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Defense Lawyer Hammers Government’s Case Against Futures Traders

June 21, 1990

CHICAGO (AP) _ The government’s charges in a historic commodity fraud trial are ″a house of cards,″ based on a desperate phony theory, a defense lawyer said today in closing arguments.

Harvey Silets, attorney for accused Swiss franc futures trader Danny L. Scheck, told a federal jury the government failed to prove Scheck participated in an alleged scheme to defraud customers of the Chicago Mercantile Exchange.

″As to Danny Scheck, the government’s case is a house of cards, a simple attempt to prove that Danny is guilty by association,″ Silets said.

Like defense lawyer Alan Blumenthal, who concluded his summation this morning, Silets challenged the credibility of the government’s key witnesses, an undercover FBI agent and two traders who have pleaded guilty to fraud charges.

Defense lawyers are pounding away at the government’s case as the first trial resulting from the FBI’s probe of the nation’s largest commodity exchanges nears an end.

Blumenthal, attorney for trader David Zatz, suggested Wednesday that the FBI agent lied on the witness stand.

Blumenthal also said the two traders who have pleaded guilty to fraud charges are liars and cheats who ″couldn’t prove anything about anyone at any given time.″

The trial before U.S. District Judge Ann C. Williams stems from an unprecedented FBI probe of corruption at the Merc and the Chicago Board of Trade, the world’s two largest commodities exchanges.

The case was expected to go to the jury by Friday.

Independent traders Scheck and Zatz are accused, along with Merc floor broker Robert Mosky, of defrauding customers while executing their orders to buy and sell Swiss franc futures contracts.

The government contends the defendants used the profits from the illegal trades to cover their personal losses from trading errors.

Blumenthal disputed statements made earlier Wednesday by Assistant U.S. Attorney Daniel Gillogly that the government’s evidence proved a fraud scheme ″that was very much entrenched, very much endemic.″

Blumenthal said the government had proved nothing in his client’s case.

He suggested that FBI agent Randall Jannett, who posed as a corrupt Swiss franc trader during most of 1988, invented an incriminating remark that the agent attributed to Zatz during his testimony.

″If recent history has taught us anything, recent history has taught us that nobody in the hierarchy of government - all the way to the top - nobody has a monopoly on telling the truth,″ Blumenthal said.

He branded admitted cheaters William Walsh and Mark Fuhrman as liars, thieves and cheats whose testimony could not be trusted.

Gillogly said Wednesday that Jannett’s testimony was ″unimpeachable″ and said Walsh and Fuhrman had no motive to perjure themselves.

Mosky, Scheck and Zatz were indicted last year, along with 44 other Chicago futures traders and a clerk, on charges of defrauding customers.

The indictments resulted from an unprecedented investigation in which FBI agents infiltrated the floors of the Merc and the Chicago Board of Trade, the world’s two largest commodity exchanges.

Two other groups of traders are to be tried in September.

Mosky, Scheck and Zatz face more than a dozen counts each of mail or wire fraud and violations of the Commodity Exchange Act. Each count carries a maximum penalty of five years in prison and a $150,000 fine.

Mosky also is charged with racketeering conspiracy, for which he could be sent to prison for 20 years and be forced to forfeit personal assets, including exchange membership.