Paul Greenwood, former Islanders co-owner, sentenced to 10 years for investment fraud

Former New York Islanders co-owner Paul Greenwood was sentenced to 10 years in prison at federal court in Manhattan Wednesday for his role in a massive investment fraud, despite cooperating with prosecutors and helping recover money for five years.

Greenwood, 67, a resident of upstate North Salem until a recent move to North Carolina, had asked for a 5-year sentence. U.S. District Judge Miriam Cedarbaum  last month sentenced his partner Stephen Walsh, a former Islanders executive who did not cooperate, to 20 years.

The two were accused of soliciting $7.6 billion from investors, and issuing bogus promissory notes to cover $554 million in losses and diverted money. Greenwood allegedly spent $80 million on a lavish lifestyle that included a horse farm, expensive stallions and collectible Teddy bears.

"I have lied. I have cheated. I have stolen," Greenwood told Cedarbaum. "Words can't express my contrition. . . .  I am truly sorry for the grief and the heartache my actions have caused."

Prosecutors urged Cedarbaum to show leniency to Greenwood -- who faced up to 85 years under sentencing guidelines because of the scope of the fraud -- in return for his cooperation in recovering money and building the case against Walsh.

But the judge noted that the cooperation "was in some part self-protection" after Greenwood was caught, and said his contrition went only so far.

"I don't have to tell you because you are an intelligent man how much damage you did before you became sorry about it," she said. " . . . You had no difficulty for a period of time living much better than the people who had invested with you."

Greenwood and Walsh were partners in an ownership group that controlled the Islanders in the 1990s. They were charged in 2009 with bilking investors in their WG Trading Co. Greenwood pleaded guilty in 2010, and Walsh pleaded guilty early this year.

In addition to the prison term, Greenwood was ordered to forfeit $83.5 million, and make restitution to victims. His lawyer said that about 90 percent of the principal invested in the firm had been recovered since charges were filed in 2009.

Manhattan U.S. Attorney Preet Bharara said Greenwood and Walsh got what they deserved.

"They stole hundreds of millions of dollars of investors' funds . . . and lied to conceal their theft," he said in a statement. "Now they are answering for their massive fraud, and they will have to forfeit their ill-gotten gains and their freedom."