Con man in Ponzi scheme released in federal plea deal
Just a day after he pleaded guilty to the biggest fraud case ever prosecuted in Chicago, con man Michael E. Kelly was ordered freed from federal custody Thursday.
Under a plea deal that angered some of Kelly’s more than 7,000 victims, Judge Ronald Guzman allowed the 63-year-old to be temporarily released under house arrest so that he can get treatment for colon cancer.
Kelly ran a massive Ponzi scheme that scammed mostly elderly investors out of $342 million by promising safe, high returns from timeshares in Mexico. Locked up since 2006, he pleaded guilty to one of the 14 fraud counts he faces in return for being allowed to stay on a $10 million bond with his family in South Bend while he is treated.
Guzman, who sentenced Kelly to the time he’s already served, stressed the deal is “only a small step” toward a just resolution of the case.
Kelly faces a far lengthier prison term if he survives and is convicted on any of the 13 remaining counts, but prosecutors were eager to secure his conviction and sentencing on at least one count before he dies, so that $50 million recovered from Kelly can be shared among his victims.
Sitting in a wheelchair, Kelly Thursday apologized to the victims, his family and the court. His attorney Jeffrey Steinback said Kelly has at best only “three or four years” to live — an argument that didn’t move all of Kelly’s victims.
Joyce Wood, 82, of La Grange, said her husband died before they got a penny back of the $200,000 they lost to Kelly’s scam.
“We’ll all be in prison of our own for the rest of our lives because of what he did,” she said. “He should die in prison.”