Judge gives ex-Islanders co-owner 5-year prison reduction

NEW YORK -- A former New York Islanders co-owner who received a 10-year prison term for a fraud conviction had his sentence cut in half Wednesday by a judge who cited his good deeds and cooperation with prosecutors.

U.S. District Judge Loretta A. Preska in Manhattan said Paul Greenwood, 69, deserved a reduction to five years. She noted that he regularly did charitable acts long before he became embroiled in an over half-billion-dollar financial fraud that spanned a dozen years.

The 2nd U.S. Circuit Court of Appeals in Manhattan ordered the resentencing this year, saying another judge wrongly based the 10-year sentence in part on a finding that Greenwood had left some individuals financially devastated.

Assistant U.S. Attorney Jessica Masella said 98 to 99 percent of investors' money had been recovered, and the government sent the judge a letter citing the role Greenwood's substantial cooperation had played in the prosecution of another defendant, Stephen Walsh.

Walsh eventually pleaded guilty and was sentenced to 20 years in prison.

Greenwood and Walsh owned a controlling interest in the Islanders hockey team from 1992 to 1996.

Greenwood pleaded guilty in 2010 to securities fraud, admitting cheating charities, schools and others out of hundreds of millions of dollars. He used a portion of the money to buy collectible teddy bears and to invest in $100,000 horses.

According to a 2008 magazine article, Greenwood's collection of teddy bears included more than 1,350 Steiff toys. Among them were 74 bears, plus birds, cats, insects, dinosaurs, kangaroos, seals and squirrels.

Prosecutors said Walsh and Greenwood carried out the fraud from 1996 through February 2009, cheating institutional investors in particular.

During those years, the men operated a securities business while Greenwood lived in North Salem, Connecticut. The businesses included WG Trading Co. LP, based in Greenwich, Connecticut, and Westridge Capital Management Inc., in Santa Barbara, California.

Five years ago, Greenwood moved to Southern Pines, North Carolina, where his lawyer said he regularly tutored veterans and performed other charity work.

Speaking by phone from prison Wednesday, Greenwood again apologized.

"I cannot express deeply enough how sorry I am,'' he said.