By Dorothy Atkins

Law360 (March 12, 2021, 6:27 PM EST) -- A California federal judge said Friday she's inclined to grant a convicted ex-wine country real estate lawyer's request for compassionate release after he contracted COVID-19 in prison in Alabama, but told his attorney to first ask prison officials if they will grant his renewed request.

During a hearing held via Zoom, U.S. District Judge Susan Illston said she plans to stay David J. Lonich's second request for compassionate release to give him a chance to ask the prison warden to consider his renewed request. If the prison officials deny it, she said she's inclined to grant it.

"Often administrative exhaustion is a meaningless hurdle that needs to be surmounted to proceed, but in this instance I don't think it is," the judge said. "I'm inclined to grant his request, but first I would like him to make the request to prison authorities and see what they say."

Lonich, who is 65, is currently serving an 80-month sentence in a federal prison in Montgomery, Alabama, after he was convicted in 2017 on more than two dozen counts of conspiracy, bank fraud, money laundering and making false bank entries for his role in an excessive lending scheme that led to the demise of Sonoma Valley Bank.

Prosecutors accused Lonich of helping his then-client, developer Bijan Madjlessi, obtain roughly $35 million in illicit bank loans that the developer knew he couldn't repay in the wake of the 2008 financial crisis. The scheme led to the local bank's demise in August 2010, and wiped out millions of dollars in bank-obtained federal aid along with it, the government alleged.

Madjlessi was initially included in the March 2014 indictment, along with former Sonoma Valley CEO Sean C. Cutting and former Chief Loan Officer Brian S. Melland, but the developer died in a single-car crash shortly after the charges were unveiled, according to court documents.

After a 31-day jury trial in 2017, a jury convicted the trio. All three defendants have appealed their convictions to the Ninth Circuit, which heard oral arguments on the appeals in February and has not yet ruled.

The defendants asked Judge Illston to release them on bond while their appeals were pending, but in January 2020, she denied their requests, finding they haven't raised legal issues in their appeals that would likely reverse their convictions.

Lonich began serving his sentence in October 2018, but last May, he asked Judge Illston to release him due to his age and health risks posed by contracting COVID-19 in prison. He noted that he is 65 and he has previously been diagnosed with prostate cancer, hypertension, high cholesterol and sleep apnea.

He also argued that in the Alabama prison he is confined to a "closed communal setting," with more than 30 inmates in each of eight wings who share one bathroom and dine together, making social distancing "impracticable, if not impossible." At the time, there were no cases of COVID-19 reported in the prison, according to his motion, but he argued he shouldn't have to just wait for an outbreak to "engulf" the prison to make the request.

Melland and Cutting made similar requests, but in late May, Judge Illston denied all three motions, and noted that none of them had served the bulk of their prison sentences and they weren't suffering a serious medical condition that warranted their release.

However, on Dec. 30, Lonich filed a second motion for compassionate release in his own handwriting, along with a letter to the court's clerk asking that his motion be delivered to prosecutors. He explained that he was representing himself at the time, and he had been diagnosed with COVID-19 days earlier, and therefore he was being isolated and did not have access to a copier or a law library.

He argued that conditions in the prison and his own health had "significantly deteriorated," and at least 45 inmates had contracted the virus within the prior month, including himself. He said the prison deemed him to be at a higher risk of developing life-threatening symptoms if he were to catch the virus, but he was told it refused his request for home confinement, since his previous request had been denied by the prison's "central office review committee" in Washington, D.C.

"When we are all facing a potentially fatal virus, from which Lonich and other inmates are incapable of protecting themselves, and could not have been considered when Lonich was sentenced, what justifies requiring Lonich to remain [incarcerated] when a viable, much safer alternative exists?" he wrote in blue ink.

Lonich's motion and letter were not uploaded to the court's docket until Jan. 11, and days later, the court reappointed Harris, who is representing him on appeal, as his defense counsel before the trial court. On Jan. 29, the court uploaded a letter dated Jan. 25 that the court received from Lonich requesting confirmation that his handwritten motion had been received.

In February, the government opposed Lonich's motion, arguing he hadn't presented any evidence of his health risks or of his home confinement release request.

During a hearing on Lonich's request Friday, prosecutors didn't show up, so Judge Illston told Harris to share her tentative ruling with the government.

The judge acknowledged Lonich had already made the compassionate release request to prison officials and exhausted his administrative remedies a year ago when he made his first request for compassionate release.

Judge Illston said she denied the request at the time because he hadn't served much of his sentence and prison outbreaks weren't as prevalent. Now he's "a year older" and served 29 months in custody, which she pointed out is 42% of his sentence. She also noted that COVID-19 cases in the prison systems are more prevalent, and age is the "single factor" that makes people most vulnerable.

Still, she told the defense attorney to run Lonich's request by prison officials one more time, before she decides whether to grant the request.

"I don't really mean to impose more paperwork on you, but I actually think that the prisons might have a useful point of view," she said, adding that he should "give it another shot."

After the hearing, Harris didn't immediately respond Friday to Law360's request for comment on Lonich's current health status.

The government is represented by Robert David Rees of the U.S. Attorney's Office for the Northern District of California.

Lonich is represented by George C. Harris of The Norton Law Firm PC.

The case is U.S. v. David John Lonich, case number 3:14-cr-00139, in the U.S. District Court for the Northern District of California.

--Editing by Marygrace Murphy.

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