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After Three Months, Government Rests Case Against Mrs. Marcos

June 20, 1990

NEW YORK (AP) _ The prosecution rested its case Tuesday in the federal fraud trial of former Philippine first lady Imelda Marcos and Saudi financier Adnan Khashoggi, and defense lawyers said they planned to call no witnesses.

The jury is to begin deliberations next week following motions and closing arguments.

″In our view, the government has utterly failed in its case. You only call witnesses if you have a case to rebut,″ said Mrs. Marcos’ attorney, Gerry Spence.

The prosecution called 95 witnesses during the three-month trial in U.S. District Court in Manhattan.

They included former Marcos associates who described a pattern of corruption they said enriched Mrs. Marcos and her late husband, Ferdinand E. Marcos, during his 20 years in power.

Other witnesses traced the flow of more than $220 million in allegedly stolen funds from secret Manila bank accounts through Swiss and U.S. banks to the purchase of four New York commercial buildings, jewelry and art works.

Mrs. Marcos, 60, is charged with racketeering, racketeering conspiracy, mail fraud and obstruction of justice. If convicted, she faces a maximum of 50 years in prison and a $1 million fine.

Khashoggi is accused of helping the Marcoses hide their ownership of the real estate after a 1986 injunction froze their assets. If convicted of mail fraud and obstruction of justice, he could be sentenced to 10 years in prison and $500,000 in fines.

The prosecution’s case ended late in the afternoon and on an anticlimactic note: Assistant U.S. Attorney Charles LaBella read the last of the evidence into the record and said, ″Your honor, with that the government rests.″

Earlier in the day, the prosecution focused on the obstruction of justice and mail fraud charges against the two defendants.

The prosecution entered into evidence the March 1986 injunction, which was issued in a separate civil lawsuit brought by the Philippine government to recover allegedly embezzled funds.

Khashoggi is accused of taking over ownership of the buildings after the court order.

Jeffrey J. Greenbaum, an attorney representing the Manila government in the civil case, testified that an agent for Khashoggi, Karl Bock Peterson, sought to enter the civil litigation in September 1986 because he claimed Khashoggi owned the buildings.

Greenbaum said Khashoggi personally took part in one of several meetings in Paris in November 1987 at which attorneys tried to reach a settlement of the civil case.

The negotiations, which ultimately failed, included one proposal in which Khashoggi offered to give the Philippine government three of the four buildings in exchange for $15 million in expenses and to sell 25 paintings for $6 million, Greenbaum said.

The U.S. government claims the Marcoses transferred the art works along with the buildings to Khashoggi to circumvent the court order.

Greenbaum said the talks broke down largely because Khashoggi’s side refused to discuss his relationship with the Marcoses.

The attorney quoted Peterson as saying at one meeting, ″We’re not in the information business.″

After Greenbaum’s testimony, LaBella read sections of a sworn statement by Peterson in the civil case.

Peterson is named as a defendant in the criminal case but is a fugitive.

In the December 1986 deposition, Peterson said Khashoggi told him in January 1986, two months before the court order, that he had acquired ″an interest″ in several New York buildings.

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