IDAHO FALLS, Idaho (AP) — In his last days as Bonneville County prosecutor, Dane Watkins Jr. had a loose end to tie up.

The federal government was working its way through a criminal case against Ponzi-scheme architect Daren Palmer but had filed no charges. Watkins kept an eye on the feds' progress. He had not pursued bad check charges on behalf of the state, preferring to dedicate his own office's resources to the rest of his caseload.

But the check cases were nearing their statute-of-limitations expiration date. In a meeting with prosecutor-to-be Bruce Pickett, Watkins warned that if the feds didn't file charges soon, Pickett would have to prosecute Palmer.

Otherwise, a possible nightmare scenario existed: Palmer walking away a free man after orchestrating the largest Idaho-based investment fraud in history.

Between 2000 and 2008, Palmer took in some $75 million from dozens of investors, many of whom belonged to eastern Idaho's wealthiest and most influential families. He promised that they would receive returns of 20 percent to 30 percent regardless of market performance, though he was never licensed as an investment trader.

Six months after Watkins left the prosecutor's office to become a district judge, the U.S. Attorney's Office in Pocatello charged Palmer with money laundering and wire fraud. Palmer pleaded guilty and is serving an eight-year sentence in federal prison.

Pickett could rest easy, knowing that Palmer would pay for his crimes.

The federal charges also freed Pickett's office from the enormous strain of a Ponzi investigation and prosecution.

Any case can turn complicated and drain resources, but few cases consume as much time and manpower as white-collar crimes.

"Give me a robbery or a murder to solve any day over a white-collar crime," Idaho Falls Police Sgt. Phil Grimes told The Post-Register ( )."They are very difficult to understand."

Part of the difficulty in unraveling them is the time it takes for all-purpose investigators to become familiar with concepts that are basic understanding for specialists, said investigator Jim Burns, who helped probe Palmer's investment scheme for the state of Idaho.

Time detectives spend digging into financial records is time they can't spend on rapes, murders and other crimes.

"Number one, it's an issue of resources. The local folks have lots of pressure on them to get to all sorts of crime," Burns said.

Grimes said local police also run into jurisdictional issues with larger crimes, such as the Palmer scheme.

His case involved so much money and covered such a large area of land that IFPD was not as well-equipped for the task as were federal agencies, Grimes said.

Embezzlement, fraud, money laundering and other schemes can be so difficult to understand, in fact, that prosecutors often worry they won't be able to explain them to a jury clearly enough to secure a conviction, Watkins said. That, in turn, could encourage them to cut a deal in order to avoid a jury trial, he said.

"It's a reality of charging decisions," Watkins said.

Though infamous now, Palmer was once a revered member of his community: helpful neighbor, respected member of The Church of Jesus Christ of Latter-day Saints, feared football coach, beloved father.

Even as he gave money to the church and local schools, he exploited his friendships, religious connections and even family members to lure investors.

When he was exposed, many of his own victims refused to believe he was a crook. The shock of what he had done gripped eastern Idaho's trusting populace.

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"Your everyday burglaries, people generally look at them like criminals and stereotype them," Grimes said. "But those in Ponzi schemes portray themselves as upstanding, trusting people. People are shocked because we see them as good, honest citizens."

Yet sentencing for such crimes is often lighter than for more basic crimes.

A Nampa woman snared in one of the state's biggest embezzlement cases was sentenced last year to at least 13 months, and up to 41 months, in prison, followed by three years of supervised release. Bookkeeper Connie Stills embezzled $1.3 million from her employer, Port of Hope Centers Inc.

While working as CFO for an Idaho Falls company, Stan Mills stole more than $550,000, according to police records. He was sentenced to one year in county jail and 10 years' probation. Mills will be eligible for work release in August.

Like Mills, Brooke Armstrong was convicted of grand theft. She stole more than $150,000 from three employers. District Judge Joel Tingey sentenced Armstrong to four months in jail and eight years of probation.

By comparison, criminals convicted of aggravated battery and drug charges commonly spend years in state prison. The maximum sentence for aggravated battery is 15 years.

Victims often are unhappy with the light sentences for white-collar criminals. Frank VanderSloot, one of Armstrong's employers, said her sentence amounted to rewarding her for stealing.

When Dorothy McCarty got five years' probation for mishandling Iona-Bonneville Sewer District money, a district board member compared the sentence to a slap on the hand.

Unlike federal judges, who rely on clearly structured sentencing guidelines, district judges have vast discretion when assessing penalties they deem appropriate.

One reason for the discrepancy is that crimes such as aggravated battery and assault involve danger to society, the most important factor in judges' sentencing decisions. White-collar criminals typically pose no physical threat.

Also, victims of white-collar crime often care more about their money than about punishment of the criminal. Restitution was a significant element of Mills' and Armstrong's sentences.

"There's always that tug in interests of the accountability for the wrongdoing, which is the punishment, and your hope that the offender will make the victim whole through the payment of restitution," Watkins said.

As of Friday, Armstrong had paid $3,242 in restitution since her 2009 sentencing. She still owes $69,037.62.

Palmer was ordered to pay $29 million in restitution, but that money will be difficult to come by. The federal government seized all his assets and is in the process of returning money to his investors.

Palmer's crime also was different in that the scope of his Ponzi scheme vastly increased the amount of time he will spend behind bars.

Ultimately, Watkins said he was satisfied that Palmer's sentence met the demands of justice, even though Palmer's investment scheme lowered the standard of living for dozens of victims.

"In my mind, there is no distinction — in terms of the willful wrongdoing for the criminal aspect — between breaking and entering, as you might in a residential burglary or a business, and white-collar crime," Watkins said.


Information from: Post Register,


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