Crimes Against Humanity

On May 26, 2006, James Paul Lewis, Jr., the former director of Orange County, California–based Financial Advisory Consultants (FAC), was sentenced to 30 years in federal prison for running a massive Ponzi scheme that raised more than $300 million and caused more than 1,600 victims to lose more than $156 million of their hardearned money. What exactly did James Lewis do to earn a 30-year prison sentence? He offered investors opportunities to invest in two mutual funds. Through false and fraudulent brochures and other promotional material issued by FAC, he told investors that they would earn annual rates of return of up to 18 percent in an Income Fund, which claimed to generate revenue from the leasing of medical equipment, commercial lending, and fi nancing insurance premiums, and 40 percent annual returns in a Growth Fund, which claimed to generate revenue through the purchase and sale of distressed businesses. Instead of investing the investors’ money as promised, Lewis used the funds to purchase homes in Villa Park, Laguna Niguel, Palm Desert, San Diego, and Greenwich, Connecticut. He also used investors’ money to purchase luxury automobiles for himself, his wife, and his girlfriend. Among other schemes, he used investor money to trade currency futures, managing to lose at least $22 million. To conceal the scheme at FAC, Lewis ran a Ponzi scheme: he took the money of new investors (and new purchases of those who had already bought into the funds) to pay the rates of return promised to investors. In other words, he used the principal to pay the interest! That is, until the money ran out. At one point nearly 3,300 investors had a total balance of $813,932,080 in the funds, but FAC and Lewis’s bank accounts held only slightly more than $2 million. At Lewis’s sentencing hearing, United States District Judge Cormac J. Carney ordered him to pay $156 million in restitution. Because many of this victims were elderly, Judge Carney described the scheme as a “crime against humanity.” Several victims told the court about their losses, which included life savings and college funds. Many victims described being forced back to work after losing their retirement savings in the scheme. How would Gottfredson and Hirschi explain Lewis’s ongoing criminal activities? Can someone so calculating lack self-control?


Sources: Department of Justice press release, “Operator of Orange County– Based Ponzi Scheme that Caused More than $150 Million in Losses Sentenced to 30 Years in Federal Prison,” May 30, 2006,