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Wednesday, March 20, 2013

New York Man Sentenced to 11 Years in Prison for Mail Fraud and Attempting to Corruptly Influence a U.S. Attorney

A New York man was sentenced today in Buffalo to serve 11 years in prison for committing mail fraud and attempting to escape the charges by exerting pressure on a U.S. Attorney’s spouse and candidate for office, the Justice Department announced.

James F. Lagona, 52, of Snyder, N.Y., was sentenced by Chief U.S. District Judge William M. Skretny in the Western District of New York.  Lagona was sentenced to serve nine years in prison on 27 mail fraud charges, one year in prison on one obstruction of justice charge and one year in prison for committing obstruction while on release in the fraud case.  In addition to Lagona’s prison term, he was sentenced to serve three years of supervised release and ordered to pay restitution of $6,396,359 for the fraud charges.

On Feb. 23, 2011, in a case prosecuted by the U.S. Attorney’s Office for the Western District of New York, a federal jury found Lagona guilty of committing 27 counts of felony mail fraud related offenses for his role in the Watermark M-One Financial Services Ponzi scheme.  According to evidence presented at trial, Lagona and his co-conspirators operated a scheme that solicited investors for waterfront real estate and promised a 10 percent return on investment after one year.  In truth, no investments were made, and new investors were recruited to pay off the earlier investors.  A total of 94 victims suffered a loss of over $6 million as a result of the scheme.

On Dec. 18, 2012, in a case prosecuted by the Justice Department’s Criminal Division, Lagona pleaded guilty to a one-count information charging him with endeavoring to influence, obstruct and impede the due administration of justice.  Lagona has been detained since Nov. 15, 2012, pursuant to a criminal complaint.

During his plea proceeding in December, Lagona admitted to obtaining a private meeting with a campaign staffer working for U.S. Representative Kathy Hochul of New York, who was then involved in a close race for reelection against her opponent.  Lagona also admitted that during the Nov. 2, 2012, meeting – four days before the election – he identified himself as a clergyman, claimed that he had been involved in discussions with the political party of Rep. Hochul’s election opponent, and falsely claimed that the opponent’s party was interested in featuring him in an advertisement or rally to claim wrongful prosecution and religious persecution.  He told the campaign staffer that he would instead publicly support Rep. Hochul, if her spouse, Western District of New York U.S. Attorney William J. Hochul Jr., dismissed the criminal case against him.  The campaign staffer subsequently reported the meeting to the FBI.

Lagona admitted to meeting with the campaign staffer a second time on Nov. 3, 2012.  During the meeting, which was covertly recorded by the campaign staffer under the FBI’s supervision, Lagona admitted to specifying that he sought a “quid pro quo” in exchange for refusing to campaign with the party of Rep. Hochul’s opponent and for publicly supporting her instead.  Lagona admitted he told the staffer that in exchange he wanted his case dismissed and for no further charges to be brought against him.  Following the meeting, Lagona made efforts to follow up with the staffer by phone.

The criminal complaint in which Lagona was originally charged with obstruction, unsealed on Nov. 15, 2012, notes that the criminal investigation revealed no evidence that the campaign staffer, Rep. Hochul or her campaign ever intended to accept or considered accepting Lagona’s proposal, nor that the proposal was ever communicated to or considered by U.S. Attorney Hochul.  The investigation has revealed no evidence that any member of the opposing party ever considered using Lagona during the campaign.

The fraud case was prosecuted by Assistant U.S. Attorney Gretchen L. Wylegala of the U.S. Attorney’s Office for the Western District of New York and investigated by the U.S. Postal Inspection Service Boston Division and the Internal Revenue Service-Criminal Investigation New York Field Office.  The obstruction case was prosecuted by Trial Attorney J.P. Cooney of the Criminal Division’s Public Integrity Section and investigated by the FBI Buffalo Division. 

Press Release Number: 
Updated September 15, 2014