A federal appeals court in Manhattan on Thursday, Jan. 7,...

A federal appeals court in Manhattan on Thursday, Jan. 7, 2016, vacated the 10-year sentence for investment fraud imposed on former Islanders co-owner Paul Greenwood, above, and ordered him resentenced. Credit: Bloomberg News, 2009 / J.B. Nicholas

A federal appeals court in Manhattan Thursday vacated the 10-year sentence imposed on former New York Islanders co-owner Paul Greenwood for a massive investment fraud and ordered him resentenced.

Greenwood, 68, had cooperated with the government after he was implicated with former Islanders executive Stephen Walsh in issuing bogus promissory notes to cover $554 million in losses and diverting $80 million to fund a lifestyle that included a horse farm, expensive stallions and collectible teddy bears.

He was sentenced in December 2014 by Manhattan U.S. District Judge Miriam Cedarbaum, who said in part that despite his cooperation and efforts to recover money for investors, a “number of people” lost “many thousands of dollars” that was “very devastating for many of them.”

The 2nd U.S. Circuit Court of Appeals said the record of the case contained evidence of losses by pension and retirement funds, but did not support Cedarbaum’s conclusion that any individual victims were devastated, and as a result she needs to reconsider the sentence.

Greenwood, formerly of North Salem in Westchester County, and Walsh, were partners in an ownership group that controlled the Islanders in the 1990s, and were charged in 2009 with bilking investors in their WG Trading Co. Walsh was sentenced to 20 years.

The 2nd Circuit said Cedarbaum may still impose the same sentence, but needs to ensure that it is not based on “erroneous findings of fact.”

Greenwood’s lawyer, Fred Hafetz, said in a statement, “I am gratified with the 2nd Circuit ordering a resentencing and am hopeful for a better sentence on the resentencing.”

Latest video