Gary Peel: Sentence on bankruptcy fraud, child pornography possession should have ended already

By The Madison County Record | Dec 8, 2015

ASHLAND, Ky. – Former lawyer Gary Peel, serving the ninth of 12 years for bankruptcy fraud and possession of child pornography, seeks immediate release.


ASHLAND, Ky. – Former lawyer Gary Peel, serving the ninth of 12 years for bankruptcy fraud and possession of child pornography, seeks immediate release.

He filed a motion for a sentence reduction in U.S. district court at East St. Louis on Dec. 4, claiming his sentence should have ended on July 28.

He filed it as his own lawyer, from federal prison at Ashland, Ky.

He argued that bankruptcy proceedings showed less value in the claim of former wife Deborah Peel than the amount that figured into his sentence.

“At every stage of the proceedings Gary Peel has contested the loss amount as incorrect,” he wrote.

“When his position was finally vindicated, he should not be penalized for this but rewarded.”

Peel formerly practiced law at Tom Lakin’s firm in Wood River.

Lakin himself would also go to prison, for distributing cocaine.

Peel filed a bankruptcy petition in 2005, aiming to escape the terms of a divorce settlement with former wife Deborah Peel.

In an examination by a bankruptcy trustee, he described valuable items he had sold for a dollar to second wife Debra Pontius-Peel.

The items included a mermaid fountain weighing 800 pounds.

When the Record reported on the bankruptcy and the mermaids, Peel suspected that his former wife had planted the stories.

In 2006, he placed in her mailbox pornographic photographs he had taken of her sister at age 16.

He threatened to disseminate the pictures.

She notified police, who wired her to record a meeting with him at a restaurant.

The recording led to his arrest.

Grand jurors indicted him on charges of bankruptcy fraud, obstruction of justice, and possession of child pornography.

Former district judge William Stiehl held trial in 2007, and jurors convicted Peel on all counts.

Stiehl imposed a sentence of 12 years for obstruction of justice, with lesser terms to run concurrently on the other crimes.

Peel moved for a new trial, and Stiehl denied it.

Peel appealed his sentence to the Seventh Circuit in Chicago, pleading that trial on bankruptcy fraud and obstruction of justice constituted double jeopardy.

In 2009, Seventh Circuit judges ordered Stiehl to dismiss one of the charges and revise the sentence.

At a sentencing hearing in 2011, the former wife’s sister testified by telephone due to the illness of her father.

“As I sat there in my dad’s hospital room, the very thing Gary Peel was trying to do so many years ago could actually affect my parents once again,” she said.

“They are currently unaware that we are being subjected again to Gary Peel’s possible venomous attacks.

“I despise more than ever the time that was taken from my parents as these endless legal maneuvers were perpetuated by Gary Peel.

She said she read the transcript from the restaurant.

“That truly indicates his threats were real and his intentions were clear,” she said.

“He fully intended to mail those awful photographs to my elderly parents unless my sister agreed to capitulate to his demands.

“File every motion to delay, spend the assets on mermaids and watches, and then file bankruptcy to cancel his obligations to my sister.

“He also suggested after 34 years of being a stay at home wife and mother of his children, that she could support herself at the very fast food restaurant they were in while he was incriminating himself.

“Even from prison his legal terrorism continues.”

She said she had nightmares and a gut wrenching reaction to any news about child pornography or sex offenders.

She said she kept numbers of the FBI and victim assistance in her phone.

“I look into my father’s eyes and see unconditional love,” she said. “My niece and nephews look into their father’s eyes and see evil.”

Then came Peel’s turn to speak, and he said Stiehl was punishing him for exercising his right to file a bankruptcy proceeding.

“What you said is I tried to get out of my marital settlement agreement by filing for bankruptcy and in fact, that’s what many people do,” Peel said.

He said that prior to the mailbox incident, his former wife filed a false, fraudulent and felonious claim in bankruptcy court.

“She had filed a claim under oath for two million, eight hundred thousand dollars,” Peel said. “That’s a felony under 18 U. S. Code, section one fifty two six.”

He said the claim had been reduced to $434,000.

He said his sentence undermined respect for the law.

“It has the taste of the old star chamber, if you will,” he said.

Stiehl revised the sentence but reached the same result: 12 years.

He assessed 10 years on child pornography and two years on bankruptcy fraud, to run consecutively.

Peel appealed to the Seventh Circuit again, but his speech at his sentencing backfired.

Justice Richard Posner called it “bumptious, defiant, and devoid of acknowledgment of wrongdoing.”

“It would have justified a longer sentence on the child pornography counts had that been possible,” Posner wrote.

Peel’s new motion argues that the bankruptcy court established his former wife’s claim was $158,455.63, not $2.5 million.

“The sentence was based on the loss amount,” Peel wrote.

He wrote that he has effectively completed the totality of his sentence, which began on March 20, 2007.

“This means he would have completed the full term as to the possession charges on Nov. 29, 2013, taking into account both time served and the 85 percent federal prisoners are required to serve,” he wrote.

He wrote that he began serving the two years for bankruptcy fraud the next day.

“Using the 85 percent figure, this comes to 20.4 months, or July 28, 2015,” he wrote.

“He has now been in jail nearly five months beyond the maximum sentence that should have been imposed had the true facts been known.

“The goal of every court should be to effect the ends of justice and zealously insure no one is subject to a greater sentence than one supported by the facts.”

Stiehl has retired. The motion awaits action by District Judge Staci Yandle.

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