Facing more than 21 years in prison, former 1Point Solutions CEO Barry Stokes has told a court he started scamming his retirement-fund clients purely out of desperation to regain custody of his foster children.
He will learn today how much his personal turmoil influences the judge deciding his fate.
Stokes, 52, is to be sentenced today after entering guilty pleas a year ago to 78 counts of embezzlement, mail fraud, money laundering and bankruptcy fraud. He has been in jail since October 2006, the month after NashvillePost.com broke the news that his Dickson-based financial empire was collapsing, taking with it some $19 million in retirement savings entrusted to him by companies on behalf thousands of employees.
The sentencing in Nashville's U.S. District Court has been delayed several times at Stokes' request. Under the terms of his plea agreement, he faces between 14 and 22 years in prison. But in a pre-sentencing memorandum, he has asked Judge Robert Echols for leniency. The main reason, he says, is "the personal loss that fueled his crimes."
Stokes explains in the filing that he was "a law-abiding citizen" with no criminal record as of the late 1990s, "hardworking, deeply involved in his community, and a committed foster parent." But after he and his then-wife were "ordered to return his foster children of six years to their unstable biological mother," he became "disillusioned by the justice system that took them away" and "lost his moral compass."
As Stokes tells the story, he reasoned that he could acquire the influence necessary to prevail in the custody dispute if only he could make his company sufficiently prominent to attract the attention of political leaders. "Mr. Stokes had been very involved in political campaigns for many years and had some sense of the sort of political favors that politicians do for their financial backers," he writes.
"During the 1990's, Mr. Stokes had done work with the Tennessee Democratic Party and had been especially involved in the campaigns to elect Phil Bredesen mayor and then governor. And, after Bredesen was elected governor, Stokes became a member of the Governor's Roundtable, a quarterly lunch meeting the Governor held with financial contributors.
"Mr. Stokes viewed his connections with Governor Bredesen as the very sort of political connection that might give him influence in the custody dispute. Specifically, Mr. Stokes hoped that Governor Bredesen might be able to get the Department of Children's Services revisit the custody issue.
"After some initial overtures to Governor Bredesen – and two meetings with the then-director of the Department of Children's Services – Mr. Stokes came to believe that his stature was simply not high enough to garner the political favor he needed. He believed, however, that if he could grow 1Point Solutions into a bigger, more successful business, he might be able to get the Bredesen administration to intervene on his behalf."
Lydia Lenker, Bredesen's press secretary, yesterday issued a terse comment when asked about Stokes' account. "As most people know," she said, "Governor Bredesen is not in the business of political favors."
Stokes also says his conduct was affected by the fact that he suffers from bipolar disorder, which has only recently been diagnosed. This week he has submitted reports from two mental health professionals to the court under seal.
In response to his version of events, Assistant U.S. Attorney Ty E. Howard filed the government's pre-sentencing report on Monday. Stokes, he said, "may wish to repackage his actions as the product of mental illness and misguided love for his children, but his conduct demonstrates otherwise."
Accusing Stokes of showing "no real remorse," Howard pointed out that his victims had "entrusted him with what was, in many cases, their life savings. Defendant’s victims were not high-flying stock-market players. They were ordinary working people saving for retirement."
The prosecutor emphasized the non-financial damage inflicted by the fraud. "It caused anger and despair at knowing that retirement savings were gone," he said. "It caused divisions among employers and employees, hurt productivity, and damaged company morale.
"It caused family conflicts as spouses and children struggled to understand what happened. And it caused disillusionment with the entire concept of saving for one’s future when years of sacrifice were erased by the criminal whim of another."
Howard argued that "a reasonable sentence" would be 262 months, just under 22 years, at the high end of the sentencing range.