Accusations fly in Gold Country fraud case
May 24, 2013
A complex fraud case that has been combative from the beginning became even more so Wednesday morning as attorneys for both sides traded accusations and the judge requested better communication and cooperation between the parties.
Nevada County Superior Court Judge Candace Heidelberger told the attorneys for Gold Country Lenders CEO Philip Lester and CFO Susan Laferte that she is unwilling to postpone the jury trial, which has been delayed several times. The trial — expected to last at least six weeks — originally was set for April, then rescheduled to June 4 before a new date was set for Sept. 17.
The criminal complaint filed by California Deputy Attorney General Maggy Krell originally also named Lester's wife, Ellen, and Jonathan Blinder as co-defendants.
Krell dismissed two felony counts of conspiracy and securities fraud against Ellen Lester in November and dismissed four felony counts of securities fraud against Blinder in March.
Laferte and Lester have been indicted by a criminal grand jury for allegedly defrauding investors of millions of dollars over a period of eight years. They face more than 60 counts each of elder abuse, securities fraud and conspiracy.
The court-appointed attorneys for the two were scheduled to file any motions to dismiss the information or to set aside the grand jury holding order by Friday. But instead, they filed a motion on Monday alleging that Krell had not provided all the discovery in the case and asking for more time to submit their motions.
According to the motion for discovery filed by Laferte's attorney, Greg Klein, he became aware during a trip to Krell's office on May 14-15 that defense counsel had not received all the evidence, including maps of the developments and engineering studies.
Klein alleged in his motion that as he began reviewing the transcripts from the grand jury indictment, "it became clear that the prosecutor had not presented a large quantity of exculpatory evidence." Klein wrote that he requested an opportunity to view the original evidence, and that when he traveled to Sacramento to do so, he discovered that he had never been provided with some of the evidence.
"At this juncture my head popped off, and I felt like crying," Klein wrote in a declaration in support of the motion.
In a more serious vein, Klein wrote that the prosecution was creating an unfair advantage at trial and obstructing the ability of defense counsel to access potentially favorable evidence.
And Klein argued that without the opportunity to view all the evidence, it was impossible for him to determine whether he covered all the potentially favorable evidence in a motion to dismiss.
"The bottom line is, the prosecution team has made some decisions as to what is relevant or not relevant, and the difficulty we're having is that someone else is making decisions for the defense team," said Ken Tribby, Lester's attorney, during Wednesday's hearing.
Tribby, a Nevada County prosecutor for nearly a quarter-century, added, "This is one of the shoddiest investigations I've ever seen in my life … You can't play hide the ball. If it's not relevant, return it. I want to see everything that was seized — that's my bottom line."
Krell fired back, saying that while not everything was copied — including the maps — the defense team has had an itemized list of everything seized.
"It's not hidden — they're available," she said, adding that it is the defense counsel's responsibility to examine and copy the evidence and she did not understand why they waited until mid-May.
More bickering ensued, with Klein at one point telling Heidelberger he might have to push the trial out to 2020, and then saying copying everything could cost the county $150,000.
"It's difficult to deal with counsel when he's constantly dealing in hyperbole and exaggeration," Krell said, adding that Klein "tends to be emotional and overly dramatic."
Heidelberger eventually mediated the discovery issues, arranging for the attorneys to received copies of the maps and other documents and for the members of the defense team to obtain a concordance database so they can check the lists of evidence against each box of documents.
Klein asked for court sanctions against Krell, but Heidelberger turned him down, saying she did not find any evidence that the Attorney General's office had been acting in bad faith.
Krell argued that Klein's attempt to argue bad faith was underhanded, and that filing a motion within 48 hours of his deadline was a "last-ditch effort" to avoid that deadline.
Heidelberger told Klein and Tribby that she would grant a short continuance but that she didn't intend to change the date for the trial.
The defense counsel now must file any motions by June 14, and a hearing was set for June 25.
To contact Staff Writer Liz Kellar, email firstname.lastname@example.org or call 530-477-4229.