Fairfield businessman Ned Roscoe, who placed 34th in a field of 135 in 2003’s gubernatorial recall election even while he was busy defrauding a bank, was sentenced yesterday to five years in federal prison.
Roscoe, 51, is scheduled to begin serving his sentence on March 21. His father, John Roscoe, 82, of Green Valley, was sentenced to five years probation with one year of home detention. U.S. District Judge Ronald Whyte scheduled a March 5 hearing to determine how much restitution they’ll have to pay.
A jury last February convicted Ned Roscoe, a former owner and officer of Cigarettes Cheaper!, on all 28 counts federal prosecutors had filed against him: one count of conspiracy to commit bank fraud and to make false statements to Comerica Bank, 13 counts of bank fraud, and 14 counts of false statements to a bank.
Benicia-based Cigarettes Cheaper! at its peak had almost 800 retail stores nationwide and $1 billion in annual revenue. After a month-long trial, jurors agreed Roscoe from August through November 2003 had directed company accountants to inflate the company’s weekly borrowing base reports of inventory submitted to Comerica Bank, eventually inflating the value of the company’s inventory by more than $16 million. He did so to get more money from Comerica through Cigarettes Cheaper!’s $21 million line of credit and to avoid a pay-down on another, $10.7 million credit line.
The jury also agreed that evidence showed that both Roscoes conspired to defraud Comerica Bank and make false statements to the bank; the elder Roscoe pleaded guilty in January 2011. And Ned Roscoe directed a company accountant to falsely inform Comerica Bank in late November 2003 that the cause of the $16 million in inflated inventory was due to clerical or accounting errors, his jury found.
In a sentencing memo filed last month, federal prosecutors said they want Whyte to order the Roscoes to pay more than $27 million in restitution: the $16.1 million outstanding principal balance on the company’s loan, plus $10.9 million in accrued interest.
Prosecutors asked Whyte to sentence Ned Roscoe to 14 years in prison, while a probation officer recommended 10 years. But in a sentencing memo filed this month, defense attorney Vicki Young had asked for a sentence of three years and 10 months, writing that “Ned Roscoe was not in any sense the ‘kingpin’ of a criminal conspiracy. The case
involves businessmen trying to keep the failing business going.”
Ned Roscoe ran as a Libertarian in the October 2003 race to oust and replace Gov. Gray Davis. In a blog he maintained at the time, he said he was counting on the support of “this political base, formed first of smokers with many different political persuasions, united in the belief that we must respect the freedoms of others in order to have freedoms of our own, combined with others seeking sensible, realistic actions by a new Governor.”
“I am optimistic, with the calm confidence of a Christian with four aces,” he wrote. “Government isn’t like business. Good government needs consensus. I can work with Legislators and officials to decide rapidly and to do what makes sense quickly. My sense of urgency comes from having customers to serve and bills to pay. My top priority is to improve the prosperity of workers without expanding the burden of government. That is, to do the decent thing.”
He finished 34th in a field of 135, earning 2,250 votes (about .02 percent of all those cast).