They didn't convince either a jury or a set of appeals court judges. (As Judge Boggs eventually wrote of the company, "A reasonable juror could easily conclude that Berkeley's sales operation was, for the entire duration of its existence, little more than a colossal fraud.") After a six-week federal trial in early 2008, Warshak was sentenced to twenty-five years in prison, and he had to surrender $459 million in proceeds from the sale of Berkeley products and another $44 million for money laundering. His mother, Harriet, got two years in jail. Berkeley eventually entered bankruptcy.
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Warshak argued that his company was simply the victim of its own success, overwhelmed with orders and run by people with no real experience in business at this scale. Berkeley's "operational deficiencies," as Warshak's lawyers called them, were simply "a byproduct of unsophisticated business practices in Berkeley's formative years and Berkeley's virtually unprecedented growth, rather than the result of criminal fraud." As evidence, they noted that the company had finally abandoned its undisclosed auto-ship program after several years and had installed an automated system to record all calls with customers. It even set up a compliance department, which at one point had nearly fifty employees, to ensure that customer interactions were aboveboard.
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