentenced to prison terms Wednesday in federal District Court.

Ed Johnson, 60, whom prosecutors described as "a lifelong con man," was sent to prison for 10 years, while his wife, G. Carol Johnson, 67, a formerly respected loan executive and community activist, will serve three years and four months behind bars.
Both at trial and at Wednesday's sentencing, Ed Johnson maintained that the criminal prosecution, followed by October's convictions by a jury on 14 fraud and conspiracy counts, was all a misunderstanding. If he'd gotten just a little more time and staff assistance, the financing would have worked out, he said.
"We were trying to help people, and now it's turned into a criminal event," he said.

But Assistant U.S. Attorney Lesley F. Wolf told District Judge Joseph J. Farnan Jr. that this was not an isolated incident. She said Johnson's criminal record stretched back 20 years, including convictions for larceny, bad checks, misappropriation of funds and fraud. She said prison time and previous court orders have not deterred Johnson and the only way to protect the public is to lock him up.
Farnan agreed, telling Johnson that the evidence showed that his loan business was conceived and executed as a criminal enterprise. "I think you started out to rip people off," he said.
According to court records, from 2003 to 2007 the Johnsons' companies -- MERL Financial and Heritage Capital Credit Corp. -- accepted 21 applications from businesses across the country for $370 million in loans to buy land and renovate buildings. But despite collecting $1.5 million in fees, the companies never delivered even a dollar in loan money to any of their clients.
Carol Johnson's attorney, Federal Public Defender Edson Bostic, picked up on the government charge that Ed Johnson was a con man, saying Ed brought that quality to his marriage.

In detailing Carol Johnson's impressive résumé, her charitable work and lack of criminal record, Bostic said she should not be defined by this conviction.

During her brief address to the court, Carol Johnson repeatedly and tearfully apologized.
"I am so sorry, so sorry we are here," she said. "I wanted Ed to succeed. We were married 25 years and I wanted him to succeed." She also said she never meant to do wrong and begged Farnan not to incarcerate her.
Wolf, however, pushed back against the portrayal of Carol Johnson as a victim. She said Carol's role -- her credibility as a loan executive before joining Heritage -- "was an essential part of the fraud."
Were it not for Carol Johnson's sterling reputation, Wolf said, many victims would not have done business with Heritage. And, she said, given Carol Johnson's lengthy experience in the loan industry, "she should have known better"
Farnan agreed, though in handing down a lighter sentence he said he was taking into account Carol Johnson's previous good works.
And unlike Ed Johnson -- whom Farnan ordered incarcerated immediately -- the judge allowed Carol Johnson to report to prison late next month.
Farnan also told Carol Johnson she might benefit from relationship counselling during her incarceration.
The Johnsons were also ordered to pay restitution to their victims.



http://www.delawareonline.com/article/20100527/NEWS01/5270366/Delaware-courts-Couple-sentenced-to-prison-for-fraud-conspiracy