News

Neill to serve to 6-8 years in prison

By Bill Moss, Published: April 25, 2013

A Superior Court judge on Thursday sentenced Sam Neill to 6-8 years in prison for stealing from trust funds, meaning the disbarred attorney will likely serve six years total, counting three years of federal prison time a judge ordered the day before in U.S. District Court in Asheville. The federal and state terms are to be served concurrently.

Judge William R. Pittman of Wake County pronounced the sentence after a hearing of more than two hours during which Neill's attorney argued that Neill had done much good for his community and the state over 40 years and Senior Deputy Attorney General James Coman said that Neill's betrayal of trust and theft of almost $2.4 million warranted harsh punishment.

The prosecution was handled by Coman after District Attorney Jeff Hunt stepped aside because he had hired Neill's son Zachary as a prosecutor several years ago. Neill is free until he is assigned to a federal prison, at which time he will have to report to a federal marshal.

Thursday was the first time the public heard from Neill's younger brother, Roy, a well-known criminal defense attorney who like Neill is a solo practitioner.

For years, the brothers had met for lunch a couple of days a week, Roy Neill said, and then more recently the two fell out. Two years ago, Sam called Roy to meet him.

"He lost 60 pounds over a period of about six months, hadn’t been exercising, hadn’t been dieting, I figured he was going to tell me he had cancer,” Roy Neill said. “Then he told me had stolen this money. I really couldn’t believe it. It was very contrary to the way he’d lived his life. I don’t condone it. It’s not the way he was raised."

The courtroom audience that included the boys' mother, Helen, both their wives and Sam's son, Zachary, looked on, some dabbing at their eyes.

“I don’t know what happened," said Roy, seven years younger than Sam, the only two children of Elmer and Helen. "I don’t know if he was depressed and he did it or if he was depressed because he did it. Sam’s always been a person who cared. Three or four years ago I would never have dreamed he could do this."

When Roy Neill said the behavior was unlike how Sam Neill had lived, Cheshire asked, what did he mean?

“Really I thought he did too much," continued Roy, whose tone and inflection is a match of his brother's. "He was on every board. He was on the Board of Governors for the UNC system, which took an incredible amount of time. He did so much for other people. He did a lot for people all through his career.”

'Harmed the most needy and vulnerable'

McCray Benson, the CEO of the Community Foundation, described to the judge the magnitude of the loss felt by people dying in hospice and animals in need of compassion from caring humans.  Barry E. Clemo, "who was a very humble man," wanted to make sure that his estate went to aid hospice, which had treated two wives, and to help dogs and cats, a passion of his wife, Tracy. "He wanted to make sure her interest in animal welfare" was carried out through the donation. "We discussed the tremendous impact this gift would have and how this gift would result in more humane treatment of animals and how his gift to hospice would assist many individuals at a time of great need in their life...."

In his humility, Mr. Clemo remarked that if $850,000 was not the biggest gift the Community Foundation would receive, it was the biggest he and his wife could donate. Benson assured him of its importance.

"Not only was this the greatest gift that he would give but for many people it would be the greatest gift they would receive. The actions of Sam Neill destroyed the Clemos' legacy and charitable intentions, destroyed Mr. Clemo's wishes to provide people aid and comfort at the end of their life ... When Mr. Neill took money from the Clemo trust, he breached the faith and trust of Mr. Clemo had placed in him and Mr. Neill thought only of himself when he stole money from Mr. Clemo's trust. ... I ask the court to remember that Mr. Neill represented himself to many in the community and across North Carolina as the champion of charitable causes. His actions in stealing money from Mr. Clemo's trust made plain that nothing could be further from the truth. I ask the court to remember that Mr. Neill's action harmed the most needy and vulnerable in our community.

"I ask the court to remember that these inviduals and animals have been left without as the result of Mr. Neill's actions," he said. Had Clemo's wishes been carried out, Benson told the judge, $213,000 would have been distributed since 2009 and another $1.2 million would still be held in trust, churing out $50,000 per year for the causes he wanted to help.

Agent details embezzlement

Andrew Pappas, an SBI agent specializing in financial crimes, described the five cases that Neill pleaded guilty to, the amounts stolen from trusts or estates and the restitution payment Neill had agreed to make:

• The Clemo case, $884,514 lost, restitution: $1.15 million.
• Ruth Danis estate, $850,000 stolen, $925,000 restitution promised.
• Irene Meinke estate, $100,000 embezzled plus $343,000 put into a corporation Neill owned, with the money ultimately lost in a bankruptcy sale; restitution of $442,000 promised.
• Edna Davis estate, $247,682 embezzled, $263,057 restitution promised.
• Harold Talmadge, $55,000 stolen. The embezzled amount was repaid by a bonding company.

Except for the Talmadge estate loss covered by a bond, no restitution has been paid.

The Davis estate, said attorney Ed Harrelson, the successor trustee, was directed to the Blue Ridge Humane Society, St. Jude children's hospital and other charities. Neill put up his half interest in undeveloped property known as Rocky Mountain off Locust Grove Road toward the $925,000 loss.

"When we received the offer, we anticipated that the property would be sold," Harrelson said. "To date it hasn't been sold and to the best of my knowledge it hasn't really been marketed because the property, they don't believe it would bring enough in this market.... Today the trust has received zero actual dollars and I don't know if the trust will ever receive any real restitution from the defendant.

"As an attorney in Henderson County I cannot say that I'm personally angry. But I'm profoundly disappointed and saddened," he said.

Judge Pittman granted a request from Coman, the special prosecutor, to place Neill under house arrest, confined to his home between 7 p.m. and 7 a.m. and requiring an ankle bracelet for monitoring. The way a federal judge structured a sentence on Wednesday blocked the state from taking Neill into custody immediately, Coman said. Neill is expected to be taken into federal custody within four to six weeks, Coman said, with the federal judge’s recommendation that he serve the time at Butner, in eastern North Carolina.

“Because of the trust people in this community had in him, he was in a position to do the harm that he did,” Coman said. “He certainly caused significant harm.”

“I would ask you to give him a significant sentence, consider adding a bunch on at the end so that if he screws up he’s go back into prison and that’ll be the end of the matter,” Coman said.

Pittman granted the request, tacking a six- to nine-year suspended sentence onto the active time, with three years probation.

The disbarred attorney, his voice cracking at times, read a statement in which he expressed remorse for the embezzlement and the harm he had caused. He said he had suffered "a breakdown" and behaved in a way that was out of character with how he had lived his life.

“During the last two very difficult years I’ve worked hard to make serious attempts to provide restitution,” Neill said. “I’ll continue these efforts until I’m successful … I have nobody to blame but myself and I’m fully responsible. My life has already been destroyed, as I’ve lost my profession, my wealth and my reputation. Gratefully my wife, children and family have been steadfast as I’ve struggled to deal with my actions and the results… All our time is limited. I’m 63. Hopefully I will have a chance to again be a positive influence on society, and I’m committed in whatever time I left to make up for this.”

Neill’s attorney told Judge Pittman that Neill had done everything in his power to make restitution.

“Generally, when we come into charges like this, it’s very rare that restitution has been paid at all,” he said.

Cheshire attempted to draw a portrait of Neill as a lifelong public servant who had made a serious mistake, then tried hard to make it right with those he harmed.

When the Hendersonville lawyer first hired him, the renowned criminal defense attorney drove from Raleigh and asked Neill, “What did you do?”

“What he told me, also unusual for a criminal defense lawyer, turned out to be the truth,” Cheshire said. “He told me about things that weren’t being investigated that he had done wrong. In other words, to me, and then to the agent, and then to the world, he made a full breast of what he had done. He didn’t try to hide it. That’s a very rare quality in someone who’s charged with what Mr. Neill is charged with.”

Cheshire said he told his client that his greater exposure was with the IRS, which would pursue him "to the end of days" to collect the tax he owed on unreported income he had taken from the estates.

“So if you want to get rid of the people that can hurt you the most you would probably choose to get rid of the Internal Revenue Service and the United States government,” he said. “That’s the option that I presented. One of them was absolutely in his best interest. The other one was going to leave him with a tax debt that he would never be able to pay. He looked me and he said, ‘That’s an easy question for me, I want to pay the victims that I hurt, not try to help myself.’ I’ve never had a client do that.”

Cheshire urged the judge to weigh the good Neill had done, and urged him not to make the punishment a de facto life term.

“The harm is quantifiable,” he said. “The loss will be made up as much as it can be. The loss of trust takes years to make up, if it can ever be made up… You have to give credit for a long life lived of passionate public service, to his state, his county, a number of individuals. …

“He’s 63 years old. He is not in good health. Taking life away from a person who is elderly is more precious than taking life and freedom away from someone who is not…. His mother (age 88) knows that she will probably never see him as a free man again.”

He asked the judge to make the state sentence concurrent so that Neill would serve “five or six years.” That's roughly what the judge did by imposing a 6- to 8-year sentence running concurrently with the federal term.

Sentenced in federal court
U.S. District Judge Martin Reidinger on Wednesday told Neill, a longtime community activist, former Home Trust bank board member, UNC Board of Governors member and two-time Democratic nominee for Congress, that he had a difficult time with the case. The judge said he did weigh the good that Neill had done over the past 40 years, but also balanced that against that the loss of trust that Neill had caused.
In a blow to Neill's hopes of serving any punishment in a federal facility, concurrent with state prison time, Reidinger ordered that the federal sentence be served in addition to any state time.
Wednesday's court appearance was the first in a two-step process for Neill. He faces sentencing in Henderson County Superior Court on Thursday before a judge from Raleigh.
The federal judge and Neill's attorney, Joseph B. Cheshire V of Raleigh, both made reference to health problems and to what the judge called a "history of mental health issues," the first time that reference had been made publicly. Judge Reidinger as part of his order directed that the federal prison make an effort to place the Neill in a facility that offers treatment and as close as possible to Hendersonville.
"This is a sad day for this court," Reidinger said. "I know it's a sad day for your family and for for the community. We do wish you the best. I hope that at the end of this process, no matter what it means, that you will emerge from it a better man."
Neill, wearing a gray suit jacket, black trousers, a royal blue dress shirt and dark purple tie, sat in the front row waiting for his case, watching as the judge sentenced three parole violators — one in an orange and white jail jumpsuit — to prison. He gazed from time to time at a one-page written statement, which he read later in court, his voice cracking slightly.
In the statement he apologized to his wife, Nancy, and his family, the court and community. "I have committed a serious transgression," he said. He told the judge he had worked hard over the last year to make restituton to the victims. He said he planned "to use the time I have left to make up" for his crime.
Cheshire told the judge that Neill had achieved much and done much good for the community. He held up a stack of letters from friends and supporters of the longtime Hendersonville attorney that testified to his work for the environment, the arts, the university system and other organizations.
"I've represented governors, congressmen, heads of state, priests, just about every human being that walks the face of the earth," said Cheshire, one of the most renowned criminal defense attorneys in the state. Neill, he said, had done as much for his community and state as any client he had had. "These are serious charges," he acknowledged. "Mr. Neill recognizes that, I recognize that and the public recognizes that."
Neill and the attorney had said in both and federal and state courts that Neill would make full restitution both for the unpaid taxes — which total $492,665 — and to the trusts from which he stole about $3 million.
"I believe in my heart that he truly intended to pay all this money back," Cheshire said. "Of course he didn't."
Assistant U.S. Attorney Richard Edwards urged the judge to give the Neill a 3-year sentence, which is the punishment that federal statutes spell out for the offense.
"I do not share Mr. Cheshire's discomfort" with the sentence, he said.
Judge Reidinger pulled one letter from the stack, written by Neill's son, Zachary, a former assistant prosecutor who is now a public defender. He wrote that his father had "taken on more professional responsibility than he could reasonably handle" and had "cracked under the pressure."
"I think that hit the nail on the head," the judge said. "That explains but does not excuse what happened here. ... A person who is granted a license to practice law by the state of North Carolina should be trusted by the people, should be trusted to deal with their money."
"I've taken into account the argument of counsel regarding the really good work of Mr. Neill with regard to the legal profession and also the university system and I could go on," he said. "I've taken all this into account but that account is to some degree limited."
To sentence Neill to less than the statute recommends would be to send a message that there is one standard for average people and another for well-connected attorneys. For that reason and others, he said, he would stick with the three-year sentence.
Family members who attended in support of Neill were his wife, Nancy; his mother, Helen; his brother, Roy and his wife, Tammi; and Sam Neill's older son Zachary.
Wednesday's sentencing was more cut-and-dried than the one Thursday is likely to be. Victims of Neill's embezzlement have prepared statements that they expect to read when he appears in Henderson County Superior Court at 9 a.m. Thursday.
State prosecutors say he stole a total of $3 million, including $884,515 from the Barry Clemo trust, which was supposed to be evenly divided between the Community Foundation of Henderson County and Four Seasons hospice.
"We'll tell him the story about Barry and how this is a travesty," said Chris Comeaux, the CEO of Four Seasons Compassion for Life. "We cared for both of his wives. He specifically wanted his estate to go to Four Seasons hospice. To have it absconded like it was is just a travesty."
McCray Benson, the CEO of the Community Foundation, said attorneys had instructed the charity to write a statement in advance. The foundation did and sent it to the court-appointed trustee for the Clemo estate, Robert Deutsch Jr. of Asheville.
"Our focus throughout this whole process has been about fulfilling the wishes of Mr. Clemo as it was expressed in his will and his trust," Benson said. "One thing that hasn't been focused on is that a portion of his trust was to create in his wife Tracy's name a fund for the care of animals. That was her thing. Barry's was for health care (for the needy) and hospice services. We feel we're the only ones left to speak on behalf of his wishes and concerns."
Before he died, Clemo told Benson that his trust "may not be the greatest gift the Community Foundation has ever dealt with but it's the greatest gift he's ever given."
Because Neill instead took the money, "animals and people in need of health care and people at the end of their life have gone without," he said.
The Community Foundation has calculated that $213,000 would have been distributed since Clemo's death in 2009 and that the $1.2 million corpus — the investment generating ongoing interest — would have been producing $50,000 a year for hospice care, health care for the poor, and dogs and cats.
When he pleaded guilty in state court last September, Neill put up family owned property on South Grove Street as restitution. Two weeks ago, he lowered the price of the property by $1 million, to $1.95 million.
Neill and his brother, Roy, inherited the land from their father.
Attempting to make restitution in four cases of embezzlement, Neill signed over promissory notes on his home at Lake Summit, the Flight Wood Grill property and unimproved mountaintop land off Locust Grove Road. The residence is encumbered by a mortgage and a contractor's lien. The Flight property sold in a bankruptcy court-ordered sale that produced no proceeds for that estate, which was Irene Meinke's. On the criminal charge that rose from the Tallmadge estate, restitution was paid by a surety bond.