22

Between indictments and scheduled trials, there stretched, as always in the American system of justice, long months and much work. Irwin and Madeleine Margolies, free on bail, were docketed to face their peers in federal court in Manhattan in December 1982, on the multiple charges of fraud and tax evasion. They had a new lawyer now, an experienced criminal and civil attorney named Gary Woodfield. It was not that Margolies no longer trusted Oestericher. That trust went deep, especially as Oestericher was so intimately involved in all that Margolies had done; it went as deep as their long friendship. It was that Margolies knew all too well Oestericher’s limitations as an attorney, and he was not about to put his fate and his future, nor those of his wife, in Oestericher’s hands.

Donald Nash, languishing in the Manhattan House of Detention, his twenty-day cloning sentence served and now sitting in a cell without bail, would go before his peers in New York State Supreme Court in April 1983, a year after the shooting on Pier Ninety-two, on five counts of murder. His attorney, Lawrence Hochheiser, well known in criminal-law circles, paid a fee in excess of $15,000 by Scott Malen from the Margolies fund, had complained bitterly of foot-dragging, of unconscionable delays in the trial because the prosecution still hadn’t amassed all its evidence and so Nash was being denied his right to a speedy trial. But a trial within a year was the norm, and Hochheiser knew it.

This was a time, then, for the prosecutions, both state and federal, to seek out even more damning evidence than they already had, time to organize that evidence into cases with no holes, and it was a time for the defense, of the Margolieses and of Nash, to try desperately to find the holes through which their clients could escape.

During those months, Nash was constantly in and out of his cell. He was ordered to appear for blood tests, to see if his blood matched any of the samples found in the van. He was ordered to appear to have samples of his hair taken, to see if it matched any of the hair found in the van. He was ordered to appear for test after test. He was taken to the district attorney’s office for interviews, and there he sat silently beside his lawyer, refusing to answer any questions, refusing to say anything, refusing to implicate anyone.

“I removed Donald Nash from prison a number of times,” Chartrand says. “On one occasion I took him from detention, and he was a very popular chap in jail. You’ve got to respect a man like this, what they were charging him with. And a guy said, ‘We’ll see you later, Don.’ And Nash turned around and he pointed his finger as though it was a pistol and fired it. They practically idolized him there.”

The evidence the government had put together against Irwin and Madeleine Margolies was very distressing to Woodfield when he went through it, and he became increasingly gloomy about their prospects. Their only hope, he came to realize, was to strike some sort of deal with the federal attorneys, to plea-bargain and, perhaps, win some kind of leniency. At the beginning, when this was only a simple fraud case, only a matter of missing money and gems, when there was still dispute over the evidence and culpability was open to doubt, the government might well have been interested, and, in exchange for a plea of guilty and the return of some of the loot, the Margolieses might have gotten off with a fine, a short vacation, and some harsh words. But Jenny Soo Chin and Margaret Barbera, and the three CBS technicians, still had been alive then. Times and the situation had changed radically. The government was convinced it could go to trial and win a conviction on most if not all of the counts in the indictments. All a plea bargain would do, then, was save some time and expense. So the government was in a position to hold firm, to bargain hard, to give almost nothing. For Irwin Margolies, Woodfield was told, there would be no deals. For Madeleine Margolies, just maybe, but that would depend on Irwin.

The lawyer explained it all to his clients. If the government pushed ahead and gained the convictions it so confidently expected, and then filed a harsh sentencing memorandum with the judge, in essence asking for the maximum sentences for the couple, then Irwin could face up to 250 years in prison and Madeleine not much less. Even with time off for good behavior, even if they served only the minimum one third of their sentences, neither Irwin Margolies, at forty-seven, nor Madeleine Margolies, at forty, could ever expect to see the outside world again, all their assets would be seized, and their children would be left destitute. And if the government was put through the time and expense of a trial, they could expect the worst.

The potential price of continued resistance, then, explained again and again by their lawyer, and the frigid atmosphere that hung over their meetings with their prosecutors, eventually convinced the Margolieses that they had little choice but to take whatever the government was prepared to offer and hope for the best. Early in November, the deal was struck.

Irwin Margolies, still maintaining that he was the innocent victim of an evil and untrustworthy employee, Margaret Barbera, agreed to plead guilty to fifty-one of the sixty-two counts of mail fraud, wire fraud, interstate transportation of stolen property, and personal and corporate tax evasion brought against him. He was doing so, he said, to protect his wife. In exchange, the government agreed to drop all the fraud charges against Madeleine Margolies, thereby allowing her to continue her attempts to retain possession of her Greenburgh home, her Florida condominium, and other assets, and accept only a guilty plea to five counts of tax evasion.

Even with their pleas, the couple was warned to expect little mercy. In accordance with Justice Department policy, the prosecutors made no recommendations as to what sentences they would like. But the memoranda filed with Judge John M. Cannella in Federal Court left no doubt as to the government’s desires and expectations. There were two. One, running to sixty-one pages, detailed the Candor scheme to defraud Maguire and others. The second, filed as a secret supplement and held in confidence, went through the murders of Jenny Soo Chin and Margaret Barbera and what the government claimed was Irwin Margolies’s role in them.

“The impact of the Margolieses’ fraud,” the government document said, “goes well beyond the mere misappropriation of many millions of dollars. Partly as a result of the monetary losses incurred, and other unfortunate consequences of the victimization, Maguire, a long-established and highly regarded name in the factoring world, will cease operations and be merged into another Irving Trust Company subsidiary.…

“So, too, the careers of several Maguire officers who were involved in the administration of the Candor account and who were themselves hoodwinked by the multifarious lies and other stratagems of the defendants have been crippled. Additionally, the Margolieses have left behind them a trail of creditors stretching from New York to London and then again to Israel.

“The effect of this fraud upon the financial community is more difficult to gauge. Commercial financing companies such as Maguire are an important industry in New York City, and the services they provide are essential to numerous other enterprises both in this community and elsewhere. A scheme of the dimension and notoriety as that committed by these defendants inevitably inhibits the growth of such companies and makes them more reluctant to offer their services to newer and small clients who may be precisely the enterprises which most need their assistance.

“Despite the devastating effects of their fraud upon institutions and individuals alike, defendants have done absolutely nothing to atone for their crimes. All requests for their cooperation have been rebuffed.… They have made no restitution nor have they so much as offered an explanation as to why restitution cannot be made. Indeed, defendants have tried every imaginable means to conceal their booty and to insulate it from the Government and their legions of creditors.… The conclusion is therefore inescapable that Irwin and Madeleine Margolies remain in jealous possession of many millions of dollars of stolen money and are confident that their sentences will not be such as to cause them to disgorge it. Indeed, their silence in this regard can only be taken as an indication of continuing criminal intent.

“Likewise, despite repeated entreaties from the Government, defendants have declined to assist in the continuing investigation of other persons who necessarily must have been involved in the fraud, except, of course, to thrust responsibility for Maguire’s loss upon Margaret Barbera and Jenny Soo Chin, whom they know cannot refute their accusations. They have steadfastly declined to provide information concerning other crimes which have come to light over the course of the investigation. Significantly, at no time have they claimed that they lack information with which to cooperate in the ongoing investigation. Their complete intransigence in these matters must weigh heavily in their sentences.…

“The litany of their various activities over the long course of this scheme reads like an encyclopedia of fraud, deceit, and duplicity. Wrongful appropriation of funds by Mr. and Mrs. Margolies certainly was not undertaken out of any compelling human need.… Their business afforded them an ability to make an honest living and enjoy a most comfortable life. Rather, the only explanation for their conduct is that they were motivated by greed.… Given the magnitude of the crimes, the total lack of remorse or restitution, and the defendants’ continuing avariciousness, vindication of the principles of specific and general deterrence requires the imposition of substantial sentences of imprisonment. It is apparent from all the available evidence and from the defendants’ massive theft that they did not believe they would be caught, or, alternatively, that they concluded that the amounts of money involved were worth the risk. Unless the Court imposes sentences commensurate with the crime, the sad fact will be that their evaluation was correct.”

Despite these harsh words, the government still was willing to waive the fraud charges against Madeleine Margolies and allow her to plead guilty to the tax-evasion ones only. “Undeniably,” it said, “it is the case that of the two defendants, Irwin Margolies is far more culpable than his wife. However … Mrs. Margolies was an active participant in the Maguire fraud. To the extent that the Government’s acceptance of guilty pleas from Mrs. Margolies to tax offenses only may seem inconsistent … ultimately the Government determined to accept guilty pleas from Mrs. Margolies to five tax felonies carrying aggregate prison terms of 19 years and fines totaling $35,000 because of our belief that such maximum penalties would provide this Court with an appropriate sentencing range with respect to all of Mrs. Margolies’s criminal activity.… Although Mrs. Margolies can be said to be less culpable than her husband, in large measure this derives from his several and continuous efforts to protect her—to the fullest extent possible from direct and collateral consequences of conviction. Thus, earlier in these proceedings, Irwin Margolies represented to the Court that he wished to testify exculpatorily for his wife at a severed trial, and in his plea allocution, he sought to minimize her role in Candor’s day-to-day operations. When all is said and done, however, the simple truth is that Madeleine Margolies played a vital and significant, although supporting, role in the Candor-Maguire crimes.”

As for Irwin Margolies: “The Court, in fashioning an appropriate sentence for Irwin Margolies, should give full consideration to his responsibility for the murder of at least one prospective Government witness and the disappearance through violence of another. If persuaded of Mr. Margolies’s direct connection with these heinous acts, the punishment which the Court would otherwise impose upon Margolies should then be enhanced to reflect his responsibility for these most ultimate acts of obstruction of justice.”

Judge Cannella read the memoranda and reached his decision. On December 1, 1982, he sentenced Irwin Margolies to 28 years in federal prison and fined him $72,000. “I am satisfied,” the judge said, “that there is no real remorse in this defendant at this time. He feels it’s like paying rent for a loft. I believe that after serving his sentence, the fruits of his crime will still be there for him.” The judge then added that he hoped the Manhattan district attorney would take additional and appropriate action against Margolies if he found sufficient evidence to bring him to trial for murder. But the twenty-eight years for fraud was the longest term ever handed down in New York for a white-collar crime. Judge Cannella ordered Margolies remanded to prison without delay, and the once and still millionaire jeweler was shackled and led off a few blocks to the federally run Metropolitan Correctional Center, the first stop on a long journey, the place where he would remain until the authorities decided where he would go next.

Three days later, it was Madeleine Margolies’s turn to face Judge Cannella. She was tearful, contrite. “I relied on my husband’s advice on anything I may have done,” she said, sobbing. To which federal attorney Ira Block retorted sarcastically, “One would have to accept the fact that Mrs. Margolies lived in a cocoon.” Judge Cannella heard her out and then sentenced her to three years in a federal prison, which meant she would be eligible for parole in a year, and fined her $35,000. He gave her until late January to get her affairs in order before beginning that sentence.