PANAMA CITY — Much of Tuesday afternoon in the trial of three leaders of a failed local bank was spent on testimony about the 2008 rollout of the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program (FDIC TLGP).
And that was the interesting part.
The three defendants — Elwood West, Frank Baker and Terry Dubose — face potentially lengthy prison terms if they’re convicted of a dozen charges against them stemming from their alleged conspiracy to defraud the FDIC TLGP out of nearly $4 million when the financial markets imploded in 2008. They have pleaded not guilty and hired a legal defense team of roughly a dozen lawyers and legal professionals.
After jurors left on the first day of witness testimony, Judge Richard Smoak expressed concern the evidence presented that day had been too dense to keep jurors’ interests.
Assistant U.S. Attorney Gayle Littleton said Stephen Stallcup’s testimony would be the most dense and difficult of any of the government’s witnesses and prosecutors already had gone to great lengths to simplify it.
“It’s the hardest part to plow through, and we just have to do it,” Littleton said.
Still, jurors appeared to struggle to keep up with the testimony on ESOP (Employee Stock Ownership Plan) loans, senior unsecured debt, supervisory guidance, financial covenants and the FDIC TLGP, to say nothing of the litany of documents that accompanied it.
Many of the five men and nine women leaned forward in their chairs with their heads in their hand and their eyes on the floor, or they leaned back with their eyes toward the ceiling. They used their notepads to cover their mouths when they yawned.
Littleton attempted a pep talk for jurors.
“I know this is riveting,” she joked, “but we’re getting through it. We’re getting close.”
The rollout of the more-than-a-little unusual TLGP, under which the FDIC guaranteed certain loans between banks in an attempt to stabilize markets by making loans available to cash-strapped banks, was rapid, Federal Reserve Agent Amy Whitcomb testified.
It was announced in October 2008, but defense attorneys pointed out the final rules of the program were not settled on until the next month, and two months after that the FDIC still was issuing clarifications.
West was actually with bank regulators when the final rules passed, and he reportedly told them of Coastal Community Investment’s interest in using TLGP funds to repay a $3 million loan.
Despite a relatively hasty rollout, Whitcomb said she didn’t find the program confusing.
“I didn’t find it confusing, and I’m not a lawyer,” she said.
Littleton has announced plans to show jurors similar fact evidence — evidence not specifically related to the crimes charged that is admissible in order to prove a defendant acted with criminal intent rather than out of a mistaken understanding of the law.