SAN JOSE -- Convicted swindler Leo Joshua Kennedy, who has admitted sapping the life savings from dozens of families by stealing at least $13 million from Silicon Valley-based trust funds, will spend six and a half years in a federal prison.

Calling the crimes "heinous" and "severe," U.S. District Judge Lucy Koh imposed the sentence on Wednesday, despite objections from victims who wanted Kennedy to spend far more time behind bars. The sentence was the maximum under a plea deal with federal prosecutors that called for a term of 63 to 78 months.

"The devastation felt by Mr. Kennedy's crimes is permanent and will be felt for many, many years," Koh said just before handing down the sentence.

The 62-year-old Kennedy pleaded guilty to fraud earlier this year, admitting that he siphoned millions of dollars from client trust funds managed by his longtime life partner and accountant Christine Backhouse through her Campbell-based Backhouse Fiduciary Services.

Dressed in a tan suit, the Danville man briefly apologized for his eight-year crime scheme, telling the judge he had "deep regret for all the pain and suffering I caused for my mistaken actions."

The judge is expected to order Kennedy to pay restitution to his victims, but it is not clear whether he has much in the way of assets to compensate them. The government has seized three properties, including a luxury home on a golf course in Washington state, but there are questions about how much interest Kennedy has in those assets.


Advertisement

Federal prosecutors estimate the restitution order should amount to about $13.7 million. Separate lawsuits over the fraud are pending against Kennedy and Backhouse in Santa Clara County Superior Court.

Numerous victims of Kennedy's admitted fraud addressed the judge before sentencing, expressing concern that he may have hidden money to avoid repaying them and urging the judge to impose harsher punishment.

Greg Horner tearfully recounted how his wife and sister, beneficiaries of their parents' trust held by Backhouse, lost more than $700,000. He told the judge that money came from her parents working hard to save over a lifetime.

"(The sentence) does not represent the loss, it does not represent the violation," Horner said. "He stole away a lifetime of work."

Kennedy's lawyers had argued for a shorter sentence, saying a 2009 heart attack and his age clouded his judgment. But Koh rejected the argument, saying Kennedy stole from others who were elderly or with medical conditions of their own, and he should have known better.

Kennedy was ordered to report to prison on Oct. 1.

"If anything," the judge said, "he should have had some sympathy."

Howard Mintz covers legal affairs. Contact him at 408-286-0236 or follow him at Twitter.com/hmintz