Federal law says crime victims have a right to “reasonable and timely notice” of any public court proceedings involving the crime.
But Paul Donisthorpe’s sudden plea bargain Monday in a high-profile $4 million trust fund embezzlement scheme caught victims by surprise.
Armando Ramirez, of Santa Teresa, helps support his brother Omar Ramirez, who lost nearly $1 million in a trust account managed by Donisthorpe that was supposed to pay for a lifetime of expenses from a traumatic brain injury.
Ramirez told the Journal on Tuesday his family had no notice of Monday’s federal court hearing during which Donisthorpe, the former CEO of Desert State Life Management, was charged and then immediately pleaded guilty.
“You were the first to tell us,” Ramirez told the Journal.
While acknowledging federal law affords rights to crime victims, a spokeswoman for the U.S. Attorney’s office in Albuquerque said the lack of notice in this case was in accordance with Justice Department guidelines.
In the span of 41 minutes, Donisthorpe appeared before U.S. Magistrate Laura Fashing on Monday morning and pleaded guilty to a criminal information that was filed for the first time during the hearing, court records show.
The U.S. Attorney’s Office wouldn’t comment on the prior negotiations that led to Donisthorpe’s decision to plead guilty to wire fraud and money laundering.
Monday marked the first time Donisthorpe, 62, had appeared at a court hearing related to Desert State after months of speculation as to his whereabouts and his mental and physical condition.
The hearing was not listed on the court’s public online calendar. Twenty minutes after his plea, the U.S. Attorney’s office sent out a “media advisory” about a “significant law enforcement announcement” that would occur at 2 p.m. Monday. The advisory made no mention of Donisthorpe or Desert State. At the event, federal and state law enforcement officials announced the plea agreement but wouldn’t respond to questions.
Although Donisthorpe pleaded guilty to two counts, state financial regulators have identified about 40 victims whose trusts or savings accounts were raided during the decadelong scheme. Some who are developmentally disabled were the intended beneficiaries of special needs trusts established by relatives or others for their future care.
Donisthorpe, a former investment banker who was convicted of vehicular homicide in 1991, faces up to 12 years in federal prison on the federal charges. He was ordered to pay $4.8 million in restitution, although state officials report that his company’s bank account is virtually empty.
Crime victim’s rights
Under 18 U.S. Code 3771, Crime Victims’ Rights, “the court shall make every effort to permit the fullest attendance possible by the victim and shall consider reasonable alternatives to the exclusion of the victim from the criminal proceeding.”
Victims have the right to “reasonable, accurate and timely notice of any public court proceeding, … involving the crime,” the law also states.
Victims, by law, have the right to be reasonably heard at any public proceedings in the district court involving release, plea, sentencing or any parole proceedings, and the right to be informed in a timely manner of any plea bargain agreement.
Donna Burk, whose 96-year-old mother lost about $32,000 in the embezzlement scheme told the Journal on Tuesday she never received advance notice of the plea hearing.
“We were never notified,” said Burk, who added that she learned about the hearing from an Albuquerque television reporter.
“The U.S. Attorney’s Office has never given me the time of day,” Burk said.
Burk added that she has no confidence she will be formally notified before Donisthorpe returns to court for sentencing. No hearing date has been set for the sentencing, according to court records.
U.S. Attorney’s Office spokeswoman Elizabeth Martinez told the Journal in an email that the Department of Justice “shall make its best efforts to ensure that crime victims are notified of, and accorded, their rights.” But she said that under a Justice Department guideline, those rights don’t attach until criminal proceedings “are initiated by complaint, information or indictment.”
“Under these Guidelines, the rights of the victims in the Desert State case took effect when the Information charging the defendant was filed in court during the Nov. 27, 2017 plea hearing,” she told the Journal in an email.
Requiring notice to victims before any case was filed in court would violate other Department of Justice rules, including those which prohibit making public statements about pending investigations or releasing information that is not in the public record, she added.
“The Department of Justice has an obligation to balance its duty to give reasonable notice to victims against its duty to provide due process to defendants, in this case as in all cases.”
She added that Donisthorpe’s sentencing hearing “will take place with ample public notice, just like a regular case. Victims will receive notice of the sentencing hearing as required by the Victims’ Rights Act.”
A “plea minute sheet” shows that during the hearing, Donisthorpe indicated he understood the terms of the agreement. He also was questioned about his age, education and physical and mental condition, but the plea sheet doesn’t say how he responded.
His health became an issue last spring when state financial regulators were trying to obtain access to Desert State’s financial records for what was supposed to be a routine financial exam of the nonprofit trust company.
Four days before regulators planned an onsite visit of Desert State’s office in Albuquerque, Donisthorpe’s then-wife Liane Kerr informed the state Financial Institutions Division that her husband had a stroke and possible brain damage and was in the hospital.
State court records show about a month later, in March, a Desert State board member and one-time friend of the couple told state regulators that Donisthorpe “had recently attempted to commit suicide by overdosing on prescription medicine.”
The board member, Helen Bennett, added that she “believed the reported suicide attempt caused some form of damage to the brain that resulted in Mr. Donisthorpe lacking the mental ability to function as a board member,” according to an affidavit filed by acting financial institutions director Chris Moya.
Kevin Graham, senior enforcement counsel for the state financial institutions division, told the Journal that he and Moya attended the plea hearing on Monday. Both men have been assisting in the federal criminal investigation.
“The judge (Fashing) asked if there were any conditions that prevented him from understanding (the plea) and he said no. He was very alert,” Graham said.
“We saw no evidence (of any impairment or brain damage). He seemed completely able to walk around the courtroom, and was competent enough to answer questions.”
Liane Kerr, a criminal defense attorney, filed for divorce shortly after the state financial investigation of Desert State began. The couple had lived in a North Valley home, ownership of which Kerr received in the divorce that was finalized in June.
Donisthorpe, a former CPA who served as deputy State Fair manager, and briefly served on the state Commission of Higher Education under Gov. Bill Richardson, reportedly was living in Bloomfield, where his family is from. He comes from a political family. His mother, retired Republican state Sen. Christine Donisthorpe, died last summer. His brother, Republican pollster Bruce Donisthorpe died in 2016.
Released without bond
At the conclusion of his court appearance on Monday, Paul Donisthorpe was released without bond under the supervision of the U.S. Pretrial/Probation Services. Magistrate Fashing ordered him to participate in mental health assessment/counseling as directed, and he is barred from opening new or additional lines of credit.