Peregrine Trial – Week 26
Comments by Bob Grimes and Dana Grimes
March 18, 2008 – 9:00 a.m. to 3:30 p.m.
The jury deliberated today without reaching a verdict. This may be an indication of a division of opinion amongst the jurors, if initial balloting has not yet resulted in unanimity. However, it is possible that the jurors have not even reached the balloting stage of deliberations because of the complexity of this retrial and the entirely different cases presented against these two defendants.
It is our experience that jurors take their civic responsibility very seriously. Although the jurors in this retrial have significantly less evidence to review, and far fewer exhibits to consider, than the jurors in the first trial, many of the exhibits are technical accounting documents. Not only are the jurors charged with weighing the evidence of each count as to each defendant, but they also must follow numerous complicated jury instructions. The concept of reasonable doubt must then be applied to every element of every count.
In the first trial, the jury deliberated for more than one week. It is rare for a jury to hang, even if initial balloting does not result in unanimity.
So far, there have not been any re-reads of testimony. Deliberations will resume tomorrow, March 19, at 9:00 a.m.
March 19, 2008 – 9:00 a.m. to 3:30 p.m.
This morning the jury submitted three legal questions to Judge Whelan. All three questions were related to the legal rules regarding convicting on substantive charges while acquitting on conspiracy charges, or vice versa. The opposing parties met with Judge Whelan to discuss how the court would answer the questions. There is never a short answer to this type of legal question from a jury, but Judge Whelan did re-read the relevant jury instructions on these topics.
Questions from jurors always make the trial lawyers nervous, and these questions suggest that at least some jurors may be considering a compromised verdict (convicting on some counts and acquitting on others). This probably is frightening to the defense, because the defense definitely does not want a compromised verdict. For them, it is all or nothing. The government probably feels they have cause for concern also, because of the indication of possible acquittal on at least some counts.
It is never possible to know if a question from the jury is being asked because most of the jurors feel that it is significant, or if only one or two jurors have focused on those issues. If any one person on the jury feels strongly enough about asking a question the foreperson typically submits that question to the court.
The foreperson in this case is an African-American gentleman of middle age, with a very interesting background. Among other things, he has been a professional singer for a well-known group, a police officer, and a prison guard. He coaches boxing and sings in his church choir, and he clearly enjoys high status among his fellow jurors. There is no way to know which side he is on, but an influential juror can change the course of deliberations.
At this point in the deliberations, it is almost certain that there has been some significant disagreement among the jury. Whether or not the disagreement is about one or more counts, whether the division is six to six or eleven to one, and whether the disagreement relates to both defendants, is impossible to guess.
The jury received Judge Whelan’s answers to their legal questions before the lunch break, and then deliberated from 1:00 p.m. to 3:30 p.m. without any further word. They are clearly making an effort to reach an agreement. Deliberations resume tomorrow at 9:00 a.m.
March 20, 2008 – 9:00 a.m. to 11:00 a.m.
Shortly before 11:00 a.m. today, the jury sent a note to Judge Whelan indicating that they were deadlocked six to six as to both defendants and on all counts. Judge Whelan brought the jury into the courtroom and asked if he could provide any further help regarding the law as applies to the case. They all indicated in the negative. He then inquired of them if they believed further deliberations would be beneficial. Again, all of the jurors indicated in the negative. Judge Whelan declared a mistrial and graciously thanked the jurors on behalf of all the citizens in this district for their great effort. Judge Whelan excused the jury and set a status hearing for April 3, 2008 at 9:00 a.m.
Judge Whelan told the jurors that they could speak to the parties if they were so inclined, and almost all of them stayed to do so. It was an interesting scene in the hallway outside of Judge Whelan’s courtroom, as jurors spoke candidly to defense lawyers, prosecutors, defendants, the families of defendants, and reporters. There were four or five FBI agents and several employees of the US Attorney’s office in the hallway as well. For the past eight weeks this jury has been told not to talk about the case and to avoid contact with the lawyers or parties. Now that they were free to share their feelings, they seemed eager to do so.
The foreperson explained that he felt the Government had not proved their case beyond a reasonable doubt, and that although he believed there was proof of criminality, he was not convinced that these two defendants knowingly and willingly participated in the conspiracy. He told AUSA Eric Beste that the prosecutors had done an excellent job, but that he had reasonable doubt. He explained to AUSA Beste that he would have liked to have heard the testimony of Matt Gless (a sentiment echoed by other jurors), and that he would also have liked to hear an admitted co-conspirator implicate the defendants. Even though he personally felt that the Government had not proven their case, he felt that during deliberations it was important to let all of the jurors express their opinions, and he kept an open mind.
One juror stated that all of the jurors agreed that there was fraud at Peregrine, and that the disagreement was over the intent element of the crimes charged; she personally was unconvinced that these defendants were willful participants in the fraud because they did not benefit from it. She indicated that she felt upset that the Government had not given her enough evidence to feel comfortable returning a guilty verdict. She and another juror stated that they did not trust Lynn Morimoto’s testimony. (Ms. Morimoto was the primary witness against Patrick Towle.)
A pro-conviction juror gave an interesting perspective on the case. He voted for a guilty verdict, because he believes Towle and Stulac, as CPAs, were in a position to know about the fraud. However, he respected the votes of the jurors who voted not guilty and even told the prosecutors that he felt strongly that it would be a waste of time to retry these two defendants, and that no jury would ever convict them. He also said that if he were the CEO of a large corporation, he would not hesitate to hire Towle and Stulac as accountants. He believes they made a mistake in their actions at Peregrine, but that by now they have undoubtedly learned their lesson.
Whether or not there will be a third trial of these defendants is, under federal law, entirely up to our United States Attorney, not the court. The Government will announce whether it will try this case against Towle and Stulac for a third time at the April 3, 2008 status hearing, if not sooner.
We believe that if there is a third Peregrine trial, it will be of Nelson, Crook and Deller, rather than a retrial of this retrial of Stulac and Towle. It would be very unusual for the Government to allocate their limited prosecutorial resources to try the same case three times, especially in view of the fact that they could not obtain a majority vote for conviction in either the first or second trial.
This was a complicated and serious case, and the fraud at Peregrine resulted in great financial loss to thousands of employees and shareholders. The FBI agents and Assistant United States Attorneys who worked for years on this case deserve a lot of credit for gaining vindication for these victims. Twelve conspirators have pled guilty to felony charges. Although it did not win this retrial, the Government won the Peregrine criminal case when it secured the guilty pleas of the primary conspirators.