A federal judge agreed that Stephen Walsh deserves a re-sentencing...

A federal judge agreed that Stephen Walsh deserves a re-sentencing on his fraud conviction. Credit: Bryan Smith

Former New York Islanders co-owner Stephen Walsh is entitled to a re-sentencing that could shorten his 20-year prison term for securities fraud, a Manhattan federal judge ruled on Thursday.

U.S. District Judge Loretta Preska granted Walsh’s request to reconsider the 2014 sentence after finding that his lawyers had provided “ineffective assistance” in agreeing to a plea that waived any right to appeal -- even if he got the 20-year maximum -- without any benefit in return.

“The court is convinced that Petitioner was not effectively represented twice -- once when the appeal waiver was effected without consideration and again when this waiver was not raised by appellate counsel,” Preska wrote.

Walsh, 74, formerly of Sands Point, co-owned the Islanders hockey club from 1991  until 2000.

He was charged in 2009 with scamming investors by raising money with misrepresentations and spending it on himself in a $50 million investment fraud.

His lawyers, Preska said, expected a sentence under 10 years, and were shocked when the late Judge Miriam Cedarbaum imposed the 20-year maximum. Walsh’s release date is not until 2032.

Walsh’s current lawyers argued that Cedarbaum, who died in 2016 at 86, was suffering the after-effects of a stroke when she sentenced him, and his former lawyers should have complained about her health.

Preska did not resolve that issue. But she said Cedarbaum mistakenly believed many investors had lost money, when in fact they were all made whole, and Walsh had been unable to raise that issue because he waived his right to appeal.

Walsh and partner Paul Greenwood, also a former Islanders executive, were accused of ripping off charities, universities and pension plans.

Prosecutors said Walsh used stolen money to pay a divorce settlement and provide money for his children's businesses, while Greenwood bought expensive stallions and collector teddy bears, according to charges.

Greenwood, who  pleaded guilty sooner, was sentenced to  10 years by Cedarbaum, reduced later to five by another judge after an appellate reversal.

Walsh began his bid to get re-sentenced in 2017. Preska has not yet set a date for his new sentencing, and has not guaranteed he will get a shorter term.

Susan Kellman, a lawyer, said Thursday she was “delighted” with Preska’s ruling. Prosecutors, who opposed a re-sentencing, declined comment.

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