updated 3/28/2007 6:49:05 PM ET 2007-03-28T22:49:05

An executive who lied on financial documents to secure bank loans and keep his sinking company afloat was sentenced Wednesday to 2½ years in prison and $51 million in restitution.

Steven Garfinkel, 64, of Philadelphia, argued that he hoped the bank loans would rescue DVI Inc., a multinational firm that listed nearly $1.9 billion in assets in its 2003 bankruptcy filing.

The Doylestown-based company financed large-scale medical equipment such as MRI machines, but got into trouble as it expanded too quickly.

Garfinkel eventually pledged the same assets as collateral for two different bank loans, leaving Fleet Bank holding the bag for $51 million when DVI collapsed. He also lied on Securities and Exchange Commission statements when he said the company’s financial reporting was accurate.

Garfinkel is the third corporate official prosecuted criminally under Sarbanes-Oxley, the corporate-accountability law Congress passed in the wake of Enron and other accounting scandals.

While there was no evidence that Garfinkel embezzled or misused DVI’s money, prosecutors argued that he profited from the scheme by keeping his job, which netted him as much as $900,000 a year.

Chief U.S. District Judge Harvey Bartle III ordered Garfinkel — who has three children ranging in age from 12 to 17 — to pay $200 a month toward restitution when he leaves prison.

“That’s not going to get to $50 million, but the judgment is there if he wins the lottery or gets an inheritance or something like that,” Assistant U.S. Attorney Amy Kurland said after the sentencing hearing.

Garfinkel’s attorney argued that he did not act alone. That aspect of the case remains under investigation, although no one else is currently charged, Kurland said.

Prosecutors also say Garfinkel directed underlings to falsify documents. But they do not blame him for the company’s demise.

The bankruptcy trustee concluded that DVI made several mistakes as it grew, including failing to acquire adequate capital, offering financing to shaky customers and unwisely venturing into overseas markets.

Garfinkel pleaded guilty to mail fraud and the Sarbanes-Oxley violation, resulting in a reduced sentencing range.

“He hoped that this, in some ways, would make amends for the horrible mistake that he had made,” defense lawyer Joel Friedman said Wednesday.

“Even though he did it in an improper manner, he was trying to save the company — for the investors, for the employees and for the creditors,” he said.

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