Stacey Jackson, the key figure in a notorious 2008 scandal involving the theft of city money aimed at cleaning up persistent post-Katrina blight in New Orleans, could be facing five years in prison if the judge heeds the federal sentencing guidelines and a presentencing report by the government.

But Jackson’s attorney, Eddie Castaing, argued in a court hearing Thursday that U.S. District Judge Mary Ann Vial Lemmon should look at a bigger picture. Jackson, he said, is a fundamentally good person who made a mistake. Her two adolescent children and husband need her, he said. She won’t break the law again, he said.

“Any term of prison would be counterproductive,” Castaing said as several of Jackson’s relatives sobbed quietly in the gallery.

Nonsense, federal prosecutor Fred Harper said. In his view, Jackson, who admitted to a six-figure rip-off of the city agency she ran, is as contemptible a white-collar criminal as he’s seen — someone who had everything going for her but who stole money intended for the needy in their darkest hour, out of simple greed. She may not commit any new crimes, but she needs to be punished, Harper said.

“To follow (Castaing’s) argument, every white-collar criminal should just go home,” Harper declared, citing a long list of local public-corruption defendants who have been sent to prison in recent years. “By his logic, Ray Nagin shouldn’t have to serve time. What’s the likelihood he’s going to commit another crime? What about Edwin Edwards? What about (technology vendor Mark) St. Pierre? What about Renee Gill Pratt?”

Harper and Castaing sparred for more than two hours in front of Lemmon, who had been due to sentence Jackson on Thursday. The judge then said she needed more time to consider their arguments and reset the sentencing for 10 a.m. Friday.

Jackson pleaded guilty in July to helping orchestrate a scheme to loot New Orleans Affordable Homeownership, the city agency she ran, of hundreds of thousands of dollars that were supposed to be spent on remediating homes damaged by Hurricane Katrina. Essentially, Jackson hired contractors she knew to do the work, had them submit inflated or phony invoices, then collected kickback payments from them.

Much of Thursday’s hearing centered on gripes Castaing lodged regarding the report submitted by probation officers. He said Jackson was being held responsible for a larger theft than she actually admitted to when she pleaded guilty in July.

In particular, he said two of her alleged co-conspirators — contractor Richard Hall, a cousin of Jackson’s, and subcontractor Jamon Dial — had admitted to getting paid by NOAH for work they didn’t do. But they never confessed to kicking back money to Jackson, he said, nor did Jackson admit to receiving anything from either one.

Moreover, Castaing said, the report pinned roughly $350,000 in thefts on Jackson, while she admitted only to receiving about $129,000 that didn’t belong to her. The disparity results in large part from what the government said were overbillings that Jackson split with the corrupt contractors, meaning that the size of the fraud was substantially larger than the amount she herself kept. Castaing said prosecutors had failed to prove precisely how much overbilling occurred.

Castaing’s persistence — he registered at least 24 objections to the presentencing report — irked Harper, who said Thursday’s proceeding was not a trial but that he could put on witnesses to prove the government’s accounting if the judge saw fit.

The argument about the exact size of the fraud was mostly moot. Castaing conceded that, even using his smaller estimates, federal sentencing guidelines would call for a sentence of much more than 60 months for his client. Her sentence cannot exceed 60 months, however, because that is the maximum penalty for the charge to which she pleaded guilty: conspiracy to receive kickbacks.

But Castaing separately asked the judge to consider granting a variance from the guidelines. He reminded Lemmon that she is not bound by sentencing guidelines, and he cited various cases in which judges showed defendants mercy. He acknowledged that in some of those cases, the defendants were caring for small children or terminally ill relatives, but he said Jackson’s family, though healthy, badly needs her.

“Children need their mothers,” he said.

Castaing also argued that Jackson had “lived an exemplified life” before her crimes, which began in early 2005, and since her departure from NOAH, which came amid a grand jury investigation in August 2008. He said she has been harshly punished in the court of public opinion, including in some “racially scurrilous” comments posted pseudonymously at nola.com by former federal prosecutor Sal Perricone.

“This is a bad crime. But it is just a snapshot,” Castaing said. “When you think about her life up to this point ... she was a solid citizen, before and after this crime. That’s what I ask you to consider.”

Harper, exasperated, said he could think of nothing that mitigated Jackson’s actions.

“She has no excuse,” he said. “She is an educated, sophisticated woman. She’s married to a successful man. Their income is hundreds of thousands of dollars. Yet she steals. It’s pure, unadulterated greed. It wasn’t because the family was in trouble. It wasn’t a gambling habit somewhere. It wasn’t a drug addiction. It wasn’t because the mortgage wasn’t going to get paid. It was just stealing. Greed.”

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