Zaler gets a long, 15-year sentence

WITH the sharp finality of his gavel strike last Friday, Nov. 6, US District Judge John Kane passed sentence on Arnold Zaler, the former Denver kosher meat entrepreneur and restaurateur who pled guilty in July to a long list of fraud charges: Fifteen years in federal prison.

Despite Zaler’s apologies to his victims and pleas for understanding from his attorney — who quoted a psychological evaluation suggesting that Zaler might be bipolar — a stern Kane would have none of it.

In elaborating on his ruling, he called Zaler’s actions in defrauding his victims “the very tissue of lies and deceit,” and called Zaler “a hardcore recidivist” from whom the public needed prolonged protection.

Kane’s sentence — which was coupled with the order that Zaler pay some $2.5 million in restitution and comply with a long list of restrictions that will follow it — exceeded federal guidelines for such cases and ignored the six to eight-year sentence which the prosecution and defense had agreed to as part of Zaler’s plea agreement.

The longer sentence clearly came as a surprise to Zaler’s attorney Mitchell Baker, who argued eloquently on his client’s behalf before the sentence was handed down.

“A sentence more than twice the recommended guidelines was not a sentence that I was expecting,” Baker told the Intermountain Jewish News after a handcuffed Zaler was removed from the courtroom by federal marshals.

Baker added that it’s “very likely” that Zaler will file for an appeal of the sentence.

There was little audible or visible reaction from Zaler himself or from the assorted people who gathered in Denver District Court to witness last week’s sentencing, but the air was thick with drama and anticipation.

Among those who sat in the spectator’s section of the courtroom were individuals who were listed in the indictment against Zaler as victims of his misrepresentations, as well as people not listed but who say they, too, were victimized — those who loaned, and lost, significant amounts of money to the man locally nicknamed the “hot dog king.”

Zaler was indicted in March, 2008 on 30 counts of wire, bank and mail fraud, after an FBI investigation. The indictment listed more than $3 million lost by his victims, lured into investing in Zaler’s businesses under what the court alleged, and the defendant confessed, were false pretenses.

As harsh as Zaler’s sentence last week might seem, he actually could have served far more time — as many as 30 years — under those charges. Instead, Kane ordered three 15-year sentences for Zaler’s convictions to be served concurrently.

According to legal experts, most criminals convicted of federal crimes serve some 85% of their sentences before being considered for parole. Based on that formula, it will likely be at least 2022 before Zaler regains his freedom.

ATTORNEY Baker portrayed his client as not only a victimizer, but as a victim himself.?

“In today’s world,” he told Kane, “we try to paint people a certain way. It’s easy to look at Arnie Zaler and say he’s a bad guy and he does bad things.”

The truth, he insisted, is not so simple. Zaler, Baker argued, found himself rapidly going under in the highly competitive restaurant business. Not originally intending to defraud anyone, he sought financial assistance to save his business but soon found himself paying exorbitant interest rates on his initial loans.

His subsequent fraudulent actions were intended to keep his business afloat, Baker argued, and were “doomed” from the beginning — “a scheme developed by somebody who wasn’t thinking clearly.”

Zaler’s resulting failures in judgment, the attorney contended, were the actions of a man suffering from “significant mental health issues,” and not the scheming “Bernard Madoff of Denver,” which is how the Jerusalem Post characterized him in its coverage.

“Mr. Zaler had a scheme that had absolutely no chance of success,” Baker said, “and absolutely no chance that it would not be discovered in a brief period of time.”

Zaler was driven, Baker added, not by uncontrolled greed but by an uncontrolled ego, basing that contention on the aforementioned psychological evaluation.

“This had no chance of success. It was simply a guy who couldn’t look people in the eye and say, ‘I failed,’” Baker argued.

When his turn came, Zaler —  speaking just above a whisper, dressed in a khaki jumpsuit and with his graying hair cut in a near-buzz — essentially agreed with everything his attorney had just said.

He apologized to several of his victims by name, to his family and friends, and to the Denver rabbis and cantors — mentioning Rabbis Selwyn Franklin and Bruce Dollin and Cantors Martin Goldstein and Joel Lichterman by name — who had helped him in the early days of his business.

Saying that “self-recrimination is never easy for anyone,” Zaler acknowledged that “there is something wrong with me,” and agreed that he was driven by ego in refusing to accept the failure of his business enterprises.

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“I did fall for the ego,” Zaler said, “for the press, the media. I couldn’t face going bankrupt or just stopping. I just couldn’t do it.”

Looking down at the podium from which he was speaking, Zaler assumed full responsibility for his actions.

“I tried and tried to be a big shot,” he told Kane. “I wanted to be a leader and look at what I’ve done. Look at what I’ve done.”

Kane was unmoved by all of it and said so directly.

“There’s no reason for anyone to believe that he will ever change,” Kane said of Zaler, noting his previous conviction in Arizona and the fact that he initially fled justice in Colorado by illegally traveling to Israel.

Kane described Zaler’s explanation of his crimes nothing more than a “tale,” common among con-men finally cornered by the law.

“The path to hell,” the judge said, “is paved with good intentions.”

THE descendant of a venerable Denver Jewish family, Zaler was a standout student at North High School and CU and a leader of the Colorado Zionist Federation leader in his youth. In the late 1970s, he ran unsuccessfully for Denver’s City Council.

He headed for Arizona some years later, where in 1996 he was convicted of 50 counts of fraud related to a software company, Softie, Inc., alleged to have actually worked as a pyramid scheme. Sentenced to 14 years, Zaler was able to secure parole after having served nearly six years.

Back in Colorado, he followed his family’s footsteps in the kosher food business, opening Zaler’s Kosher Meats in southeast Denver in early 2004.

The business seemed to do well in its first year, gradually evolving into a restaurant and adding a bakery and kosher Asian food in 2005.

Late that year, Zaler expanded his business into Kosher Korner, a concession stand selling kosher hot dogs at the Pepsi Center. That part of the business soon expanded, eventually placing vendors in Invesco Field, Coors Field and some Super Target locations.

Not long after that, however, Zaler encountered rough waters with his ventures. Due both to disputes with local kashrus supervisory authorities and what might have been too much expansion too soon, he began losing money, first closing his restaurant and later his vending business.

Prosecutors alleged that it was during this period of decline that Zaler began making misrepresentations to lure investors, including MEP Group, a New Jersey-based partnership; Spivak Funding, a firm which invests in food companies; and two Denver businessmen.

According to the 2008 federal indictment, these investors forwarded varying amounts of money to Zaler — by means of wire and mail transfers and a series of transfers from several banks — after being shown purchase orders and invoices falsified by Zaler and an accomplice (who was charged and sentenced separately) indicating debts owed to Zaler.

After being investigated by the FBI and charged, Zaler initially pleaded not guilty in US District Court. Before his trial, however, he fled the country, apparently using an Israeli passport which the court had overlooked.

The IJN received reports in late March, 2008 that Zaler had been spotted at the Regency Hotel in Jerusalem by a member of the Denver Jewish community. Less than a month later, federal authorities issued an arrest warrant for him.

During nearly a year spent in Israel, Zaler allegedly engaged in further fraudulent activities before his activities there were exposed in an article in the Jerusalem Post. In the spring of this year, he surrendered to federal agents in Atlanta and was shortly thereafter returned to Denver.

He has spent the intervening months at the federal prison in Englewood, where he will remain until assigned to a permanent prison facility.

Among those in the spectator’s section last week was a man who knew Zaler long before he became a convict.

Rob Prince, who said he hasn’t spoken to Zaler since 1975, recalled standing next to him before 500 people in 1969. It was in Boulder, at a rally of the radical leftist student group Students for a Democratic Society, of which Zaler was an outspoken and highly visible leader.

As the crowd watched, Zaler and several others who were protesting the Vietnam War burned their draft cards.

“Arnie was a natural leader,” Prince told the IJN as the courtroom emptied out. “His old friends in the SDS from all over the country are following his case.”

But not necessarily as sympathizers, Prince added.

“Unfortunately, I think he deserves the sentence.

“My only question is, ‘Arnie, what happened?’”

Prince described the Arnie Zaler of 1969 as an intelligent, articulate, attractive and charismatic individual —  a born leader who seemed destined for “the fast lane” of success.

“I’m really saddened,” Prince said, “to see what happened to someone who could have done so much, not just for Jews, but for everyone.”