Aug. 25—EAU CLAIRE — Michael Shillin's longtime habit of lying, first to his family and then to clients who paid for his financial expertise, was laid bare leading up to his sentencing on federal fraud charges. The only question was how much prison time it would cost him.

The former leader of the now-defunct Altoona firm Shillin Wealth Management was given a seven-year prison sentence by Judge James D. Peterson in U.S. District Court for Western Wisconsin during a Thursday morning hearing in Madison, according to online records.

Following his release from prison, Shillin will be on supervised release for five years. The judge also ordered Shillin to pay $513,314 in restitution.

Shillin, 33, agreed in May to plead guilty to two of the 10 fraud charges he'd been indicted on last fall.

One of the guilty pleas was for wire fraud due to lies Shillin told clients about their investments during his career as a financial adviser to make them artificially happy so they'd continue to entrust money with him. Shillin's other guilty plea was bank fraud for obtaining $462,000 in yet-to-be-repaid loans from Chippewa Falls-based Northwestern Bank by presenting proof of collateral that belonged to a client, not himself.

During Thursday's proceedings, Peterson rejected Shillin's argument that his lies were a misguided attempt to make his clients feel good. The judge said Shillin "lied to make [himself] feel good," according to a news release the U.S. Attorney's Office issued on the sentencing. Peterson also called Shillin a "highly skilled manipulator" with "vast experience in deceit."

Regulators have already barred Shillin from working in the financial, insurance and securities fields ever again.

The judge opted for a longer sentence than nonbinding Federal Sentencing Guidelines recommended. Those guidelines said the former financial adviser should get about 3 1/2 to 4 1/4 years in prison.

In the days leading up to sentencing, the U.S. Attorney's Office and Shillin's defense lawyer both filed documents with the court with their suggestions for a prison sentence.

Assistant U.S. Attorney Zachary Corey urged the judge to go above and beyond the guidelines, requesting that Shillin spend the next six years in prison.

"His conduct before, during, after the offense show an utter disregard for rules and the truth," Corey wrote. "The only way to stop Shillin from engaging in similar behavior in the future is to sentence him to a significant prison sentence so he will at least think twice before committing more fraud."

The prosecutor argued the longer sentence is warranted due to the collateral damage — financial and emotional — suffered by Shillin's former clients.

Direct losses attributed to Shillin's wire fraud was tallied at $126,314, but clients spent more of their own money to repair their finances. Victims ended up paying tax penalties, hiring experts to uncover and correct fraudulent financial figures, missing out on investing their money on other opportunities, and some had to pay more to get different health insurance.

Defense attorney Kathleen Quinn of Milwaukee, argued for the low end of the sentencing recommendations — 3 1/2 years in prison — for her client.

She noted that Shillin is a first-time offender who had been active in volunteering for charities, nonprofit organizations and youth sports while he lived in the Chippewa Valley.

Quinn's filing began by calling Shillin a "workaholic" who failed to pump the brakes on his business as it got too big, too fast for him to manage. This led to delaying and failing to handle some of his clients' issues, but also lying to keep them.

"He lied to cover his failures and to stave off clients' disappointments," Quinn wrote. "More than that, he created entirely fictional scenarios to lead some of his client's to believe his work for them resulted in life-altering windfalls in their favor."

Corey wrote how Shillin's overstatement of his clients' wealth led them to spend beyond their means.

"Many of the victims spent money based on Shillin telling them they had assets they actually did not," Corey wrote.

One victim reported buying a $1.5 million lake home in 2020. Shillin also encouraged another client to proceed with buying a new pickup truck.

As clients learned they weren't as rich as Shillin led them to believe, some have had to sell off items, consider downsizing homes or returning to work after they'd retired.

Shillin has been in jail since mid-April, when he was caught returning from an unauthorized tropical vacation to the U.S. Virgin Islands that violated terms of his pretrial release.

That was among the factors that Corey mentioned in why he argued for the harsher sentence.

"Even after indictment, Shillin continued to demonstrate that he does not believe that rules apply to him," the assistant U.S. attorney wrote.

A six-page handwritten letter that Shillin wrote while he's been in jail was sent to the court Tuesday, offering his own explanation for his behavior.

"Facing the reality of my crimes has been humbling and also frightening at times when I look back on my actions and how they have left a wake of chaos to those impacted," Shillin wrote.

He said he went into financial planning to help people, but he changed along the way.

"Instead, I became an egotistical maniac, putting my ambitions over my clients' and employees' well-being," Shillin wrote.

He had a drive to be seen as successful, break firm records and strived to always win. But he also was insecure about losing relationships and business, a trait that grew in him and led to the many lies to keep them both.

"Instead of being honest, it became easier to tell people what they wanted to hear versus what they needed to hear," Shillin wrote.

He finished the letter by telling the judge he'd "graciously accept" any punishment and would be productive during his incarceration. Shillin stated he'd work on his mental health and would emerge from prison a better person "full of integrity, honesty and consistency."

Prior to his career as a financial adviser, Shillin's family was aware of his habit of making up elaborate lies.

One story included in Corey's filing was of promises that Shillin made to his younger sister, which bore a resemblance to similar behavior he'd later show with his business clients.

When his sister was in eighth grade, Shillin promised his family he'd start an education fund to pay her college tuition. Each subsequent Christmas and birthday, he'd provide statements showing how much money the growing fund had. When she reached college, Shillin was late on the tuition payments to the point where his sister told their parents. Shillin ultimately admitted there was no investment account.

Quinn noted in her filing that Shillin's mom first recognized her son had trouble telling the truth and over-promising while he was in high school.

"While it is a penchant that is long-standing and that has caused Michael relationship problems, it did not manifest as criminal behavior until he got into the work environment in which he sought to be some kind of unrealistic superhero to some of his clients," the defense attorney wrote.

One point of agreement in filings from both the defense and prosecution was that Shillin really didn't gain much by lying in his professional career.

"Finally, the offense was aggravated because it was so inexplicable and unnecessary," Corey wrote. "Even without the referrals and additional fees he gained from the scheme, Shillin was running a successful business and had a good life."

Quinn made a similar statement in her filing with the court.

"His crime is so odd because it really does appear that, except for a few commissions he could have easily lawfully earned had he just used his talent and maybe for some extra business drummed up by a few clients who believed he worked miracles for them, there is not evidence that he was significantly enriched by his lies when he told them," the defense attorney wrote.

Shillin filed for Chapter 7 bankruptcy protection in November. He claims to have $173,784 in assets, but $1.84 million in liabilities, according to an amended filing made in January.

That case is still pending in the U.S. Bankruptcy Court for the Eastern District of Wisconsin.

Shillin ran his own firm in Altoona's River Prairie development from mid-2018 until it closed in late 2020 while he was under investigation. Prior to starting Shillin Wealth Management, he had stints in local offices of Edward Jones and Raymond James Financial Services.

Shillin Wealth Management managed 2,992 accounts with nearly $135.5 million in assets in them before the firm went defunct in December 2020, according to a financial report provided to the court.