Adviser ordered to start fraud sentence

A financial adviser jailed seven years for civil contempt was released Friday and told to finally start serving his five-year sentence for conspiracy to commit securities fraud.

Judge Kevin Castel said he lifted Martin Armstrong's confinement because it had not compelled him to turn over disputed assets in his securities fraud case, and the judge did not want to waste further judicial resources in one of the nation's longest-running civil contempt cases.

Armstrong pleaded guilty in August to conspiracy to commit securities fraud. He was ordered to pay $80 million in restitution and sentenced to five years in prison, which hinged on an end to his civil contempt detention. The judge said he would not get credit for his time he has served.

Prosecutors said Armstrong took money from new investors to cover the losses of previous ones when his company, Princeton Economics International Limited, lost hundreds of millions of dollars trading the Japanese yen and various securities in the late 1990s.

In 2000, a different federal judge jailed Armstrong on contempt for not surrendering some $15 million in assets, including 100 gold bars and a bust of Julius Caesar. Armstrong claimed he had no control or possession of the items. He's been held ever since.

On Friday, Castel said Armstrong remains in civil contempt and the U.S. government also could pursue an indictment against him on a criminal contempt charge.

Armstrong's lawyer Thomas Sjoblom said he did not believe the government would go after his client on criminal contempt charges. "What would be the point?" Sjoblom asked. "He doesn't have the assets."

Although an appeals court recently upheld Armstrong's confinement, the matter was handed to Castel, who had the power to end the detention.