In phone fraud, judge metes out 1-day sentence for Arkansas man

Restitution totals $239,750 in subsidized-service scam

A Sherwood man was ordered Wednesday to repay the federal government $239,750 for defrauding a federal program designed to ensure affordable access to telephone services for low-income people.

But Cody Joe Morris, who pleaded guilty on March 14, 2016, to a charge of conspiring to commit wire fraud, was sentenced to only one day in prison, to be followed by three years of supervised release.

The unusually short prison term was imposed by Chief U.S. District Judge Brian Miller as a way to acknowledge Morris' fast cooperation with prosecutors after the scam was uncovered and his forthright testimony at a co-defendant's trial two weeks ago.

Miller indicated in a Wednesday sentencing hearing that he wanted to give Morris a strictly probationary sentence, but the law doesn't allow a sentence of only probation for Class B felonies such as wire fraud conspiracy.

The judge also cited a motion from Assistant U.S. Attorney Hunter Bridges to reduce Morris' sentence by up to 40 percent of the suggested penalty range, and the fact that the accused mastermind of the scheme, Johnny Edward Walker of Hot Springs, was acquitted by a jury.

Miller said he would impose the lowest prison term possible -- one day -- in order to impose three years' probation, the sentence he thought was most appropriate.

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Restitution in federal cases is mandatory. Though the amount of fraud tied to Morris was more than the amount he personally generated, he was the only one convicted in the case and, as such, is required to pay all the restitution by himself.

The amount of fraud he was directly responsible for wasn't discussed in the sentencing hearing, because Morris had already agreed at his plea hearing that he was responsible for the theft of $150,000 to $250,000 from the program.

Acting U.S. Attorney Pat Harris, who helped try the case against Walker, said Wednesday that Morris was responsible for the majority of the fraud.

Morris has no previous criminal record, but federal sentencing guidelines suggested a sentence of nine to 12 months in prison, primarily because of the amount of fraud involved.

Standing beside defense attorney Marjorie Rogers of Little Rock, Morris told the judge: "I've never done a drug in my life. I've never done any drinking. I've never been in trouble. ... I had a moment in my life when I was down. ... I understood the consequences, and I've got to pay."

A federal indictment alleged that from December 2012 through about April 2013, Morris and Walker conspired to defraud the Universal Service Fund, a federal program designed by the Federal Communications Commission to ensure reasonable and affordable access to telephone services nationwide.

The program is funded by telecommunications providers that generally pass along the fees to consumers as a "universal service charge" or something similar on their bills, according to the indictment. An independent, nonprofit corporation collects the money from the providers and administers the program.

Eligible companies were reimbursed for providing discounted cellphones and wireless services to qualifying customers.

Morris, a salesman employed by Walker's TDE Industries, worked out of hotel rooms in Oklahoma and Pine Bluff, using a telephone book to find names he falsely said were customers to whom he had given away phones. In reality, he threw away or gave away the phones he activated, prosecutors said.

Metro on 05/04/2017

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