Atlanta lawyer and convicted embezzler Nathan Hardwick IV on Monday received a 15-year sentence to be followed by six years of supervised release.

“You are seriously a disappointment to our legal profession,” said Judge Eleanor Ross of the U.S. District Court for the Northern District of Georgia to Hardwick on Monday. “I think your conduct in this case has been egregious—and not just as to your spending. It is indisputable that you were a greedy and deceitful person.”

“I'm not sure you've grasped how serious this is. I hope you do in custody,” Ross said, noting he called the proceedings a “show” during his trial testimony.

During the daylong sentencing hearing, Hardwick, 53, said he was learning about “personal responsibility.”

“I now see how my actions had the unintended consequence of hurting my clients and partners,” he said in his statement to the judge, adding that his “personal spending was irresponsible and reckless.”

Twelve jurors unanimously convicted Hardwick on Oct. 12 on all 21 counts of wire fraud, plus separate counts of conspiracy to commit wire fraud and making false statements to federally insured banks. They rejected his defense that the $26.5 million that the government documented he took from his now-bankrupt, residential real estate closing firm, Morris Hardwick Schneider, from the charged period of 2011 through mid-2014 were funds he thought legitimately due to him as the majority owner.

The judge's sentence fell in between the parties' recommendations. Assistant U.S. Attorneys J. Russell Phillips and Lynsey Barron had asked for almost 22 years—a stiff, 262-month sentence—while Hardwick's defense team of Ed Garland, Kristen Novay and Robin Loeb of Garland, Samuel & Loeb had said he should serve only eight years.

In a hearing that lasted until 7 p.m. Monday, Ross allowed 31 levels of sentencing enhancements under the federal guidelines—short of the 37 sought by the government—which would mean a sentence of 108 to 135 months, up to 11.25 years.

But after victim-impact statements from Hardwick's ex-partners and a Fidelity National Finance representative, plus statements from Hardwick and his parents, the judge in her final ruling increased the sentence to 15 years. She explained that her decision was “based on what I see as egregious behavior and lack of remorse—not about the egregious spending but the actual theft of funds from client accounts.”

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Victims' Losses

Hardwick's former law partners, Mark and Gerard Wittstadt, who are brothers, and Art Morris all advocated for a stiff sentence.

Mark Wittstadt, 53, said that Hardwick “lied and stole from me and my brother.”  The Wittstadts had merged their foreclosure firm, based in Baltimore, with Atlanta-based Morris Hardwick Schneider's residential closing firm, but the foreclosure and closing operations were run separately.

“We did everything we could to try to save this law firm,” Mark Wittstadt said. “I lost all my clients and my law firm—and, on our [foreclosure] side, our 700 employees all lost their jobs.”

He added that he's fought four years to repair the damage to his reputation from the escrow account shortfalls that came to light in 2014 and the subsequent failure of Morris Hardwick Schneider.

Wittstadt, who has a wife and two children, said he's incurred thousands of dollars in attorneys' fees over civil litigation prompted by the shortfalls and the bankruptcy proceedings for Morris Hardwick Schneider and that he's had to “sell everything” except his home.

Morris, a retired partner, said Hardwick “took down a firm of 800 people.”

“I spent 46 years—my whole life—building it,” he added. “Think about those families,” he said. “In my opinion, he deserves the maximum of every guideline.”

Morris said he put $1.5 million into Morris Hardwick Schneider after the escrow shortfalls were discovered in 2014 and that he's lost about $4 million from the firm's failure.

“Have you seen any remorse from this guy? Not a word,” Morris said. “He will hurt someone again.”

Gerard Wittstadt asked the judge to give Hardwick the maximum sentence of 262 months, using the government's enhancements.

At 54, with a wife and four children, Gerard Wittstadt said he's had to sell his family home, beach house and farm and has purchased a handgun because he feels unsafe after threats he received after the firm's demise.

He added that he'd hoped to be a judge one day like his father, Gerard Wittstadt Sr. “I do not think that is a reality now,” he said.

David Baum, the Southeast regional manager of title insurer Fidelity National Financial, said Hardwick “violated the trust” of homebuyers placing their funds in escrow with Morris Hardwick Schneider.

If Fidelity had not stepped in, he said, those people would have lost their homes. Instead, “Not a single consumer was harmed,” Baum said, because Fidelity spent $29.5 million to prop up the escrow accounts.

That caused Fidelity a net loss of $22.4 million—plus $4.5 million in legal fees, Baum said. “Mr. Hardwick never showed any remorse or apologized for the problems he caused.”

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Sentencing Battle

The major bone of contention during the sentencing hearing, taking up almost four hours of arguments, was the size of the loss that Hardwick caused. The government needed to show that Hardwick took between $9.5 million and $25 million from the firm for the 20-level enhancement it sought.

Phillips, the prosecutor, referenced FBI agent and fraud investigator Kimberly Johnson's testimony during the trial that Hardwick received $26.5 million from the firm, including $19.5 million from the escrow accounts, from 2011 through mid-2014, according to the government's documentation. The prosecutor added that Hardwick took $20.6 million from 2011 to 2013 alone—when the firm's net income was only $9.9 million, according to an audited financial statement.

The judge said it was clear that Hardwick took more than $20 million from the firm over the charged period but noted the defense's argument that some of that was from legitimate distributions.

“We stand convicted of taking more than our share,” Garland said, but he argued that this did not establish the actual loss to the firm. Forensic accountant J.P. Gingras appeared for the defense to argue that the loss to the firm was minimal to nonexistent.

Ross ruled that the government's proposed $19.5 million loss figure—the amount Hardwick received from the escrow accounts—did not show actual loss by a preponderance of evidence.

Instead, the judge used the total figure of more than $6 million from the 21 wire fraud charges of which Hardwick was convicted and granted 18 levels of enhancement (applicable for more than $3.5 million in losses).

She granted another two levels for hardship suffered by victims, two levels for Hardwick's role as organizer of a criminal activity and two levels for abuse of a position of trust—on top of a base seven-level enhancement—for a total 31-level enhancement. That was short of the government's request for a 37-level enhancement.

Hardwick's restitution hearing is set for May 9.

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Co-Conspirator

Co-conspirator Asha Maurya, who has pleaded guilty to one count of conspiracy to commit wire fraud, is scheduled to be sentenced Tuesday.

Maurya is the former controller for Morris Hardwick Schneider's residential closing side. She facilitated wire transfers from the firm's operating and escrow accounts to pay Hardwick's bills for casinos, private jets, women and other expenses.

The government has asked for a 63-month sentence for Maurya. Her lawyers, Page Pate and Jess Johnson of Pate & Johnson, have instead asked for 33 to 41 months, citing her extensive cooperation with the government and acceptance of responsibility for her actions.

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