A former One Bank & Trust executive who was acquitted of bank fraud charges in late 2016 after a three-week jury trial has lost an attempt to force the U.S. attorney's office to compensate him for his legal fees.
A month after a federal jury in Little Rock acquitted former bank executives Michael Francis Heald and Bradley Stephen Paul of all charges on Oct. 31, 2016, Heald filed a petition contending that federal prosecutors knew they didn't have a case against him but maliciously prosecuted him anyway and consequently should have to pay his litigation expenses. He didn't say how much the case had cost him.
But in an order filed Tuesday, U.S. District Judge Kristine Baker denied the petition, which was filed under the Hyde Amendment, enacted in 1997 as part of a final appropriations bill for the U.S. Department of Justice. It allows federal judges to award reasonable attorneys' fees and other litigation expenses to defendants in criminal cases who were victims of wrongful federal prosecutions.
Baker noted in her 15-page order that before the trial, in which the parties presented testimony from numerous witnesses and introduced many exhibits, she carefully studied the indictment and allegations in considering several motions.
She also noted that after the trial, she granted Heald several extensions to file documents in support of his petition, but that on March 26, the final deadline, he filed yet another request for an extension. The request said in part, "It will be a very difficult and intensive process to trace all of the evidence to show how the government obscured the evidence, confused the jury, and presented evidence the government knew was false and misleading."
Baker wrote, "Mr. Heald has had approximately 17 months to prepare and file his supplemental briefing, but he has failed to do so."
She cited the language of the Hyde Amendment, which allows a judge to award fees and expenses to a prevailing party in a criminal case when "the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust."
She quoted from rulings in other courts that under the amendment, "it is not enough to show that the prosecution was unsuccessful" and that the amendment was intended "to deter prosecutorial misconduct, not prosecutorial mistake."
Baker concluded that the prosecution of Heald wasn't "vexatious," under even the least stringent definition of the term. She also reaffirmed that federal prosecutors "had probable cause to proceed against Mr. Heald, meaning its prosecution was not frivolous."
She similarly found that Heald didn't show that he was prosecuted in bad faith, which "is not simply bad judgment or negligence, but ... implies the conscious doing of a wrong because of dishonest purpose or moral obliquity."
Heald, a former chief operating officer of the Little Rock-based bank, was accused of helping hide a bad $1.5 million loan from federal regulators to help the bank obtain a $17.3 million government loan. Heald and Paul, a former executive vice president at the bank, went to trial while Gary Rickenbach, a former senior executive vice president, pleaded guilty to a low-level felony charge and received a probationary sentence.
The bank's former chief financial officer, Tom Monroe Whitehead, who admitted helping former bank chairman Layton Stuart illegally obtain bank money for personal expenses, received immunity for testifying against Heald and Paul. Stuart died in 2013, months after regulators removed him from the bank's helm.
Baker wrote, "Mr. Heald is correct that [Stuart's] untimely death prevented his prosecution." She said he was also correct that the government dropped charges against Whitehead, who then testified, but, "based on the docket, Mr. Whitehead was the first to cooperate."
Heald's attorney, Gary Corum of Little Rock, didn't return a reporter's call Wednesday, and a spokesman for the U.S. attorney's office said prosecutors would have no comment.
Metro on 05/10/2018