NEW YORK, Sept 9 (Reuters) - A lawyer and former chief executive of Industrial Enterprises of America was sentenced to a minimum of seven years in jail Friday for stealing more than $110 million from the company and its investors.

James Margulies, 47, was convicted in July of grand larceny, scheming to defraud and falsifying business records, among other charges. He also served as chief financial officer and general counsel for the company.

In all, a jury found him guilty of 30 felony counts in what prosecutors termed a "pump-and-dump" scheme, in which Margulies fraudulently issued 43 million shares in Industrial Enterprises worth $90 million and then used the proceeds to inflate the value of the company.

Prosecutors said Margulies sold his stock at artificially high prices and used the gains to buy homes, pay for private jet travel and purchase luxury items, including a $350,000 ring for his wife.

John Mazzuto, who worked with Margulies and preceded him as CEO, pleaded guilty in January to four counts and provided key testimony against Margulies during his six-week trial.

Prosecutors had called Mazzuto the "architect" of the scheme, and Margulies told the judge in a tearful speech Friday that he never intended to hurt anyone.

"My actions were well intended at the time," he said. "By the time I recognized the potential harm of these actions, it was too late to do anything about them."

He added that he has a child with special needs and that his absence could be "devastating" to her future.

'OVERWHELMING EVIDENCE'

But Acting New York State Supreme Court Justice Gregory Carro said the "overwhelming evidence" proved that Margulies was well aware of the scheme's illegality from the outset and sentenced him to seven to 21 years in prison.

"It's probably one of the strongest cases that's ever come before this court," Carro said. "Each day, the evidence just mounted and mounted and mounted. You say that you got into this innocently, but this fraud started on Day 1."

Carro also ordered Margulies to make restitution of $7 million. His lawyers were granted a hearing later this month to discuss whether that amount should be adjusted, and Carro agreed to stay the restitution until then.

According to Mazzuto's testimony, the two men created fake minutes for board meetings that never occurred and produced phony documentation of consulting services that were never provided, all in an attempt to conceal their scheme.

Mazzuto, who violated his plea agreement when he was arrested for drunk driving earlier this year, has not yet been sentenced.

Among the victims were an Ohio teachers' pension fund and the Methodist Church, prosecutors said.

The chemicals company filed for bankruptcy in May 2009, a year before the men were formally indicted.

The case is People v. Mazzuto and Margulies, New York State Supreme Court, New York County, No. 2503/2010.

For the prosecution: Assistant District Attorneys Garrett Lynch and Harold Wilson.

For Margulies: Ira London of London & Robin Law Offices and Martin Adelman.

(Reporting by Joseph Ax; Additional reporting by Jonathan Stempel)

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