Judge Trims U.S. Guideline by Third : Counterfeiter Sentenced to 18 Months

Times Staff Writer

A U.S. judge, undercutting federal sentencing guidelines, told a convicted counterfeiter Friday that he saw no sign that “jail is doing you any good” as he ordered the former Costa Mesa printer to spend just 18 months in prison.

Federal law dictates that Hal Stepanich, 33, should have received a minimum sentence of 27 months for printing $10 million worth of phony bills in denominations of $20, $50 and $100 and trying to pass them around the Southland and elsewhere, lawyers on both sides of the case agreed.

But U.S. District Judge J. Spencer Letts, terming those guidelines unconstitutional, has declared that he does not feel rigidly bound by them in his Santa Ana courtroom. That policy is being appealed by federal prosecutors.


Letts’ unorthodox interpretation of the law came into play at Stepanich’s sentencing Friday as he told the defendant that “you are as tempting a case (for departing from the federal guidelines) as I know.”

‘Entirely Aberrational’

“Everything I know suggests this was an entirely aberrational act that never should have happened, and that’s a tragedy,” Letts told Stepanich.

The defendant, his attorney and his family have maintained that the former high school track star from Cypress was led unwittingly by a longtime family friend into what authorities say was one of the largest counterfeiting schemes in U.S. history.

The accomplice, Richard L. Wattel, 62, was recently sentenced in Texas to serve 41 months in federal prison after pleading guilty.

In seeking a light sentence, H. Dean Steward, U.S. public defender, also pointed to Stepanich’s extensive cooperation with authorities after a phony $100 bill spotted at a Palm Springs bank led to his arrest in April.

He led authorities to a $7-million cache of phony bills hidden in Huntington Beach, admitted his guilt in court and offered to aid in the prosecution of Wattel. The two had printed the phony money at a residence near Palm Springs, using $10,000 in printing equipment. But they apparently never used the bulk of the money.

A graduate of Cal State Fullerton who served in the Navy and worked as a printer in Orange County, Stepanich also received strong character support from family, friends and some community leaders in Desert Hot Springs, where his parents live.

Awaited Sentence

Letts seemed swayed. Family members in the courtroom anxiously awaited the sentence since it appeared at times from Letts’ remarks that he might set Stepanich free altogether. The defendant had already served more than 150 days in custody since his arrest.

“You’re not a person that jail is doing you any good,” Letts told Stepanich.

After a short recess to contemplate what he termed “a hard problem for me,” Letts returned and delivered the 18-month sentence.

That was the term sought by Stepanich’s attorney. It was nine months below the 27 months that was sought by U.S. Atty. Thomas J. Umberg, recommended by probation officers and set as a minimum by federal sentencing law.

Umberg would not comment after the sentencing, saying only that Letts’ policy of departing from the federal sentencing guidelines is under appeal.

Kisma Stepanich, the sister of the defendant, said later: “Obviously, we would have loved him to be able to get out now, but all things considered, we’ve all got to be very, very happy with this.”