Judge Declares Mistrial in Fraud Case
LUBBOCK, Texas (AP) _ The judge in the trial of D.L. ″Danny″ Faulkner and six others declared a mistrial Friday after jurors said they were hopelessly deadlocked in the largest savings and loan fraud case.
After deliberating for more than 16 days on the 88-count indictment, jurors told U.S. District Judge Sam Cummings they could not come to an agreement.
″I know we’re disappointed a verdict has not been reached in this case,″ Cummings told jurors. ″But I’m not disappointed in your performance.″
He told jurors that a gag order remained in effect. It was not immediately clear how the jury was split.
Assistant U.S. Attorney Terry Hart said the case would be retried.
Faulkner showed no emotion as the mistrial was announced, but 10 minutes later he fought back tears as he talked to reporters in the courthouse lobby.
″I think it’s been really hard on us,″ Faulkner said. ″I want to be remembered for the nice things I’ve done, not this.″
Co-defendant and former Garland Mayor James L. Toler put his arm around his wife as he walked out of the courtroom and said, ″Let’s go to the showers. Get ready to fight again.″
Faulkner and Toler are accused of heading a conspiracy to steal $135 million from Empire Savings and Loan Association of Mesquite and four other S& Ls in Texas and Arkansas in 1982 and 1983.
The other defendants, former Empire chairman Spencer H. Blain Jr.; former S&L employee Paul Arlin Jensen; former real-estate salesman Kenneth Cansler and land appraisers Arthur Formann and Paul Douglas Tannehill, also were accused of conspiracy.
There was little reaction from the defendants or the prosecutors when the judge announced the mistrial. Defendants and their attorneys shook hands, and Hart and two other prosecutors left the courtroom immediately.
Several jurors were frowning as they entered the courtroom for Cummings’ announcement. The cordial atmosphere that was evident during the six months of testimony had dissolved.
Hart asked Cummings to poll the jurors, but the request was denied.
Mike Fawer, Towler’s attorney, called the mistrial ″an absolutely crushing defeat for the government.″
″The government took its best shot, and they have not been able to win a case under the best possible circumstances,″ Fawer said. ″And I think they should leave these people in peace and let them get on with their lives.″
The indictment charged the seven with defrauding the savings and loans through fanciful real-estate appraisals and sham land transactions along Interstate 30 in Garland, east of Dallas.
Prosecutors said the defendants gave themselves private jets, expensive watches and even a $4 million mansion with the money they borrowed ostensibly to buy land and condominiums.
All the defendants except Formann and Tannehill were charged with a count of racketeering, which allows the government to confiscate illegal profits. The government had accused the defendants of receiving $135 million from the alleged scheme.
After hearing six months of testimony in which 120 witnesses testified and more than 3,000 documents were introduced, the jury began deliberations Aug. 23.
The defense called no witnesses, but attorneys contended in two days of final arguments the defendants were victims both of Texas’ economic collapse in the mid-1980s and of the government’s key witness, real-estate salesman Clifford Sinclair.
The defendants contend that Sinclair, who pleaded guilty to federal fraud charges, is entirely responsible for planning the looting of the savings and loans and he is falsely implicating them to get his 13-year sentence reduced.
When Empire was closed by regulators in 1984, it was the largest collapse of a thrift in U.S. history. Prosecutors said the defendants were partly to blame. The $279 million Empire collapse heralded the failures of other thrifts soon after, when oil and real-estate prices plummeted.
Unlike some of the smaller trials involving thrifts, there were no charges of using depositors’ money to buy influence or sex. Instead, testimony consisted of a mind-numbing array of numbers recounted by witnesses describing dozens of real-estate transactions in excruciating detail.