Michael Chatfield was sentenced to 108 months in prison on Thursday for his involvement in the “Cream Scheme” that defrauded insurors of millions of dollars. Chatfield was also ordered to pay $2 million in restitution.
The sentencing took place in Winchester, and Attorney David Eldridge had several issues with the pre-sentence investigation report, one being the claim Chatfield was a leader of the multi-level marketing scheme.
“This organization is based on a whole host of independent contractors,” said attorney Eldridge. “He didn’t hire or fire anyone, although it is true he recruited participants.”
The attorney pointed toward co-defendant Billy Hindmon’s sentence, who received 51 months last week. Attorney Eldridge told Federal Judge Sandy Mattice his client and Hindmon were both on the same level of the scheme, and that there was no difference in their roles.
However, the state argued there “is no requirement that says you have to be an employer to be a leader. You can lead independent contractors.” Prosecutor Frank Clark also emphasized the finding that Chatfield was the one who was said to set up an LLC used in the scheme. Judge Mattice eventually overruled this objection by the defense.
Attorney Eldridge then asked for a variance from the standard sentencing guidelines, which would have seen Chatfield sentenced for a maximum of 210 months in prison. He emphasized the large number of people (and their letters of support) that vouched for his character.
Demarcus Rogers briefly took the witness stand, telling the court how Chatfield was someone who took him under his wing when the witness was a freshman in high school. He also said Chatfield helped his businesses a few years ago, and described Chatfield as a high-character and moral person.
Prosecutor Clark asked, if Chatfield was morally upstanding and intelligent, why did he get stuck in the Cream Scheme? And prosecutor Clark also paid special attention to the testimony stating that Chatfield came from an affluent family with plenty of resources, with the prosecutor saying there was no excuse for Chatfield to become so involved in the fraud.
“It would not be obvious to a 23-year-old just out of college to disclose the cost their insurance would incur,” said attorney Eldridge, who affirmed the fraud in the case as Chatfield’s inability or refusal to disclose the cost of the pharmaceutical and its effectiveness to insurance companies.
“At least on the outset, I understand,” said Judge Mattice. “But at some point, it had to become apparent to Chatfield (fraud was being committed).”
The defense also argued that sentencing Chatfield to almost 20 years in prison would be excessive. They cited studies that showed people who commit white collar crimes are deterred from committing similar crimes again after a short prison sentence. Judge Mattice did not support this argument, and pointed out how someone like Bernie Madoff’s life sentence a decade ago has not stopped fraud from happening.
“The mere concept of what you said is offensive,” said Judge Mattice. “We can’t have a society where a class with wealth and connections don’t deserve to go to jail.”
Prosecutor Clark said he believed the sentence must be “substantial,” as $18 million was attributed to Chatfield. He said there is a reason there is a difference between misdemeanor theft and felony theft.
“Someone who steals $18 million may be willing to go to prison for one year, or maybe even four,” said prosecutor Clark. “Give them enough money and they may be willing to ride it out for a few years.”
The prosecutor told the court about Chatfield’s role within the scheme, painting a picture showing a man who was at the top of the scheme. Prosecutor Clark said Chatfield was the one who “fed lies” to those who were about to be questioned about the scheme. He also said that when Chatfield was about to be caught, Chatfield simply sold his book to someone else rather than coming clean, and that he often bragged about the scam in emails and texts.
After each side had argued their point, Judge Mattice sentenced Chatfield to the lengthy prison term. The prosecution agreed that $2 million is a proper amount of restitution, as it was determined Chatfield made $2.8 from the Cream Scheme.
Chatfield will have the opportunity to shave a year off his sentence if he completes 500 hours of drug treatment during his time in prison. After he leaves, Chatfield will be on probation for three years. Because Chatfield’s wife is both pregnant and diabetic, Chatfield will report to prison on Feb. 3rd (their child is due to be born in January).
“Mr Chatfield, I wish you luck,” said Judge Mattice before he adjourned court.