PANAMA CITY — As the trial of three former leaders of Coastal Community Investments moved into the middle of its second week, jurors appeared to be developing a comfort bred by familiarity.
Groups of jurors began to converse instantly in the jury box when attorneys went to sidebar Tuesday. They laughed or whispered. In some cases they’re touching each other, like when a young woman reached out on Monday to tickle the ears of an older man sitting in front of her.
By the time their deliberations on the fates of Elwood West, Terry Dubose and Frank Baker begin, they should know one another even better, since those won’t begin any time soon.
Assistant U.S. Attorney Gayle Littleton said she expects to finish presenting the government’s evidence against the former bankers Wednesday, and it’s not clear how long the defenses will take.
West, Dubose and Baker, the former CFO, CEO and attorney, respectively, of Coastal Community Investments have pleaded not guilty to 12 felonies stemming from allegations they conspired to defraud the Federal Deposit Insurance Corporation’s Temporary Liquidity Guarantee Program.
On Tuesday, two Atlanta-based attorneys with the firm of Bryan Cave testified against their former clients, including details that would seem to fall under the attorney-client privilege.
Robert Klingler and Beth Lanier were hired by Coastal to explain to the FDIC why Coastal had problems following the FDIC’s procedures after the holding company took a $3.75 million loan that was ultimately repaid by the FDIC when the banks went under in 2010.
It’s not clear from watching the trial how Klingler and Lanier have been able to square their testimonies with the apparent violation of attorney-client privilege; defense attorneys asked Judge Richard Smoak if they could bring up the topic in their cross examinations, but Smoak said that information was not for the jury.
Instead defense attorneys questioned why Klingler and Lanier didn’t confirm whether Coastal’s $3.75 million loan was actually eligible for the FDIC guarantee. They said that was not the task they were hired to perform, so they relied on Dubose, West and Baker to provide them with accurate information about the loan, which had been issued months before they got involved, Lanier pointed out.
“I didn’t go back and see if the company was correct; they’re a bank,” Lanier said, echoing Klingler’s sentiment that he would’ve expected bankers to know they’d violated the law by asserting the loan was eligible for the TLGP.
Klingler also testified that when he was seeking information about the loan from Dubose, the CEO never mentioned he’d signed a loan agreement that put the company’s shares up as collateral, which is where the loan ran afoul with regulators.
Dubose is expected to be the target of two of Littleton’s remaining witnesses, who are expected to testify that he sold them $140,000 worth of Coastal shares to avoid personal losses after it became clear the banks would fail.