On his last full day in office Tuesday, President Donald Trump commuted the prison sentence of a businessman who led what federal prosecutors described as the “largest investment fraud in the history of the district of Oregon.”
Jon Harder was founder and CEO of Sunwest Management, once the nation’s third-largest chain of assisted living homes. He was five years into a 15-year sentence when Trump commuted his sentence Tuesday, one of 143 people who received last-minute pardons or commutations.
In a statement, Trump said he was convinced to commute Harder’s sentence because of valuable assistance he’d given to lawyers for his investors. “President Trump commends Mr. Harder for choosing to put his employees, investors, and the senior citizens residing in Sunwest’s homes above himself,” the president said in a Thursday press release.
In 2015, Harder pled guilty to two felony counts of money laundering and fraud. He’s done his time at the Federal Correctional Institute in Sheridan. The facility has a minimum-security wing where Portland’s white-collar crooks generally seek to do their time.
It’s unclear just when he’ll get out
Sunwest ran more than 300 assisted living centers at its peak. But rapid expansion and mismanagement left the company in a serious cash crunch. Prosecutors alleged that Harder misled investors to convince them to place more money with the firm.
In December 2012, federal prosecutors accused him of defrauding more than 1,000 investors out of about $130 million.
Prominent Portland attorneys and even a former federal judge who served as mediator in several civil suits against Harder have long argued that the 15-year sentence was excessive.
Michael Hogan, the retired chief judge of the U.S. District Court in Eugene, said Harder’s cooperation was key to the sale of Sunwest’s assets, which resulted in investors recovering more than anticipated from the firm.
Harder’s cooperation was “against his substantial financial and penal interests,” Hogan wrote. The Trump administration cited Hogan’s remarks when announcing Harder’s commutation.
When Sunwest crashed and burned, the safe thing for Harder to do was to keep his mouth shut for fear that anything he said could be used against him, his lawyers said.
“He had the right to refuse to give testimony and he declined to exercise that right in favor of giving candid and complete information and explanations to the end of unraveling the transactions and making investors whole,” said Bob Miller, a Portland attorney who represented Harder in the civil litigation.
Ford Elsaesser, a Boise attorney active in the Sunwest case, said he always thought Harder got the 15-year sentence partly out of prosecutors’ and judges’ frustration with the lack of criminal prosecutions in the years after the Great Recession.
Harder’s sentencing came in 2015, by which time it was abundantly clear that there would be no ambitious federal criminal takedown of the major executives whose reckless lending fueled the economic collapse of 2008.
“I think people were looking to punish someone for what happened during the mortgage crisis,” Elsaesser said.
Not everyone agrees. Mike Esler, another Portland lawyer who represented investors in the case, said the commutation was a “travesty of justice.” Harder continued to raise money from unsuspecting investors even after it was clear that there was no pulling out from Sunwest’s nosedive, according to Esler, adding that Harder misled investors and endangered the elderly residents in Sunwest’s assisted living centers.
Federal prosecutors sought and received a 15-year sentence for Harder. Allan Garten, the former federal prosecutor who led the case, pointed out in the government’s sentencing memorandum that Harder “deceived” his investors and “decimated” their savings. At the same time, the government alleged that Harder refused to provide personal financial information to the government.
Garten, who is now retired, reserved his most vehement criticism for Trump.
“We fully discharged our obligation and the judge fully discharged his obligation,” Garten said. “It does not surprise me in the slightest that Trump would fail in discharging his. That he commuted the sentence without consideration to the victims is consistent with his behavior in his four years in office.”
