PANAMA CITY — A former executive at a failed bank is pushing back against prosecutors who want to show a jury evidence of misconduct, arguing the government can’t prove the allegations, and even if it could the evidence would only confuse and prejudice jurors.
Attorneys for Donald Terry Dubose, who is charged along with Frank Banker and Elwood West with fraud for allegedly ripping off the Federal Deposit Insurance Corporation (FDIC), filed a response to Assistant U.S. Attorney Gayle Littleton’s notice that she plans to show jurors evidence Dubose lied in order to convince a pair of local investors to buy shares in his failing bank to avoid personal losses.
Littleton contends Dubose knew regulators were about to clamp down on Coastal Community Investments, a holding company for Coastal Community Bank and Bayside Savings Bank, so he lied to sell his daughter’s shares in the company and recover the money he lent her to buy it.
Dubose is not charged with any crime stemming from the allegations in Littleton’s filing, but Littleton argues she needs the evidence to show Dubose and the other bankers purposely committed fraud against the government. Dubose contends Littleton has an ulterior motive: to paint Dubose as a liar in one instance so jurors will find it probable he lied to the FDIC.
The evidence is intended to prove Dubose’s character, he argues, not his intent to defraud the FDIC’s Temporary Liquidity Guarantee Program (TLGP), which was created to reassure lenders who were hesitant to make loans to each other during the collapse of the financial system.
“There is substantial risk that the jury will draw impermissible character inferences from the evidence — i.e., once a liar, always a liar,” attorney Claire Rauscher wrote.
Part of the problem with Littleton’s assertion that Dubose lied to sell shares and avoid personal losses is that she can’t prove it, Rauscher wrote.
Littleton alleges Dubose lied when he said a “retired old lady,” not his daughter, was trying to sell her shares, but the only evidence Dubose knew that was a lie is that the shares that eventually changed hands didn’t come from a retired old lady, Rauscher argues. Other people were interested in buying and selling shares in the bank too, including a man who wanted to sell shares his grandmother owned before her death.
“The elderly woman could have sold her shares to another buyer or could have decided not to sell,” Rauscher wrote.
Jurors will be confused by evidence and testimony about the uncharged allegations and including it will prolong any trial and force Dubose to mount a defense to evidence of conduct that he is not charged with, Rauscher wrote.
Dubose, Baker and West are scheduled for trial beginning Feb. 24, and a pretrial hearing is scheduled for Feb. 18. They are each charged with conspiracy to defraud the FDIC, seven counts of wire fraud, three counts of lying to the FDIC and aiding and abetting a false claim against the United States. They have pleaded not guilty.