Time-share scam defendant could go free after just six years in prison
BY KIM JANSSEN Federal Courts Reporter firstname.lastname@example.org December 12, 2012 9:32PM
Updated: January 14, 2013 7:27AM
He’s accused of the biggest fraud ever prosecuted in Chicago — a $340 million time-share scam that conned more than 7,000 victims.
But Michael E. Kelly could be freed from federal custody this week having served just six years behind bars.
Under a plea deal Kelly agreed to Wednesday, the 63-year-old would be freed on bond so that he can get treatment for colon cancer while remaining under house arrest at his family’s South Bend home.
Judge Ronald Guzman agreed to the deal in principle but said he wants reassurances from Kelly’s probation officer before signing off on it. Though Kelly — who sat in a wheelchair throughout a lengthy hearing Wednesday — told the judge he is gravely ill with advanced heart disease as well as cancer, Guzman said, “I’ve seen sicker people than this get up and walk away.”
Noting that only $50 million of the $340 million Kelly allegedly stole has been recovered, that Kelly has dual Mexican and American citizenship and has previously lived abroad, the judge added that he didn’t want to receive a “frantic phone call” saying that Kelly had fled the U.S. while under house arrest.
Between 1999 and 2006, Kelly allegedly led a life of luxury in Mexico by promising investors an 11 percent return on timeshare investments — an alleged ponzi scheme that eventually came crashing down.
Prosecutors on Wednesday agreed to ask for just a five-year sentence — less than Kelly has already served in a downtown lockup — in return for Kelly’s guilty plea to one of the 14 counts he faces. They want to ensure that Kelly is sentenced before he dies, so that Kelly’s estate cannot later try to prevent his victims from clawing back as much as possible of the cash Kelly stole.
Kelly still faces a far longer period behind bars if he survives and is convicted on 13 remaining counts of fraud. He would have to return to federal custody within 120 days unless he convinces the court that his medical needs prevent it.
He is due to be sentenced on the count he has pled guilty to on Thursday, meaning he could be free by the weekend.