SAN FRANCISCO — Modesto mortgage broker Tony Daniloo, who fleeced as much as $7 million from lenders and clients while posing as a wealthy philanthropist, will spend 7½ years in a minimum security federal prison, a judge ruled Wednesday afternoon.
Daniloo apologized profusely and pledged to try repaying victims after his release.
"I want to prove to everyone I have changed," said Daniloo, unshackled and wearing beige prison garb, wire-rimmed glasses and slip-on tennies. "I want to raise my son honestly and righteously."
Saying that Daniloo is taking his punishment "in a very manly way" and predicting "good chapters" in the book of Daniloo's future life, U.S. District Court Judge William Alsup noted that the 32-year-old Turlock man has cooperated with authorities since his arrest in December 2004.
Sign Up and Save
Get six months of free digital access to The Modesto Bee
"I am certain that in the long run, something good is going to come out of this," Alsup said to Daniloo in fatherly tones. "You have a long life in front of you to make up for this. Good luck to you."
Although some people drove from Stanislaus County to witness the proceeding, none spoke when Alsup asked for victims' statements.
Anita Vitti of Patterson, whose twin sister, Theresa Lund, committed suicide after losing nearly $1 million in a family trust in dealings with Daniloo, said she was shaking too badly to rise when the time came to speak.
"I'm appalled at the leniency," Vitti said afterward. "When the judge talked about what a good person (Daniloo) is, it was very upsetting."
Daniloo's prison term is the product of a plea agreement reached in December. He pleaded guilty to 122 counts: 77 counts of money laundering, 41 counts of wire fraud and four counts of mail fraud.
Judge waived $12,200 fine
Attorneys for both sides failed to agree on how much restitution Daniloo should pay victims, so Alsup scheduled a May 1 hearing. He waived a $12,200 government fine, saying Daniloo had no means of paying.
After the hearing, Daniloo's attorney, Deborah Levine, said her client has turned over much of his property to authorities. She refused to say how much money is contemplated in the restitution dispute.
Although Atwater's federal prison is closer to Daniloo's loved ones in Turlock, family members requested he be sent to Lompoc Federal Correctional Complex because it specializes in substance abuse treatment. Alsup complied. Daniloo has been in custody in Alameda County.
A plea bargain in the state case suggested that he abused drugs before his December 2004 arrest.
Outside the courtroom, Vitti questioned why the judge put a premium on Daniloo's drug treatment and proximity to family.
"(Daniloo) didn't care what he did to other families," said Vitti, whose sister shot herself in 2004 after he arranged deed transfers and loans for her. Vitti said the money disappeared.
In December, Daniloo admitted to preying on the elderly, minorities and people with bad credit. His victims include his parents, his wife's parents, his friends and neighbors, and an Alzheimer's patient, according to lawsuits and a prosecution investigator.
But the judge had kind words for Daniloo and his family, some of whom attended Wednesday's sentencing. His parents, David and Susie Daniloo, sat the front row of the gallery and stood when recognized by Alsup.
"It means a lot to your son and to me to have you here," Alsup told them. "I know it hurts you to be here. This is probably the hardest thing you have had to do. It will mean a lot to your son in the long run if you support him in this."
"Thank you for the nice letters you sent. I read them all," the judge continued, acknowledging letters from victims as well.
Daniloo's wife, Nansi, previously negotiated a plea agreement for herself and has been out of custody since shortly after her arrest at the same time as her husband's. Neither she nor their 4-year-old son attended Wednesday's proceeding.
Other supporters and Daniloo's parents declined to comment after the sentencing.
Although Daniloo's sentence is nine years, Alsup reduced it 18months to account for some of the time that Daniloo has spent behind bars awaiting trial.
The federal justice system has no parole, so Daniloo will not be released early.
He began bilking mortgage lenders and East Bay clients in 1998, when he worked for firms in Dublin and Pleasanton. Daniloo struck a plea deal in May with the state for those crimes, agreeing to repay East Bay victims $1.34 million and seek drug counseling.
He also agreed in May to a six-year, eight-month state prison term that is largely meaningless because it runs at the same time as the federal sentence imposed Wednesday. Daniloo is scheduled to appear April 19 in Hayward for formal sentencing in the East Bay crimes, where victims will be invited to speak.
Daniloo returned to Turlock and took over DreamLife Financial in late 2003. A few months later, he pledged $5.5 million in publicity gimmicks to California State University, Stanislaus, and Turlock's Emanuel Medical Center and was a finalist in naming rights to the San Francisco 49ers stadium.
Preying on the vulnerable
A December 2004 Bee review of his past revealed multiple lawsuits, bankruptcies and late tax payments. He was arrested and DreamLife folded soon after.
On Wednesday, Daniloo's attorney said "his misconduct does not reflect his potential."
"The first thing he said to me in custody was, 'I'm relieved I was caught,'" Levine said. "The conduct he was engaging in, it was so obvious what he was doing was stealing. It was something done by a desperate man who was out of control."
Assistant U.S. Attorney Michael Wang disputed that, noting Daniloo went to great lengths to hide his crimes, including laundering ill-gotten gains and making "lulling payments," or partial payments to lenders to keep them from looking too closely at his crooked deals.
"Many of these victims were vulnerable people, elderly and low-income, who put a lot of trust in the defendant," Wang said. "Many were deprived essentially of their life savings because all of their net worth was in their properties."
But Alsup, emphasizing redemption, stuck to sentencing guidelines agreed upon in December.
"This is a young man who had everything going for him and threw it away," the judge said. "He'll have to recoup it. He disappointed his family and the people who relied on him.
"But it's also the story of somebody who has great potential to do good things in life," Alsup continued. "I believe in the future you are going to contribute something good to your country and to your community."