MarCon's Martin sentenced to seven years in fraud case

The judge says he was disappointed that she never would admit her guilt.

jsowell@idahostatesman.comFebruary 28, 2014 

Elaine Martin

STATESMAN FILE PHOTO

Elaine Martin, who founded and built up a small company into a major supplier of concrete highway barriers, received her prison sentence Thursday after four hours of testimony over two days.

A federal jury found Martin, 67, guilty in September on 22 counts of mail fraud, wire fraud, conspiracy and filing false tax returns.

Chief U.S. District Judge B. Lynn Winmill said he had a tough time deciding on the appropriate sentence. Martin faced up to 20 years on some of the counts, but Winmill said that would be too long, given Martin's age.

"In this case, the thought of a 20-year sentence is incomprehensible. It would likely be a death sentence," Winmill said.

And simply fining Martin wouldn't be a deterrent to anyone else and could be chocked up as the cost of doing business, he said.

Winmill agreed to a defense request that Martin be released from the Ada County Jail for six weeks to take care of a medical issue and to get her personal affairs in order. Government attorneys objected to the request, and Winmill said this was the first time he had been asked to release a prisoner while waiting for the federal Bureau of Prisons to determine where to send that prisoner.

Winmill noted that Martin, who grew up in Jerome, had no previous criminal record and that her entire family resides in the state. She had been free after her arrest and during her trial but was jailed in November after she refused to cooperate with a prosecution investigation into her finances to assist in a forfeiture proceeding.

"I've never had a concern that Ms. Martin is a flight risk," Winmill said.

'OUT OF WHACK'

The judge said he was disappointed that Martin continues to deny responsibility for her actions. In a brief address to the judge before the sentence was announced, Martin blamed four company accountants for not keeping MarCon out of legal trouble.

"I have no idea where it got out of whack," Martin said. "It was never my intention to defraud (the government)."

Martin participated in two programs offered by the federal Small Business Administration and the U.S. Department of Transportation that were supposed to benefit economically disadvantaged companies.

From 1997 to at least 2008, Martin submitted fraudulent tax returns and financial information to qualify for programs in Idaho and Utah, according to court documents. She obtained 33 contracts totaling $14.2 million and with profits of $3.1 million.

"The dominance of her business made it almost impossible for another business to benefit from these programs," Winmill said.

'THE WRONG WAY'

It was announced in court Thursday that MarCon was recently sold for $3.1 million, the same amount Winmill earlier ordered her to pay in forfeiture. The buyer wasn't identified.

The U.S. attorneys who prosecuted the case declined to comment. Idaho U.S. Attorney Wendy Olson praised the outcome.

"Elaine Martin's conviction, sentence and forfeiture of more than $3 million clearly demonstrates that fraud and misrepresentations to government programs is the wrong way to run a business," Olson said in a written statement. "This office, indeed the entire Department of Justice, along with its law enforcement partners are committed to rooting out greed and dishonesty in government contracting."

Andrew McBride, who represented Martin, said he was disappointed with Winmill's sentence. The defense plans to file an appeal with the 9th Circuit Court of Appeals alleging that there were errors in evaluating the factors that go into determining the appropriate sentence.

"We respectfully disagree with the sentence," McBride said. "We think it's far too harsh."

SHOWING GENEROSITY

The defense on Thursday presented evidence that Martin participated in numerous charity causes and was generous to her employees.

Alan Gneiting, who worked for MarCon from 1994 to 2006, said Martin allowed him to take time off when his wife was pregnant and ordered to rest in bed. Another time, his wife was hospitalized and Gneiting was allowed to drive 350 miles from a work site back home to tend to his wife, he said.

Martin also called his wife to check on her, Gneiting said.

After 10 years of employment, MarCon employees were given an extra week of vacation and $5,600 in cash to spend on a vacation anywhere they wanted to go. Martin also personally loaned Gneiting $20,000 without interest so he could put a down payment on a house without raiding his retirement account.

"She may have done some wrong, but I know she's a good woman," Gneiting said.

The tax fraud charges were tied to unreported income from the sale of used concrete barriers. Money from the sales was deposited in a bank account unknown to company auditors, and Martin distributed the money among herself and co-owners Darrell Swigert and son Tory Martin.

McBride argued that Martin should have been credited for amending her tax returns and reporting the previously undisclosed income, and for overpaying what she owed by $600,000.

Those actions took place after Martin learned she was under federal investigation, Winmill said, and could not be considered in determining the sentence.

Swigert, a MarCon investor and Martin's former live-in boyfriend, was convicted of obstruction of justice for helping Martin cover up her crimes. He is scheduled to be sentenced on March 19.

John Sowell: 377-6423, Twitter: @IDS_Sowell

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