Jurors continue their deliberations on fate of 3 Sun Belt defendants

Author(s): HOWARD HOFFMAN Date: March I, 1988 Section: NEWS

Twelve jurors today are continuing to discuss whether to convict or acquit three men of defrauding the tailed Sun Belt Federal Bank. The jury began its deliberations late Monday after five hours of closing arguments.

Federal prosecutors contend that Sun Belt President Larry Tullos, Sun Belt attorney Sidney Fazio and businessman Michael E. Blanton conspired to misrepresent the purpose and terms of an $8.3 million real estate development loan. The three men contend they negotiated a legal business deal.

Assistant U.S. Attorneys Ed Gonzales and Rand Miller argued to the jury Monday that the three defendants engaged in a complicated loan scheme that would allow Sun Belt to remove a $5 million loss from its books and circumvent federal banking regulations. The prosecutors charged the defendants used false documents to mislead both bank officials and federal bank examiners.

Gonzales told the jury that this is "a case about professional lying,"

The loan in question involved a request from Miller Development and Baton Rouge Petroleum Center to borrow $4.5 million to purchase a 234-acre tract for development in St. Tammany Parish near Covington. It also involves a $5 million trailer park Sun Belt had acquired by foreclosure after default on the Sun Belt loan. Bank examiners had previously questioned the trailer park loan and the trailer park would become a loss to Sun Belt if it were not sold.

Gonzales said Tullos recognized the trailer park was a problem he needed to solve immediately, so he recruited Fazio, "a crooked lawyer," and Blanton, "a flunky."

Their plan was to lend Miller Development and Baton Rouge Petroleum Center more than the $4.5 million they needed to buy the Covington property, Gonzales said. They arranged the loan so that an extra $3 million would be available to purchase the trailer park.

However, loan documents show that $8.3 million in loan proceeds would be applied to the Covington property. No mention was made in loan documents recovered from Sun Belt flies that any of the money would be used for the trailer park in Lafayette.

Gonzales also noted that Sun Belt directors who served on the loan committee testified no mention was made that any of the money would be used for the trailer park when they voted to approve the loan.

The loan was structured so that Miller Development and Baton Rouge Petroleum Center each would borrow $3.75 million and Ridgeland Builders, a company owned by Blanton, would borrow $800,000.

Gonzales said Tulios got the loan approved by negotiating its terms, then not disclosing the full terms at the loan committee meeting. He said Fazio created the misleading documents that show how much money Sun Belt would disburse, but don't say how the money would be applied. He said Blanton made the whole scheme possible by becoming a partner for an afternoon.

By signing his name to the loan documents, Gonzales argued, Blanton kept the bank below the threshold for loans to a single borrower. Federal regulations limit how much a bank can lend to any one customer. But because Blanton renounced his interest, he was a mere "nominee... for convenience only," Gonzales said. That fact was essential to bank examiners and was disguised purposely in the Sun Belt record.

"The bank's records did not contain the true facts," Gonzales said. "They were designed to conceal the true facts."

Miller reminded the jury that the important issue to consider is that before the transaction, Sun Belt owned a $5 million trailer park. After the transaction, the savings bank had no trailer park and had lent $3 million to buy a trailer park it already owned without taking a mortgage or other security on the property. He also pointed out that the transaction was recorded as a cash sale so the trailer park could be removed from the bank ledgers. And he noted Tulios informed bank examiners in a letter that the trailer park had been sold without a loan.

Defense attorney Sam D'Amico, representing Tulios, told the jury that real estate developer Seyborn "Steve" Wicker negotiated with the developers about buying the trailer park.

I le also asked the jury to consider the role of Sun Belt Vice President 1 larry Adcock, who was present throughout the May 30, 1984, loan closing and who collected the documents that eventually landed in the Sun Belt files.

Neither Adcock nor Wicker testified. Wicker had informed the court that if called, he would invoke his Fifth Amendment right against possible self-incrimination.

D'Amico said Tulios did not draft or sign the major documents and was not present for much of the closing.

The important question the jury should consider, D'Amico said, is why Tulios would involve himself in such a scheme.

There is not "one scintilla of evidence of what benefit this was to Larry Tulios," D'Amico said. "It cannot be suggested to you that Larry Tulios got one single, solitary penny out of these transactions... What these people were trying to do is comply with the law."

Tommy Damico, the attorney for Fazio, said the evidence did not show that his client intentionally participated in a conspiracy to defraud Sun Belt.

Fazio "acted in good faith," Damico said, attempting the interpret the

"His lack of testimony alone created any reasonable doubt you may need in regards to my client," Damico said.

Miller turned that question around and asked why, if he is so important, the defense didn't call Adcock.

Defense attorney Leo Agrillo, who represents Blanton, said Blanton had every intention to repay the $800,000 loan he received from Sun Belt through Ridgeland Builders.

"He was liable for it, and he had to pay it," Agrillo said. "The bank didn't sign these papers. How does it affect the bank in any way?" Agrillo said Blanton followed the advice of the lawyers.

"Here we are in court today because the U.S. attorney has a different interpretation of the rules (the "loan to one borrower 1 regulations), 11 Agrillo said.

Tullos and Fazio face a maximum of 80 years each in prison if convicted on all 16 counts.

Blanton could be imprisoned for 25 years if convicted on five counts against him.

Tullos is serving a four-year prison term for his 1987 conviction on another fraud charge stemming from his presidency at Sun Belt.

Copyright 1988 Capital City Press, Baton Rouge, La