AUBurgeddon: Will Bobby Lowder be the first AU Trustee to be a trusty?

In a Letter to the Editor of the Auburn-Opelika Daily News, the Tuskegee News’ Owner/Publisher, Paul Davis nails it. Davis has been a frequent and vocal critic of Bobby Lowder’s interminable micromanagement of the affairs at Auburn University, and was the author of this seminal piece exploring the connections between Bobby Lowder, indicted super-lobbyist Robert Geddie, and the Tigers Unlimited Foundation, once headed by current Auburn Athletic Director, Jay Jacobs.

Every serious legal observer of the Taylor Bean & Whitaker and Colonial cases believe that the federal government is slowly but surely closing in on their biggest target. Sometime this summer, the last remaining assets of Colonial are likely to be liquidated in federal bankruptcy court, and the once mighty Colonial will be no more.

When that happens, all of the documents and evidence relating to Colonial’s final, nefarious dealings will finally see the light of day. They will no longer enjoy the shield of attorney-client privilege that has kept them from the public view since August 2009.

Several people have written and asked why I Bleed Crimson Red hasn’t weighed in on the recent appointment of Lowder to yet another term on the Auburn University Board of Trustees. The reason: I have no position one way or the other. As I see it, this is a matter that teh fambly needs to resolve.

If they want such a Shakespearean figure to remain on the governing board of their university, so be it. Maybe they deserve each other, or maybe they’re ready for some new blood.

I don’t care one way or the other.

I do however, think Davis’ question in the OA News bears repeating: Will Lowder be our first trustee to become a trusty?

Exit Question: Does Lowder’s nomination even reach the Senate floor and if so, does he survive a straight up-or-down vote? It’s really up to my barner friends to decide.

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COLLEGEBOOKRENTER.COM Going to college? Got a kid going to college? You can't afford not to click this!

BingoGate: McGilley draws a bead on McGregor

There are many targets of opportunity in the unfolding Alabama bingo corruption case set to go to trial on June 6. But none were bigger than Milton McGregor and Ronald Gilley, the two casino owners and developers who are alleged to have assembled a network of lobbyists and set out to bribe legislators in order to get a constitutional amendment on the 2010 ballot that would have allowed electronic gambling in establishments owned, operated and/or planned by the two.

Now one of the two, Ronald Gilley, has elected to plead guilty to 11 charges in connection with the case and in the “factual basis” for his plea agreement, it’s clear that the two allies are now enemies.

A key statement in that factual basis is the following: “[This factual basis] is a summary, made for the purpose of providing the Court with a factual basis for the defendant's guilty plea to the charges against him. It does not include all of the facts known to the defendant concerning activity in which he engaged.”

In other words, when he takes the stand, Gilley will provide testimony not laid out in public court filings. The defense will have access to his proffers [information he provides to investigators and which the prosecution intends to present at trial], but a great deal of the documentation in this case has gone onto the docket under seal, preventing public access and publication by this site and the news media.

There will be high drama in the courtroom in June.

Milton McGregor is man with a long reputation for influence-peddling when it comes to gambling in the state of Alabama. In fact, he’s known for peddling influence in a host of other money-making opportunities in the state.

He once sat on the board of directors for Colonial BancGroup and served on that board’s Compensation Committee. That’s right, ladies and gentlemen. A man who will stand trial about a month from now—on charges of money laundering, conspiracy and bribery—deliberated on how the employees and executives of the sixth largest bank to fail in American history would be paid. He is also known as a big time contributor to one of the two largest athletic programs in the state—Auburn University.

Gambling. Mortgage and bank fraud. College athletics. If there was money to be made in this state, Milton McGregor probably had a finger in the pie, and all three are currently under investigation. McGregor has been a busy fellow, hasn’t he?

But now, his one-time protégé has apparently turned against him, and the protégé appears to be aiming his testimony squarely at the man who helped finance his Casino Crossings “entertainment extravaganza” and put him on the map of power players in the state. But in an ancillary development, Gilley’s testimony also puts a great deal of pressure on those who worked the “McGregor side” of the two-legged conspiracy. Mssrs. Coker and Geddie are now on the clock. Do they roll on the big guy too, or do they go down with him under the blazing testimony of Gilley, Jarrod Massey and Jennifer Pouncy?

Exit question: Mr. McGregor surely has knowledge of a case or cases unrelated to the bingo case. Perhaps one or more of these represent a bigger prize for a highly politicized Department of Justice, eager to gain convictions on the banking crisis’ old white guys that nearly wrecked our economy from Fall 2007 through Summer 2009.

Wonder who that could be.

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ColonialPalooza: Farkas GUILTY on all counts; what it means going forward

Breaking news by Suevon Lee, the Ocala Star-Banner reporter who has been covering this story from Day One:

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According to Peter Carr, a spokesman for the U.S. Attorney's Office for the Eastern District of Virgina, the verdict was returned 5 p.m. Tuesday, after a full day and a half of deliberations that began Monday afternoon at the conclusion of a 10-day trial at the federal courthouse here.

A sentencing date is also being set for Farkas, 58, who faces up to 30 years in prison on each count when he appears before U.S. District Judge Leonie M. Brinkema on a future date.

In what prosecutors have described as the “largest and longest running fraud scheme in the country,” Farkas, with the help of several co-conspirators, was accused of selling fake loan assets to Colonial Bank, once one of the country's largest, and diverting funds from a company-owned financing vehicle to help cover Taylor Bean's operating expenses.

 

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In response to comments, emails and tweets:

Farkas’ conviction may or may not have any impact on whether the feds decide to pursue senior officials at Taylor Bean’s partner, Colonial Bank. Colonial officials have already acknowledged that they are the target of an ongoing federal probe into potential banking and securities irregularities.

Also, both Colonial and Taylor Bean are in Chapter 11 Bankruptcy, a process that should result in final liquidation of those two companies’ remaining assets sometime this summer. A great deal of evidence is behind the shield of attorney-client privilege in those cases. In fact, Farkas’ own defense team sought to compel the release of those documents before the trial began, claiming that they could contain information needed for his defense. It’s a fair assumption that these materials will no longer enjoy that privilege once the bankruptcy proceedings have run their course.

Could they be used to advance the ongoing federal probe and result in criminal indictments? Perhaps. There’s also a chance that the evidence could be exculpatory for Farkas, giving him ammunition as his case winds through the appeals process.

There’s still a lot of intrigue left.

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ColonialPalooza: Lee Farkas’ testimony concludes with no smoking gun

Lee Farkas spent nearly five hours on the stand Friday, defending himself against federal charges that he directed a $1.9 billion scheme to sell phony loans to Colonial Bank, diverted funds out of short-term financing arm Ocala Funding LLC, and defraud the US TARP program.

To our dismay, he did not deliver any smoking gun, directly linking any of the senior managers or directors of Colonial BancGroup to the massive fraud scheme that toppled both the bank and Taylor Bean & Whitaker, the mortgage giant Farkas grew into the largest non-depository lender in the country.

As noted here yesterday, Farkas did testify that the check kiting scheme was authorized by the Montgomery-based bank.

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So far, Farkas has claimed that "Plan B", which prosecutors allege was a way to sell Colonial hundreds of millions of dollars in "fake" loans, was the brainchild of Cathie Kissick, the head of Colonial's Orlando-based Mortgage Warehouse Lending Division, whom he first met in the mid-1990s before Taylor Bean exploded into the mortgage lender it became.

"She was very creative in ways to come up with ways for us to fund more loans," he said.

As for the overnight sweeping, which prosecutors claim was funneling money from Taylor Bean's investor funding account into its master account at Colonial, allegedly to help cover operating expenses at the company, Farkas said this all happened under someone else's direction.

"It was someone at Colonial who had authority to make those transactions at the time," he said, adding he sent an internal team from Taylor Bean to "investigate" these overdrafts but never received an explanation that met his level of satisfaction.

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He also clearly believed that federal investigators were examining Colonial’s activities during the failed attempt to secure TARP funding, and the prosecution appeared to stipulate that belief by providing jurors with an August 2009 recording of a conversation:

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[Sean] Ragland's testimony followed statements from Desiree Brown, Taylor Bean's former treasurer. The jury heard a tape recorded conversation between Brown and Farkas on Aug. 4, 2009, a day after FBI agents raided Taylor Bean's Ocala headquarters and Colonial Bank's Mortgage Warehouse Lending Division in Orlando.

"The only thing they're looking at is Colonial and nothing else," Farkas tells Brown on the recorded call, in reference to the bank's failed efforts to receive TARP funding.

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There are about 732 different lines of speculation as to why the prosecution didn’t delve deeper into this relationship and entangle the highest levels of senior management at Colonial, especially after noting that Farkas was allegedly conspiring with a “Senior BancGroup Officer” until nearly the last day before the raids on offices in Florida.

Here’s one line of speculation: Doing so would have provided the Farkas defense an avenue towards establishing reasonable doubt and risking an acquittal.

As to why the defense didn’t take that path on its own… It’s anybody’s guess as to why, on the stand, Farkas didn’t point to Montgomery, Alabama and exclaim “he did it! I’m innocent!” Why not enter testimony and documentary evidence showing the intense and excrutiatingly detailed control the Micromanager exercised over his empire? It appears to be a missed opportunity, and it may result in Farkas’ conviction. Does that mean Bobby Lowder escapes with his skin intact?

Hardly.

In its bankruptcy filings,  Colonial has acknowledged that it is the subject of Dept of Justice criminal probe into to its mortgage warehouse lending division and alleged accounting irregularities. At the minimum, Colonial executives face jeopardy under the Sarbanes – Oxley Act. Colonial’s assets are set to be liquidated in Chapter 11 proceedings in the following months. When that’s done, a ton of documents and other evidence will emerge from behind the shield of attorney-client privilege and the picture will  become much clearer.

Farkas’ defense team sought to speed that emergence process in pre-trial motions to compel access to those documents, but the motion was denied. Perhaps that’s why the Farkas team opted not to raise the matter during trial. It could be fodder for appeal should Farkas be convicted.

Stay tuned. There is still a long way to go.

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ColonialPalooza: Yes, Farkas is on the stand today

Update to an earlier post. Scroll down for updates.

"It is always the defendant's choice," says his attorney, William Cummings.

It’s usually a train wreck when the accused takes the stand in his own defense because it opens him up to cross-examination by the prosecution. But in this case, Farkas may have no choice. The prosecution has paraded a slew of his former employees and business associates, who’ve outlined an extravagant lifestyle and inner circle fringe benefit spending that would make Fiesta Bowl executives envious.

The prosecution rested Thursday. The defense began its case Thursday with three witnesses: two former Taylor Bean employees and an Atlanta-based Accountant who testified that Colonial received as much as $20 million more than was withdrawn in the allegedly fraudulent transfers.

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In her testimony later Thursday afternoon, Karen Fortune, the defense expert witness, said according to her analysis, Colonial, as the result of all these transfers, received back more than $20 million in cash than it advanced to Taylor Bean.

She acknowledged on cross-examination, however, that her job was not to make any evaluation as to the validity of the transactions, just assess the amounts Colonial had advanced and ultimately received back.

"It's not your testimony here that, as long as Colonial makes money, crime pays, is it?" Assistant U.S. Attorney Charles Connolly posed to the witness.

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Developments throughout the day. Suevon Lee, the Ocala Star-Banner reporter covering the trial should have an update on whether he takes the stand.

Getcha some popcorn, because there's another big fish swimming around out there that the government would like to get the straight skinny on, and Farkas almost certainly has the goods.

UPDATE: As expected, Mr. Farkas is indeed on the stand.

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So far, Farkas has claimed that "Plan B", which prosecutors allege was a way to sell Colonial hundreds of millions of dollars in "fake" loans, was the brainchild of Cathie Kissick, the head of Colonial's Orlando-based Mortgage Warehouse Lending Division, whom he first met in the mid-1990s before Taylor Bean exploded into the mortgage lender it became.

"She was very creative in ways to come up with ways for us to fund more loans," he said.

As for the overnight sweeping, which prosecutors claim was funneling money from Taylor Bean's investor funding account into its master account at Colonial, allegedly to help cover operating expenses at the company, Farkas said this all happened under someone else's direction.

"It was someone at Colonial who had authority to make those transactions at the time," he said, adding he sent an internal team from Taylor Bean to "investigate" these overdrafts but never received an explanation that met his level of satisfaction.

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Who within the Colonial inner circle would have had sufficient authority to ok a check kiting scheme that rose into the ten-figure range, generating gobs of cash in overnight interest fees?

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ColonialPalooza: “I felt powerless to stop it.”

Former Colonial Senior Vice President Catherine Kissick told jurors yesterday that she felt powerless and had no choice but to continue going along with an ever growing fraud that ended up toppling the largest non-depository mortgage lender in the United States and wrecked the once mighty banking empire founded and run by Auburn University megatrustee, Bobby Lowder.

Kissick was testifying in the the trial of Lee Farkas, former CEO of Taylor Bean & Whitaker. TBW had become Colonial’s largest mortgage lending customer of the financial giant’s warehouse loan business.  Colonial financed billions in mortgages originated by TBW, many worthlessly toxic mortgages that were later packaged and sold to Fannie Mae and Freddie Mac. But financial difficulties at TBW were hidden in an elaborate, multimillion dollar check kiting scheme until the banking crisis brought such intense pressure that the scheme was impossible to continue.

Prosecutors also allege that Farkas, working in close concert with a “senior Colonial BancGroup officer” concocted a second scheme to defraud the United States’ Troubled Asset Relief Program out of hundreds of millions. Had the scheme gone undetected, Colonial Bank would have received a massive infusion of capital that may have allowed both firms to survive the crisis. However, federal authorities uncovered the scam, raided TBW and both companies fell into bankruptcy in the summer of 2009.

In another development, the Farkas defense team has won its battle to gain access to documents and email evidence flowing between Colonial and attorneys at Akerman Senterfitt LLP. Via Law360.com (subscription required), Farkas’ attorneys said the needed the evidence to bolster their defense, and that the preparation of Farkas’ defense had been hampered by those documents being placed behind the shield of attorney client privilege.

It’s a win for Farkas and a loss for Colonial and especially for Bobby Lowder, who most believe is the “Senior Colonial BancGroup” official that the government claims Farkas was conspiring with, right up until the day the FBI raided offices, carted off boxes, and padlocked doors.

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Colonial Palooza: Farkas Trial continues, and Lee gets bad news

It was Day #3 in the Lee Farkas trial, where the former Taylor Bean & Whitaker CEO is being tried on multiple counts of bank, wire and securities fraud in Alexandria, VA. Reporter Suevon Lee continues to provide coverage of the case.

The star witness today was former Colonial executive Teresa Kelly, who explained to the jury how TBW and Colonial executives perpetrated a fraud that brought down the once-mighty Colonial BancGroup and TBW, which was once the nation’s largest non-depository mortgage lender.

In another development, Farkas got some bad news as the trial began this week. He had earlier filed a motion to exclude expert testimony. His attorney had argued that witnesses the government had identified as “experts’ were actually three senior managers from Freddie Mac and Ginnie Mae.

William Cummings, Farkas’s defense lawyer, argued that the government was trying to “disguise” these witnesses as “lay” experts in order to get around tighter disclosure standards.

In criminal trials, expert witnesses have greater latitude to testify to their opinions on subject areas of their expertise.

That motion was denied.

This almost certainly forces Cummings to put his client on the stand, and who knows what happens then. A defense lawyer never wants his client under cross examination, and neither does anyone else who may (or may not) be an unindicted co-conspirator. Especially if the defendant on the stand is trapped and has damning information on someone else.

It’s a dumpster fire. You never know what’s gonna blow or who it’s gonna burn.

The government has never identified the “Senior Colonial BancGroup Official” who, almost until the last day, was allegedly in constant communication with Farkas and other TBW executives about the fraudulent TARP application.

I won’t blog this trial daily, as I’m much too far away and depend on the media and court resources to keep up with it. I will however, keep readers posted on significant developments on this and other cases surrounding a curious group of individuals from central and east Alabama.

Stay tuned, sports fans. It’s gonna be a busy spring and summer.

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ColonialPalooza: Farkas Trial, Day 2

April 5 (Bloomberg) -- The former president of Taylor, Bean & Whitaker Mortgage Corp., Raymond Bowman, said ex-Chairman Lee Farkas ordered data sent to Colonial Bank for nonexistent loans in an effort to cover up the company’s growing deficits.

Bowman, 45, testifying in federal court in Alexandria, Virginia, today for the government, said Farkas in 2003 explained that the sale of “dummy” loans, known as Plan B, were necessary to prevent Taylor Bean from going out of business.

“I told him I didn’t think it was a good idea,” said Bowman, who pleaded guilty last month to conspiracy and making false statements. Bowman said he thought the plan was unethical and “possibly illegal.”

Read the rest here.

Suffice it to say that if the CEO of Taylor Bean was running things on his side of the scheme, the micromanager and CEO of Colonial BancGroup was running things on the Montgomery side.

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ColonialPalooza: Chief Financial Officer Sarah Moore on the stand

The Ocala Star-Banner’s Suevon Lee is in Alexandria, reporting on the trial of Lee Farkas, the man prosecutors say was the chief architect of a nearly $2 billion fraud scheme between his former company, Taylor Bean & Whitaker, and executives at Colonial BancGroup.

As the nation’s financial crisis worsened, both companies failed and toppled Bobby Lowder’s banking empire. Five former executives of the two firms have already pleaded guilty.

The government’s first witness is former Colonial CFO Sarah Moore.  Her testimony is expected to be a key part of the prosecution’s case.

CORRECTION: the sentence above has been revised to correct a typographical error in the first version of this post. Ms. Moore has not pled guilty to any crime, nor has she been charged with one.  We regret the error and apologize to Ms. Moore.

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TARP, the Troubled Asset Relief Program, is a federal program to buy assets and equity from financial institutions to strengthen the financial sector. It was part of the government's measures in 2008 to address the subprime mortgage crisis.

Sarah Moore, the former chief financial officer of Colonial, was the government's first witness. She said an application for TARP funds had been filed with the Federal Deposit Insurance Corp. and other regulators. Along with the application were balance sheets listing supposedly worthless assets.

"If a bank employee and a bank customer are working together, it's very difficult to find errors or omissions [on a financial filing]," Moore said. "A customer is typically a check on a bank and a bank employee is a check on the customer. If these two are working together, it makes it very difficult to find any issues."

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The trial is expected to last about three weeks.  Moore continues her testimony today.

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ColonialPalooza: Farkas seeking to bar testimony from Ginnie Mae and Freddie Mac “experts”

It was a busy news week, so please excuse the tardy nature of this report.  Earlier this week, former CEO of Taylor Bean & Whitaker Lee Farkas sought to bar the government from using executives of Ginnie Mae and Freddie Mac as expert witnesses in his upcoming trial on charges of bank, wire and securities fraud.

Jury selection in the trial is scheduled to begin Monday in Alexandria, VA before US District Judge Leonie Brinkema.

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Farkas’s legal team wants to exclude the testimony of several potential government witnesses, among them three senior managers from Freddie Mac and Ginnie Mae. Taylor Bean bundled mortgages into securities and sold them to investors such as Freddie Mac. Many of those mortgages were guaranteed by Ginnie Mae.

William Cummings, Farkas’s defense lawyer, says the government is attempting to “disguise” these expert witnesses as “lay” witnesses in order to circumvent heightened disclosure standards. In criminal trials, expert witnesses have greater latitude to testify to their opinions on subject areas of their expertise.

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“In addition, because of this reality, he will be forced to take the stand in his defense thus infringing on his constitutional right against self-incrimination,” Cummings said in court papers.

All things being equal, Cummings said, he’d prefer that Farkas not testify.

“As a criminal defense lawyer, the general rule of the thumb is to keep the client off the stand,” Cummings said in an interview Thursday.

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Cummings has repeatedly sought to slow down the pace of the proceedings to little avail. In recent weeks, a number of defendants—Taylor Bean’s former president and treasurer, as well as the former head of Colonial Bank’s mortgage warehouse lending division—have pleaded guilty to criminal charges connected to the scheme. Colonial, an Alabama bank that collapsed in 2009, was Taylor Bean’s main lender and provided the company with $3 billion in mortgage financing.

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In the media coverage of the plea agreements, Cummings admitted that the government has approached him with the possibility of a plea agreement, but Cummings says nothing has been formalized and no agreement has been reached. Without such a deal, Farkas faces the prospect of spending the rest of his life in the federal lockup if he’s convicted of the 16 charges against him.

Farkas is a “big fish,” and prosecutors are less willing to make a deal with such a high profile target. That is, unless the “big fish” can help them indict and convict an even bigger fish.

As noted here last month,  there haven’t been a lot of convictions or guilty pleas regarding the billions of dollars worth of alleged fraudulent applications for relief under the US’ Troubled Asset Relief Program (TARP). There have been a few successes and a few disappointments, and  political pressure is growing to get a scalp from someone sitting at the top of the financial institutions that ultimately failed. The problem is that many of the top executives most often mentioned as TARP money miners are Wall Street executives who have poured millions into political campaigns for federal offices over the last several cycles.

Cummings might be making a good decision for his client, but hurting the chances of getting to some of the targets much higher up the food chain. There has been plenty of ink and bandwidth spent on exposing the Government Sponored Enterprises (GSE’s) wheeling and dealings. Getting these people on the stand—even as expert witnesses—might give Cummings the chance to put these people on the spot.

Farkas knows what these people were doing.  Farkas knows what Bobby Lowder was doing, too. The question is not whether the government really wants Farkas’ scalp, but whether they’re willing to “go there” and make a deal with him in order to get Lowder and get the execs at GNMA, FNMA and FHMC. Maybe the former. The latter, maybe not so much.

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More details of Colonial investigation emerge in plea agreement

As reported here yesterday, former Taylor Bean & Whitaker executive Desiree Brown agreed to plead guilty to federal fraud and securities charges in an Alexandria, Virginia court hearing. As a result of that plea deal and from news reports covering the hearing, some interesting new details are emerging.

From the Bloomberg story that hit yesterday afternoon, it is apparent that the scheme to defraud the US Troubled Asset Relief Program involved more people than just Lee Farkas and Brown, and Farkas himself has entertained offers for a deal.

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Until today, Farkas, 58, was the only person charged in what the government said was a massive scheme to deceive financial firms and TARP by covering up shortfalls at Taylor, Bean, once the largest non-depository mortgage lender in the U.S., according to the SEC’s statement on the case. Farkas was indicted on 16 counts in June and faces the possibility of spending the rest of his life in prison, according to a Justice Department statement.

“Were there other people besides Mr. Farkas who were involved in this scheme,” U.S. District Judge Leonie M. Brinkema asked Brown at the plea hearing?

“Yes ma’am,” Brown answered.

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In the criminal case, Brown admitted that from late 2003 through August 2009, she, Farkas and other unidentified individuals conspired to defraud Colonial Bank, Colonial BancGroup Inc., shareholders of Colonial BancGroup, TARP, and investors in Ocala Funding LLC, which included Deutsche Bank AG and BNP Paribas SA, according to Brown’s statements in court and a Justice Department statement.

One of the goals of the scheme was to obtain funding for Taylor, Bean to help cover expenses for operations and “servicing payments owed to third-party purchasers of loans and/or mortgage-backed securities,” the department said in the statement.

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On June 15, 2010, after nearly a year of investigations, depositions and grand jury hearings, the Department of Justice indicted Lee Farkas, Chairman and CEO of Taylor, Bean & Whitaker Mortgage Corp, which at the time was one of, if not the largest originator of home mortgages in the country.  Farkas and Taylor Bean were one of Colonial's largest customers, using Colonial’s “warehouse” lending unit to finance the origination of mortgages which Taylor Bean then packaged and sold to Fannie Mae and Freddie Mac. 

In the indictment and the accompanying SEC filings, the government contends that Farkas and an unnamed “Colonial Bank Officer” conspired and engaged in a complicated check kiting scheme to conceal Taylor Bean’s nefarious financial dealings.  Later, as things began to unravel during Spring 2009, court documents show that Farkas conspired with a “Senior BancGroup Officer” to conceal a fraudulent scheme to obtain TARP funding from the government.  It is not known who the “Colonial Bank Officer” was that helped Farkas conceal transactions from regulators.  The “Senior BancGroup Officer” is believed to be Bobby Lowder.

More from the Bloomberg story:

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William Cummings, a lawyer for Farkas, attended today’s hearing. In an interview, he said he expected more guilty pleas before his client goes to trial. He said his client, who has pleaded not guilty, has had some settlement discussions with the government though “nothing has come out of it yet.”

Brown said in court that she has been talking with the government for the past six months. Brown was vice president of special projects at Taylor, Bean starting in October 2002. In 2004, she was named controller and then treasurer.

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While it is still much too early to be certain, the details emerging from yesterday’s hearing indicate that the noose is tightening around the neck of the former CEO of Colonial BancGroup.  Brown acknowledges a broader conspiracy to defraud TARP and Farkas himself is considering copping to a plea deal.

It bears noting that as a non-depository mortgage company, Taylor Bean was not eligible to receive TARP funding. That money would necessarily have gone to Colonial, and Mr. Micromanager—who is known to make calls to political figures when their $50,000 loans are 15 days late—would absolutely been in near complete control of any plans to secure the hundreds of millions sought by Colonial.

Extra Point: What a Shakespearean tragedy is unfolding here.  Lowder, the micromanager, would surely be a key player in any NCAA and legal wrongdoing at Auburn University. After all, he is the Tiger of Trustees at the school, controlling the school’s finances and pumping millions into the Tigers Unlimited slush fund foundation. The micromanager was also key to Colonial’s rise and meteoric crash two years ago.  The man’s friends say he has had two great loves in his life: His banking empire and Auburn.

But his micromanaging—and some say his arrogance—may lead to the destruction of them both.

The bard himself would weep.

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ICYMI: Mortgage executive with ties to Colonial Bank failure will plead guilty

In Case You Missed It® yesterday, news hit the afternoon wires that former Taylor Bean & Whitaker executive Desiree Brown will plead guilty in a special hearing set for 9:30 am Thursday, February 23. Brown was once the Treasurer of the failed Florida mortgage banking giant that went under in August 2009 and took the mighty Colonial BancGroup with it.

(ed. note) In response to numerous emails PM’s and Tweets: Yes, this is a huge development. While it wasn’t unexpected, the timing is interesting as Farkas is scheduled to stand trial in six weeks on charges of bank and wire fraud. But most importantly As Taylor Bean’s Treasurer, Ms. Brown had to account for every nickel of the company’s transactions with Colonial, and as discussed below, those transactions led to billions of losses and ultimately led to a colossal bank failure.

From the Reuters story that first broke the news:

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* Filings say ex-treasurer received over $1.5 million

* Brown due in court Thursday for plea agreement hearing

By Jeremy Pelofsky

WASHINGTON, Feb 22 (Reuters) - The former treasurer of the now-defunct Taylor, Bean & Whitaker Mortgage Corp, Desiree Brown, is set to enter a plea agreement to federal criminal charges on Thursday, according to court records released on Tuesday.

No details of the criminal charges were available but U.S. Judge Leonie Brinkema has scheduled a hearing for 9:15 a.m. (1415 GMT) on Thursday in the U.S. District Court for the Eastern District of Virginia. Such hearings are typically held when a defendant is expected to plead guilty.

Taylor, Bean & Whitaker filed for bankruptcy in August 2009 and federal prosecutors have accused the former chairman of the mortgage firm, Lee Farkas, of orchestrating a scheme that led to billions of dollars in losses that are still being tallied.

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It’s worth noting that Court authorization for the Title III wiretaps—the recordings that are now the central body of evidence in the BingoGate case—also came from the U.S. District Court for the Eastern District of Virginia. But I digress…

Taylor Bean was the largest non-depository mortgage lender in the country when it went belly up nearly two years ago. The company was also Colonial BancGroup’s largest “mortgage warehouse” customer. Mortgage warehousing was a common practice in the period just before the credit market meltdown, wherein depository banks such as Colonial made short term loans to mortgage originators.

The originators then lent to homebuyers and refinancing homeowners, including huge numbers of subprime borrowers. The loans were then packaged and sold to Fannie Mae, Freddie Mac and Ginnie Mae. The warehouse borrower then repaid the loans (with interest and certain transactions fees) and the cycle began again.

In its indictment of Taylor Bean’s CEO Lee Farkas, and in accompanying court documents filed by the Securities and Exchange Commission, federal authorities allege that Taylor Bean executives conspired with as yet unnamed “senior Colonial BancGroup executives” to run a check kiting scheme that was so large it would make EF Hutton blush. But the feds also allege that Taylor Bean executives conspired with—or at least acted with the knowledge of—those same executives to defraud the US’ Troubled Asset Relief Program to the tune of hundreds of millions of taxpayer dollars.

Regulators discovered the sham TARP operation and Colonial never received a bailout. In August 2009, federal authorities raided Taylor Bean’s offices and collected scores of boxes of documents.  The company filed for bankruptcy shortly thereafter, and Colonial BancGroup followed suit days later, setting up the worst bank failure in 2009 and the sixth largest in US history.

Colonial BancGroup officials have publicly acknowledged that they are the target of a federal criminal probe into possible bank and wire fraud. Indictments are widely expected, but there is no timetable for when those might come down.

Exit question: Micromanagers who make personal phone calls on $50,000 loans that are 15 days past due usually know when hundreds of millions are being moved around in elaborate shell games, don’t they?

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Coincidence: Dr. Treevorkian’s new lawyer has connections to Bobby Lowder

Amid news reports that Dr. Treevorkian, aka Harvey Almorn Updike, has gone hermit and is now living in a van down by the river or something, the man accused of attempted herbicide and criminal mischief in the poisoning of the Toomer’s Corner has finally found a lawyer.

The first three attorneys appointed by the court to represent him have, one by one, asked to be excused from the case due to alleged conflicts of interest and irreconcilable differences.  The first two claimed conflicts of interest based on ties to Auburn University. The third cited “irreconcilable differences” which, to me, suggests that despite never apparently attending class at Auburn, he’s all in with teh fambly (If you think that’s something, wait until we get to jury selection in the Lee County courthouse).

Along comes Glennon Threatt, Jr.

Mr. Threatt, as you may recall, represented former Birmingham Mayor Larry Langford in his trial on federal bribery and corruption charges in 2009. Langford was convicted of those charges and later sentenced to 15 years in the federal pen, where he remains to this day, professing his innocence.

Langford also made news when a lawsuit was filed, alleging that he walked into an Alabama casino and was escorted to certain bingo machines, that delivered eye-popping jackpots in the tens of thousands.

Take a wild-assed guess at who owned the casino at the center of that controversy.  If you guessed Milton McGregor, you win the Daily Jackpot and will receive one free year of IBCR blog content! Stay on the line and we’ll get your details…

But back to Dr. Treevorkian’s new defender, Glennon Threatt, Jr.  He is not a first, second or even third year criminal defense attorney who works for peanuts taking court appointed lawyer assignments. The dude is a white collar criminal defense lawyer and is reportedly well compensated for his services in criminal defense. Maybe he can afford to take Dr. Treevorkian’s case pro bono, but it’s curious that such a high powered white collar criminal defense attorney is defending a man accused of the most notorious incident of criminal mischief in modern state history.

Or, is it?

According to this website, Mr. Threatt either once worked for or is still affiliated with the law firm of Miller Hamilton Snider & Odom, one of Alabama’s largest and most prominent law firms. One of the founders of the Miller Hamilton legal juggermaut was Jack Miller.

Who was Jack Miller?

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Lowder is now coming home to his beloved Auburn. He is building a mansion in the scholarly neighborhood of Pinedale, home to many present and former Auburn professors and administrators.

There goes the neighborhood.

Drive by and look at the place. During the past week, from 30 to 40 cars and trucks have crowded the block in a mad scramble to finish work on the house.

It’s rather a sad spectacle. Without his big money, his big bank, his big jet, his powerful control of the AU board, I doubt he will find many real friends. Money does buy friends, but those so bought are as plastic as Colonial credit cards.

Coming to Auburn, he has said he can remain more focused on family and Auburn University. Maybe the family side will work out; being more focused, involved in Auburn will not.

That focus may have played a role in the loss of his bank. His input at AU is not wanted and he will quickly get that message. His power on the “new” board is all but gone.

He lost the left side of his brain with the recent death of Jack Miller, Lowder’s $4 million-per-year Mobile lawyer. Gone is his chief ally in the Alabama Senate, Lowell Barron, and an Auburn trustee about as slimy as Lowder. Death claimed two good guys on the board, Jack Venable and Charlie Glover.

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There are other publications documenting the relationship between Lowder and his “left brain”. As with many of Lowder’s associates, Mr. Miller served on the AU board of trustees and had a multimillion dollar business relationship with the Money Man.

Mr. Miller also once employed the man now charged with defending Dr. Treevorkian against charges that he poisoned Auburn’s beloved 130-year old Live Oaks at Toomer’s Corner. If I was Updyke, I think I’d go live in a van down by the river, too.

There are just too damned many coincidences, with too many of the same faces showing up the most unusual places.

Exit question:  Does Mr. Threatt use the TiderInsider.com postings as a means of creating reasonable doubt at trial, or does this case even go to trial?

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Mortgage exec tied to Colonial Bank failure will plead guilty

This not at all a surprising development, but it does come at a very curious time.  According to Reuters, former Taylor Bean & Whittaker executive Desiree Brown will enter a guilty plea to federal financial wrongdoing charges and cooperate with prosecutors.

There are no details regarding the charges Brown will cop to, but Judge Leonie Brinkema has a hearing set for 9:15 am EST Thursday in the District Court for the Eastern District of Virginia.

A similar hearing scheduled in the USA vs. McGregor et al case (BingoGate) tipped us off that Jarrod Massey was pleading guilty.

Taylor, Bean & Whitaker was the largest non-depository mortgage lender in the country when it failed in August 2009. DOJ obtained indictments against its former CEO Lee Farkas of orchestrating a complicated fraud scheme that led to billions of dollars in losses that still haven’t been counted yet.  TBW’s failure led to the failure of $26 billion Colonial, which was the largest bank failure in 2009 and the sixth largest in US history.

Included in the Farkas indictment are statements implicating “senior executives” of Colonial Bank and Colonial BancGroup, the bank’s holding company.  Colonial’s former CEO is none other than Bobby Lowder, the megabooster accused of micromanaging his bank and Auburn University.

Ms. Brown will likely plead guilty to pilfering TBW accounts for about $1.5 million, but she is also expected to have wide ranging knowledge of the various schemes alleged to have been devised by Farkas and Colonial execs.

Also on Colonial’s Board of Directors:  Former Auburn Head Football Coach Pat Dye, and casino  owner, political powerbroker, and Auburn booster, Milton McGregor. As luck would have it, these gentlemen also have demonstrated business relationships with Robert Geddie, another Auburn booster and graduate. Geddie and McGregor stand trial this summer in the BingoGate case.

Regular readers of this blog already know how to connect the dots.

Exit question: If Farkas sees that his goose is cooked, does he roll on the Money Man?

h/t Crimson Corner Blog.

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AUBurgeddon: Newton investigation’s costly price tag and media fail

In a story from the Birmingham News’ Jon Solomon today, we learn that Auburn University has shelled out a hefty $170,000 or so in legal fees in connection with the NCAA investigation of allegations surrounding former Auburn Quarterback, Cam Newton.

That’s not pocket change, and it looks like there’s a lot more moolah to be spent in the months ahead.  The fact that there’s to be a lot more legal expenses going forward might be news to some people, as is explained in a little better detail later on.

Solomon says:

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Auburn University says it has spent approximately $170,000 in attorney fees on the Cam Newton case during the past 4 months.

Auburn Senior Associate Athletics Director Scott Carr said Tuesday the fees started in mid-October and have all gone to Lightfoot, Franklin, White LLC, the university's Birmingham-based legal counsel.

Auburn provided the information in response to an open-records request by The Birmingham News.

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By way of comparison, Solomon notes that the University of Alabama spent a total of $188,443 on the textbook case. He does not note that the textbook matter is altogether closed.

Which leads us to another little nugget of gold provided to the state media cartel’s readers, courtesy of a quote from Mike Slive. Slive was interviewed yesterday by ESPN’s SEC Beat Writer, Chris Low.

The following exchange takes place, and the topmost is repeated in Solomon’s story:

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Does the NCAA’s investigation of Cam Newton and his father, Cecil, remain open?

MS: You’re going to have to ask them, but nobody has written me a letter that says it’s over.

How did you feel about Cecil being there at the end of BCS National Championship Game after telling Auburn officials he would not attend?

MS: If it was up to me, I would have preferred that he not be in the stadium.

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OMG! WTF! You mean the NCAA isn’t through investigating Cam Newton and Auburn?!? Hasn’t fellow cartel writer Charles Goldberg of the venerable Auburn Bureau told us over and over and over again that the NCAA has already investigated the matter and “found nothing wrong?”

Has the fambly called in the dogs and pissed on the fire too soon, Nelly?

This is a dark, dark day for denizens of the 334 area code, folks. Especially those who don’t surf the net or read reputable national sportswriters such as Thayer Evans of Fox Sports or Pete Thamel of the New York Times. These and other notable journalists have reported on the very active, very much ongoing nature of the NCAA investigation. Conversely, the state media cartel has cheerfully kept up the fambly meme that the NCAA already finished it’s looky-see and declared them all clean and innocent.

It looks like that $170,000 is a mere down payment. A retainer fee, if you will. Because the ongoing nature of the NCAA investigation of the Newtons and Auburn isn’t all the state media cartel fails to report on.

They fail to note that Lightfoot Franklin & White is the same firm representing Auburn Trustee, booster and puppeteer Bobby Lowder in the Colonial Bank Employees’ class action lawsuit against him, in which the former employees allege that he mismanaged, swindled and otherwise ruined their financial interests in running his bank into the ground.

They fail to note that the sitting Athletic Director, Jay Jacobs, once ran the athletic department’s fundraising colossus, Tigers Unlimited Foundation, which paid out millions to the lobbying firm of Robert Geddie. You know… the Auburn graduate who is one of the 11 people indicted and charged in the BingoGate case. For the slower folks in the 334 Fambly, let me spell that out for you in clear, fifth grade language: Your AD has a documented business relationship with a man who will stand trial as part of a conspiracy to commit fraud, bribery, extortion and money laundering. That is, unless he flips. After all, he’s being represented by the same firm who represents Auburn in the Cam Newton case and Lowder in the Colonial class action case. Franklin’s skills as a negotiator are legendary in the legal community. He represents his clients professionally and thoroughly.

All of’em.

I can’t be too harsh on the state media cartel. In truth, the Birmingham News went all rogue and stuff when they filed the open records request. Solomon often sometimes controls his homerism, plays it straight down the middle and reports the news. Press-Register Sports Editor Randy Kennedy is about as professional as they come. But our state media cartel is clearly dropping the ball on this story and potentially missing out on the opportunity to win Pulitzers.

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Five bona fide reasons why BingoGate and AUBurgeddon are probably connected

I’m sure you’ve seen or heard about the MEGATHREAD at www.tidefans.com (link fixed).

Maybe you’ve also seen and heard about the ATPB thread at www.tigerdroppings.com. (UPDATE: Thread restored)

Together, these two forums have combined for thousands of pages, tens of thousands of posts and quite literally millions of page views. If there is ever going to be an entry in Websters for “Going Viral,” right next to the definition would be links to these two URL’s.

It’s also worth noting that loony conspiracy sites like Alex Jones’ Infowars and Dylan Avery’s Loose Change have also generated tons of traffic for their owners by hyping the black helicopterism of global plots to take down the US of A, or something.

One of the things that allows Jones and Avery to perpetuate their loony theories is the narrative that they are “just asking questions.” That sounds legitimate enough, until you realize that as soon as they’re given real answers (by reputable scientists and writers at Popular Mechanics), they dismiss the answers and come up with a whole new set of questions. Much like a video game villain or monster comes back after you mash the RESET button.

So what’s the difference between the black helicopterists at Jones’ and Avery’s sites and the theories spun by the denizens of the MEGATHREAD and ATPB? Aren’t they both wildly speculative and don’t they all describe a plot that’s just too crazy to be true?

There is some stuff out there that stretches the limits of credibility, and some folks have taken speculative reasoning as Gospel truth. That doesn’t mean that there isn’t factual information there, nor does it mean that because it all can’t be true, none of it is.

In truth, some of it is certainly true and it can be documented by court filings, media reports and other credible sources.  Here are five reasons showing that the Auburn recruiting scandal surrounding Cam Newton, the pay-for-play allegations and political corruption in Alabama are all part of the same monster:

1. Milton McGregor’s ties to Auburn University, Colonial Bank and politics in Alabama. It is no secret, nor is it speculation, that the one-time statewide political powerbroker has connections to all three sides of the AUBurgeddon triangle. McGregor and former Colonial CEO Bobby Lowder are tight. Or, they were tight. McGregor sat on Colonial’s Board of Directors. McGregor has given millions to Auburn. McGregor will stand trial for attempting to corrupt the legislative process by conspiring with lobbyists and bribing politicians. He is of course, innocent until proven guilty but the prosecution is confident.
2. The FBI’s interview with John Bond. The FBI does not go on fishing expeditions. They did not just wake up one chilly morning in November and decide to go hassle a former Mississippi State quarterback about possible violation of NCAA recruiting regulations. The FBI doesn’t do NCAA investigations. They do criminal investigations, and during the conduct of those investigations, they only interview witnesses that they believe have legitimate, useful information in developing a criminal case against one or more defendants. Each and every interview with such persons of interest is documented on federal form FD-302.
3. Business relationship between AU Athletic Director Jay Jacobs and indicted co-defendant Robert Geddie. Again, no speculation, no secrets. Auburn graduate Robert Geddie used to head up the lobbying firm Fine-Geddie (along with an Alabama graduate, Joe Fine). As documented by his seminal piece in the Tuskegee News, Paul Davis outlines the relationship between Geddie’s firm and Auburn’s Tigers Unlimited Foundation. TUF paid millions to Geddie’s firm over several years. Current AU Athletic Director Jay Jacobs was TUF’s first president and resigned that post when he was selected as AU’s AD. For the naysayers and skeptics out there, let me lay it out for you: The current athletic director of a major college sports program has a demonstrated business relationship with a man indicted on charges of conspiracy, money laundering and bribery. Like McGregor, Geddie is innocent until proven guilty and deserves his day in court.
4. Bobby Lowder. Duh! If you’re running a improper benefits scam, where’s the money gonna come from? How about the former CEO of the once mighty Colonial BancGroup, who also happens to be a sitting Auburn Board of Trustees member, who chairs the BOT’s finance committee, who has poured millions into the school, who has been fingered by the Southern Association of Colleges and Schools as a micromanager of both academic and athletic affairs at Auburn, who cements alliances with other BOT members through loans and other business relationships, who provided the aircraft in the infamous JetGate scandal? Like I’m telling you something new here, right?
5. Sam Franklin is the Golden Thread, tying it all together. Sam Franklin is a senior partner in the Alabama Powerhouse law firm of Lightfoot Frankin White. Sam Franklin represents Bobby Lowder in the class action lawsuit filed by former Colonial employees. Sam Franklin represents Auburn University in the Cam Newton case, and has represented the school in all NCAA compliance matters, dating back to AU’s most notorious run-in with the NCAA, the Ramsay Tapes Scandal. But on November 30, 2010, Franklin got a new client—Robert Geddie. But Franklin doesn’t practice criminal law, so his hiring as Geddie’s lead counsel in a criminal proceeding is an eyebrow raiser at worst and at best, slam dunk evidence that the cases are all tied together.

We also know that federal investigators are wrapping up an expanded probe that goes beyond the scope of the original documents and, judging from the language in the prosecution’s court filings and statements from BingoGate defense attorneys, there is a likelihood that a new round of indictments is forthcoming. DOJ is notoriously tight-lipped about ongoing investigations and only disclosed the expanded probe’s existence because they had to in order to avoid compromising it and protect the evidence. But going back to the FBI’s interview of John Bond and media reports that the FBI was also exploring ties between McGregor and the Newton recruitment, it is not black helicopterism to suggest that investigators are making their way up I-85.

In their court filings, the prosecution indicated that the picture would become clearer on January 31, 2011. That date is now less than a week away and by this time next week, we should have a much better idea of who, and what comes next.

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Auburgeddon and BingoGate: Feds closing in on new targets?

About two weeks from today, defense lawyers in the US v. McGregor et al case will get their first look at the unredacted wiretap binders and federal form FD-302’s. The prosecution alleges that these materials comprise compelling evidence that prominent casino owner, Auburn booster and state powerbroker Milton McGregor conspired with business partner Ronnie Gilley to bribe legislators into voting for an electronic gambling bill during the 2010 session of the Alabama Legislature.

Attorneys for Tom Coker, one of two lobbyists employed by McGregor, had asked the court for the unredacted materials late last year. The government didn’t strenuously object to rcomplying, but with one caveat—they could not release the materials until on or about January 31. 

The reason? Since the October 4 indictments and arrests of the McGregor Eleven, the feds had expanded their probe beyond the original scope of the gambling conspiracy indictments, and the contents of the binders and 302s could compromise the expanded investigation, according to court documents filed in the case. The prosecution indicated that the expanded probe would no longer be compromised if release of the wiretap binders and 302s were delayed until January 31.

A lot happened between the October 4 round up and Coker’s December 20 motion to compel access. From the standalone Timeline Page:

November 4, 2010

The ESPN Story breaks. Reporters Pat Forde, Chris Low and Mark Schlabach allege that Cecil Newton approached Mississippi State in a pay for play scheme involving his son, then Blinn Junior College Quarterback Cam Newton.

November 9, 2010

ESPN.com’s Joe Schad files a report, claiming that Mississippi State recruiters confirmed that a pay-for-play plan was discussed during two separate phone conversations. In one, Cam Newton told a MSU representative that he chose Auburn because the “money was too much.”

Sources: FBI becomes involved in the case.

November 11, 2010

In a wide ranging radio interview, Kenny Rogers fingers Cecil Newton as the originator of the pay-for-play scheme.

November 13, 2010

Cecil Newton admits to talking money, per a WSBTV report, but denies that Auburn, Cam or Cam’s mother were aware of his negotiations.

November 16, 2010

John Bond is interviewed by the FBI.

Sources say the FBI is also interested in links between McGregor and pay-for-play at Auburn. McGregor, through his attorney, denied involvement in the pay for play scheme.

On December 17, this blog explored links between defendants in the Alabama corruption scandal and the ongoing investigation into Auburn’s recruitment of Cam Newton. One of the defendants in the corruption trial—Robert Geddie—is a graduate of Auburn University and partner in the lobbying firm of Fine-Geddie. Fine-Geddie has a multimillion dollar relationship with the Auburn University Athletics fundraising organization, Tigers Unlimited Foundation.

Geddie is the other lobbyist hired by McGregor.

  It is also worth noting that current Auburn University Athletic Director Jay Jacobs was President of Tigers Unlimited, and that the foundation has flourished in part due to the financial support of former Colonial BancGroup CEO Bobby Lowder, the mega-Trustee and prominent Auburn booster.

As shown in the viral December 17 post, Sam Franklin—a prominent attorney in the state of Alabama and a partner of the law firm Lightfoot Franklin White—appears on the chop list of court documents filed in motions by the defense in the corruption probe. Franklin is also the chief counsel for Auburn in the NCAA probe, and represents Bobby Lowder in the multimillion dollar class action lawsuit filed by Colonial Bank employees.

This begs the question: Who, or what, is the target of the expanded criminal investigation that according to the prosecution, goes beyond the scope of the original October 4 indictments?

Is the federal government closing in on new criminal conspiracy?

DOJ is famously tight-lipped when it comes to discussing matters currently (or not) under investigation, so it is anybody’s guess as to what they may have uncovered and who the new players may (or may not) be. But isn’t it interesting that three parties to three separate matters—Auburn in the NCAA probe, Geddie in the BingoGate case and Lowder in the class action lawsuit—have all hired the same lawyer?

A lot of these questions could be answered in the next two weeks. But just as dramatically, a lot more questions may be asked.

Getcha some popcorn, sports fans. This one might be headed to over time.

Update: The wiretap binders are due today, January 18. The unredacted 302s are due on January 31.

 

AUBurgeddon: Why is a judge granting Ex Parte motions? UPDATED

Scroll down for updates.

Ex parte is a Latin legal term meaning either by or from one party. An Ex parte decision or order is made by a judge without requiring all parties to the case being represented. In both federal and state courts, the use and availability of Ex parte proceedings are sharply limited by the Fifth and Fourteenth Amendments to the US Constitution, which provide protections against depriving a party of life, liberty or property without due process of law. In practice, this has led to any relief obtained through such proceedings to be temporary, and sooner or later the excluded party is given an opportunity to contest the appropriateness of the order before it can be made permanent.

But not always before the damage is done.

On January 5, 2011 news reports indicated that the federal government had expanded the scope of the criminal probe that currently has prominent Auburn University Booster Milton McGregor and 11 others under federal indictment and facing trial on April 04, 2010. Two of the original targets of the probe—Jennifer Pouncey and Jarrod Massey—have agreed to plead guilty in exchange for testimony.

Most troubling for those outside the scope of that case was the revelation by defense attorneys that the government was holding back considerable amounts of information provided by Massey, citing an ongoing criminal investigation of unknown individuals and unknown criminal activity.

That same day, US Magistrate Wallace Capel granted an Ex parte motion by the government, discontinued the Ex parte status of prior motions, but ordered the records SEALED:

  

This order confirms the news stories of January 5. The government is certainly expanding its probe, and feels the information contained in the record of Massey’s negotiations with the government is sensitive enough to remain under lock and key.

Recall from this post from last November that one of Milton McGregor’s first legal maneuvers was an attempt to seal all documents related to his indictment. Capel denied that motion, citing the public’s First Amendment right of access to criminal proceedings.

Wednesday’s ruling is vastly different from the earlier ruling on McGregor’s motion. In this instance, the court has apparently weighed the harm done to public access against the harm done to an ongoing criminal investigation, and found that unsealing the documents pertaining to Massey’s statements would harm the latter much more than the former.

Which means that we won’t know the scope of the expansion until the additional targets of the investigation are led away in handcuffs. This kind of uncertainty, combined with the knowledge that at least two people are already singing like happy canaries, creates enormous pressure on people who think they may be under the gun.

At least one prominent figure is believed to be sweating quite heavily, and sources indicate to me that the individual has even approached investigators with an offer to cooperate, only to be told that the matter is not “ripe enough” for that, just yet.

You will stay tuned, won’t you?

UPDATE: Federal prosecutors want Ronnie Gilley’s bond revoked, and claim that he attempted to bribe Jarrod Massey to withhold testimony.  h/t @rtrstokes

UPDATE: It’s 2011. D’oh!

 

 

 

AUBurgeddon: Prosecutors expanding criminal probe beyond original 11 (UPDATED)

Scroll down for the latest.

Didn’t I tell you that this was much larger than just a stellar quarterback with a greedy father?

Didn’t I tell you that this was larger than even the indictment of 11 casino owners, lobbyists and legislators over a vote-buying scheme?

Of course I did, and depending on where your loyalties lie, you either believed me, or you didn’t.

From WSFA 12 News in Montgomery, via the Associated Press:

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MONTGOMERY, Ala. (AP) - Federal prosecutors say in court papers that their gambling investigation in Alabama has grown beyond the legislators, lobbyists and casino owners who have already been indicted.

The disclosure comes in court papers involving notes from interviews the FBI did with Country Crossing casino lobbyist Jarrod Massey, who has pleaded guilty to bribery and conspiracy.

Federal prosecutors say they have provided other defendants with copies of the FBI's interview notes, with some material blacked out. They said the undisclosed material pertains to an ongoing criminal investigation involving facts beyond the scope of the indictment issued against 11 people in October.

Prosecutors say in the court papers that disclosure of the material at this time would risk exposing details of the investigation.

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It remains to be seen what the expanded scope of the investigation entails. Could it ensare other political figures in the state? I’d bet my last VictoryLand chip that it will.

Could it also ensnare people not involved in the original “scope of the indictment issued” against the McGregor Eleven? People associated with a major university, located about 55 miles up I-85 from Goat Hill?

Of course.

Update: Here is a more detailed report than what appeared at the WAAY site. I found the highlighted quote rather interesting.

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Coker's attorney said Wednesday the language in the court papers is not something the FBI routinely uses to try to keep notes private, and its presence is significant.

"There is definitely another investigation ongoing. What it entails I can't say," McKnight said.

Prosecutors have offered to give the complete notes to Coker's lawyer by Jan. 31 unless some reason arises to justify withholding the material. McKnight filed papers Wednesday saying he can agree to getting the notes no later than Jan. 31 "given the government's representation about the ongoing investigation."

Massey and Coker were among 11 people arrested Oct. 4 on an indictment accusing them of buying and selling votes on pro-gambling legislation. The remaining 10 defendants are scheduled for trial April 4.

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Well, now.  Whatever investigation could that be?

Don’t forget to visit the Timeline page for the complete rundown of events.

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