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May O'Shei, who bilked millionaire Seymour Knox IV and more than 400 other local investors out of about $2 million, began a four-month jail term Friday and was ordered to repay $1 million.

Angering a standing-room-only courtroom full of O'Shei's victims with some of his comments, State Supreme Court Justice Nelson H. Cosgrove spared her a possible state prison term.

At the request of Assistant State Attorney General Dennis Rosen, the judge -- skeptical of O'Shei's repayment ability -- ordered the 49-year-old Orchard Park grandmother to pay $1 million in restitution to investors in her defunct International Global Inventions of Williamsville. But he also gave her a six-month local jail term rather than the seven-year state prison term Rosen had sought.

O'Shei, an eighth-grade dropout, pleaded guilty in December to felony scheme-to-defraud and grand larceny charges. She declined to comment as she was taken from the downtown courtroom in handcuffs. Under state sentencing guidelines, O'Shei will serve only four months of the six-month term, court officials confirmed.

After the sentencing, Stephen Kolbert of East Amherst, who said his family lost $12,500 in the O'Shei scheme, and a cancer-stricken Buffalo investor objected to what they described as the judge's demeaning comments. Cosgrove had suggested that a number of the O'Shei investors expected to make a lot of tax-free money without filing forms with the Internal Revenue Service.

Prosecutors had accused O'Shei of coaxing people to invest, on average, about $10,000 each in a number of products that she said would generate enormous returns. The main products were bingo card marking devices called daubers.

But prosecutors said O'Shei and business partners Joseph Kalczynski and Kenneth Canzoneri had misled investors by telling them the products were already manufactured and market-ready and that they had orders for millions of daubers. None of that proved to be true, prosecutors said.

During Friday's proceedings, Cosgrove repeatedly said he wasn't prepared to sentence O'Shei if she were not guilty as she had pleaded.

Rosen confirmed that Knox, a former director of the O'Shei firm, has already given the state $200,000 to repay other investors and that he personally lost another $200,000 in the O'Shei scheme. The prosecutor said that Knox paid little attention to the day-to-day operations, but that he "cooperated fully with us" in the criminal probe.

Knox was on the firm's board of directors along with O'Shei and her two major accomplices -- Kalczynski, 47, of Lancaster, and Canzoneri, 42, of North Tonawanda -- but he did not take part in any of the criminal wrongdoing, Rosen said.

Kalczynski and Canzoneri are scheduled to be sentenced in two weeks by State Supreme Court Justice John F. O'Donnell on their guilty pleas last fall to felony scheme-to-defraud charges, Rosen said.

On Friday, O'Shei lawyer Thomas J. Eoannou kept insisting to Cosgrove that she could not accept the judge's offer to let her withdraw her Dec. 20 guilty pleas and stand trial.

"She knows what she did is illegal. She knows she committed crimes," Eoannou told the judge.

Eoannou said O'Shei and her husband, Lt. Gary O'Shei, who is on disability leave from the Buffalo Police Department, were financially devastated by her failed scheme far worse than any of her investor-victims.

O'Shei has lawsuits pending against her former business partners -- except Knox -- and she and her husband both have personal injury lawsuits pending that could end up generating part or all of her court-ordered restitution, Eoannou and Rosen told the judge.


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