Seattle investment adviser Mark F. Spangler was sentenced Thursday to 16 years in prison for fraud and money laundering after secretly investing more than $46 million of clients’ money into two risky startups in which he had an ownership interest.
U.S. District Judge Ricardo S. Martinez said the lengthy sentence was based in part on Spangler’s lack of remorse for deceiving his friends and clients.
“Something happened to change Mark Spangler from the person his family knew, someone his early clients knew, into someone who was willing to lie and cheat and swindle,” Martinez said during sentencing.
“In gambling away his clients’ money in his startups, he risked their retirement funds, children’s’ education, family’s welfare … their livelihood — all in the hopes, I guess, of hitting it big.”
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Addressing the court before his sentencing, Spangler expressed regret for losing hisclients’ money, saying his primary goal was “always to make money for them.”
“They are good people, and I am saddened they were harmed,” he said.
Spangler, 59, was convicted in November on 32 counts of fraud and money laundering.
He ran The Spangler Group investment firm and, according to Securities and Exchange Commission documents, raised more than $56 million from his clients beginning in 1998.
However, between 2003 and 2011, rather than invest the funds in publicly traded securities, he diverted more than $46 million into his two risky startups, TeraHop and Tamarac.
During the sentencing, three clients told the court how Spangler’s actions affected their lives.
Abbe Sue Rubin, who lost more than $10 million, asked the judge to give Spangler the full 20-year sentence the prosecution recommended.
“It still hurts that your lawyer said you did nothing wrong and that I should have known,” she said to Spangler in front of the court. “But … should I have known? ‘Don’t worry’ you said. ‘It will all be OK.’ ”
After two years of liquidating assets and untangling the complexities behind Spangler’s fraud scheme, court-appointed receiver Kent Johnson was able to return more than $30 million to investors — including $3.9 million for Rubin, the prosecution calculated.
Thursday, the judge ordered Spangler to pay the remaining $19.8 million owed to the clients as restitution.
Spangler was not jailed while on trial, but the judge ordered him taken into custody immediately. Spangler requested he be sent to the federal detention center in Sheridan, Ore., to be closer to his family.
Spangler’s lawyer, John Carpenter, said he plans to appeal both the guilty verdict from November’s trial as well as Thursday’s sentence.
Coral Garnick: 206-464-2422 or email@example.com. On Twitter @coralgarnick