Former New York Islanders co-owner Stephen Walsh leaves federal court in...

Former New York Islanders co-owner Stephen Walsh leaves federal court in Manhattan in 2014 following his sentencing on fraud charges. Credit: Bryan Smith

A Manhattan federal judge on Wednesday lopped more than 15 years off the securities fraud sentence of former New York Islanders co-owner Stephen Walsh after finding that he received “ineffective assistance” from the lawyers representing him when he was imprisoned for 20 years in 2014.

U.S. District Judge Loretta Preska, who ruled last month that Walsh deserved a resentencing, reduced his sentence at a noon hearing to time served, and Walsh’s lawyer said he would be let go as soon as the order was transmitted to the federal prison in Danbury, Connecticut.

“The family is driving up now, and if it’s tomorrow it’s still not 20 years from now,” lawyer Susan Kellman said Wednesday afternoon. “ … I don’t know that he’s planned anything beyond hugging his family for the next couple weeks. He’s just going to try to live his life.”

Wednesday night, Kellman said Walsh had been released and was back home on Long Island with his family.

Walsh, 74, formerly of Sands Point, and a co-owner of the Islanders from 1991 to 2000, was accused in 2009 of carrying out an alleged $50 million investment fraud with partner Paul Greenwood, also an ex-Islanders executive, by using a fraudulent sales pitch.

Prosecutors said the pair defrauded investors including charities and universities, and spent the money on personal expenses. Greenwood pleaded guilty and was sentenced to 10 years, later reduced to five. Walsh pleaded guilty and was sentenced to 20 years by the late U.S. District Judge Miriam Cedarbaum.

In their plea for a resentencing to Preska, who took over the case, Walsh’s new lawyers said he had been advised to expect 18 to 24 months and was blindsided by getting the 20-year maximum.

They also argued his previous lawyers entered into a flawed plea bargain that gave up Walsh's appeal rights, that he was less culpable than Greenwood, and that Cedarbaum — who had previously had a stroke — mistakenly thought investors hadn’t been made whole.

“The judge brought the sentence in line with other cases,” Kellman said. “People just don’t get 20 years when there’s no loss and they’re not the most culpable person.”

Prosecutors opposed a resentencing for Walsh but took no position on what his sentence should be after Preska ruled in his favor.

Preska announced her ruling at a noon hearing with Walsh on a video conference call. His surrender date for the 20-year sentence was Jan. 5, 2015, and until Wednesday federal Bureau of Prisons records showed his release date as 2032.

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