Ponzi schemers are being shown little or no mercy by federal judges, and last week's judgment against the founder of hedge fund firm Westgate Capital Management was no acception.  Judge Richard Sullivan sentenced James Nicholson to 40 years in prison for defrauding investors up to $141 million.  The government had sought a 45-year term;  defense countered with 10 years.  By comparison, Bernie Madoff, King of the Ponzis, got 150 years for his fraud, estimated at $65 billion fraud.

While Bernie ran a far-bigger fraud than Mr. Nicholson - 460 times as large - Bernie's 150-year sentence was less than 4 times Mr. Nicholson's sentence.  Nicholson's defense lawyers, in their sentencing memorandum, argued that Mr. Nicholson's fraud was not actually a Ponzi scheme as the government alleged, and they called a 30-45 year sentence "draconian" and excessive. 

Just imagine what's in store for Allen Stanford, if he's found guilty of operating a $7 billion Ponzi scheme - that trial begins January 2011. 

These tough sentences in federal court are a far cry from the 5-year federal prison term given to the real Mr. Ponzi in 1920 - Charles Ponzi served only 3-1/2 years of that sentence.  But he was also convicted of larceny in Massachusetts and did spend another 7 years in state prison before being deported to Italy.  [NYT Dealbook, 10/29]