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A Berkeley man convicted of fraud and tax evasion for selling Central American coffee labeled as Kona coffee was sentenced to 30 months in state prison by a federal judge in Oakland today.
According to prosecutors, from 1993 to 1995, Michael Norton bought about 3.6 million pounds of coffee from Central America, sorted the beans, rebagged them and labeled them as "pure Kona coffee," a more expensive bean from Hawaii.
Prosecutors said sales of the misrepresented coffee allowed Norton to divert an estimated $1.3 million into a personal Swiss bank account. The money was not reported in his 1995 tax return.
Norton pleaded guilty to one count each of fraud and tax evasion last July for a scheme that prosecutors said netted him more than $13 million in ill-gotten profit.
Although Judge D. Lowell Jensen said the exact amount of the profit could not be determined, he estimated the amount at about $13 million, based on shipping records in the probation report. Any fraud amount over $10 million influences federal sentencing guidelines.
Defense attorneys attempted to persuade Jensen that the amount was lower, and argued that Norton should be allowed to serve probation and extended home surveillance because he has cirrhosis and has just been selected to partake in an experimental treatment that could save his life.
The four-year trial took a toll on Norton's health, said defense attorney Penelope Cooper, who added that the case had no visible victims.
"The case really was about purchasers of fancy cups of coffee," she said, later adding, "It was really just another cup of coffee, and a very enjoyable one at that."
But the judge said that regardless of who was victimized or how, the case was about fraud.
"It's no different from most fraud cases," he said. "Money has been gained by misrepresentation."
The judge did, however, take Norton's health into consideration, but not to the extent that the defense attorneys were hoping, and said it did not exclude Norton from serving time in prison.
Norton was sentenced to serve 30 months in a state prison and to pay full restitution -- $480,000 to the government in taxes, and another $475,000 to six of his customers. He was given four months to surrender into custody.
Norton had no comment after the proceeding. He did, however, speak in court.
"I'm sorry for this whole thing to have happened," he said. "I don't think I've inflicted the amount of pain that has been talked about."<
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