Two ESM Founders Sentenced for Theft, Obstruction of Justice

Two founders of a securities firm that collapsed and triggered a financial crisis in Ohio were sentenced to jail by a judge who expressed contempt for the plea bargains the prosecutors had reached.

“This is not the way I think a judicial system should be run,” said Common Pleas Court Judge Fred Cartolano as he gave ESM Government Securities founders Ronnie R. Ewton and George G. Mead longer sentences than prosecutors had proposed.

He called Ewton “one of the most cunning criminals I have ever had the misfortune to face.”

ESM, of Fort Lauderdale, Fla., was closed by federal regulators in March, 1985, for insolvency. An ESM client, Cincinnati-based Home State Savings Bank, lost $144 million in the closing and collapsed four days later, leading to a crisis in Ohio’s privately insured savings and loans.

Rejected Prosecutors’ Recommendation

Ewton and Mead later pleaded guilty to both state and federal charges stemming from the case, but Cartolano specifically rejected a prosecutors’ recommendation that the state sentences imposed Thursday be served along with the federal sentences.

He sentenced Ewton, 43, of Boca Raton, Fla., to nine years in state prison and fined him $27,000 on charges of theft, obstruction of justice and complicity to misapplication of funds. Prosecutors had recommended a seven-year sentence to be served concurrently with his 15-year federal sentence for fraud.

Mead, 52, of Ocean Ridge, Fla., was given six years in prison and $17,000 for theft and obstruction of justice. Prosecutors had recommended a five-year sentence to be served along with his 14-year federal sentence.

Prosecutors told the judge that they recommended the reduced sentences and the concurrent state and federal sentences because Ewton and Mead had cooperated with investigators in the case.

Ewton was a star prosecution witness in the trial of three former Home State officials, which was continuing in a nearby courtroom.

Cartolano said he was appalled that federal authorities have allowed Ewton to keep a multimillion-dollar home, $400,000 in cash and his wife’s jewelry and furs and was angered that Ewton would serve his federal sentence at an Air Force base in Florida.