United States District Court, D. Nebraska
MEMORANDUM AND ORDER
The government has moved for a “Hearing to Determine Defense Counsel's Possible Conflict of Interest.” (Filing No. 32). The defendant does not oppose scheduling this proposed hearing. (Filing No. 41). The defendant moves for a Bill of Particulars, (Filing No. 34), and to extend the deadline for filing pretrial motions. (Filing No. 37). The government opposes the defendant’s motions.
For the reasons described below, the motion for a hearing will be granted, and the motions to order a bill of particulars and to file additional pretrial motions will be denied.
Defendant Gilbert G. Lundstrom faces a 23-page, 15-count indictment alleging that in his capacity as an officer of TierOne Bank, he conspired to commit wire and mail fraud affecting a financial institution and securities fraud (Count 1), conspired to falsify bank entries (Count 2), devised and executed a mail fraud scheme (Counts 3 & 4), devised and executed a wire fraud scheme (Counts 5 through 9), devised and executed a securities fraud scheme (Count 10), and falsified bank entries (Counts 11 through 15). (Filing No. 1). As acknowledged in Defendant’s brief, for each of the 15 counts, the indictment alleges the elements of crime charged.
The defendant moves for a bill of particulars, arguing the indictment against Lundstrom is insufficient because it “fails to provide sufficient detail regarding the purported false statements that are essential to any charge of fraud, ” the indictment fails to identify all alleged co-conspirators or persons who made allegedly false statements or were involved in the alleged fraudulent conduct, and government’s discovery has not corrected these deficiencies. (Filing No. 34, at CM/ECF p. 1). Defendant states “a bill of particulars is necessary in this unusually complex fraud case so that defendant can adequately investigate the charges, prepare a defense and avoid or minimize the danger of unfair surprise.” (Filing No. 34, at CM/ECF p. 2). Specifically:
Paragraph 32 alleges LUNDSTROM received analysis in February, April, and May 2009 which showed that TierOne needed to increase its reserves and Loan Loss Allowance by at least $30 million to cover additional losses in TierOne's loan portfolio, but he and his co-conspirators did not report that information to TierOne's shareholders, regulators, external auditors, or the investing public, and as a result TierOne made statements and issued reports to the SEC, the OTS and the investing public about TierOne's loan portfolio that were materially false.
The defendant demands that the government identify the allegedly false statements and reports made to the SEC, the OTS and the investing public, including the dates of the statements.
Paragraph 34 alleges that Defendant and his co-conspirators directed, and caused others to direct, TierOne employees to not order new appraisals even when existing appraisals no longer reflected the true value of TierOne's loan collateral and real estate; and when appraisals received reflected a lower value for loan collateral or real estate in TierOne's portfolio than TierOne had recorded, Defendant and his co-conspirators rejected the appraisal to avoid having to recognize the loss.
The defendant demands that the government identify the cases in which Defendant and coconspirators allegedly directed others not to order new appraisals, including the identity of the alleged co-conspirators who provided this direction and to whom; and the cases where appraisals were allegedly rejected, including the identity of the alleged co-conspirators who did so.
Paragraph 35 alleges Defendant and his co-conspirators restructured loan terms to disguise a borrower's inability to make timely interest and principal payments; in “some cases, ” they caused TierOne to advance additional funds to delinquent borrowers so that they could use the additional funds to make interest payments back to TierOne and, in some cases, they understated the risk ratings of certain loans, when an increase in the risk rating of the loan would require that TierOne to record an additional loss.
The defendant demands that the government identify the “some cases” in which defendant and coconspirators caused TierOne to advance additional funds to delinquent buyers, including the identity of the alleged co-conspirators and the delinquent buyers; and identify the “certain loans” for which defendant and coconspirators understated the risk rating, including the identity of the alleged co-conspirators who were involved in such action.
Paragraph 36 alleges Defendant and his co-conspirators concealed losses in TierOne's loan and real estate portfolio, and knowing that TierOne's core capital ratio had still fallen below the 8.5% minimum threshold mandated by the OTS, they caused TierOne to issue financial statements that were manipulated to falsely show that TierOne had met or exceeded the 8.5% core capital ratio.
The defendant demands that the government identify the particular financial statements that “were manipulated, ” the co-conspirators who were involved in such action, and the manner in which the statements were allegedly manipulated.
Paragraph 37 alleges Defendant and his co-conspirators made materially false, misleading, and fraudulent statements, and caused others to The defendant demands that the government identify the particular 10-Q’s that allegedly contained false and do so, in TierOne's Forms 10-Q filed with the SEC, TierOne's Thrift Financial Reports filed with the OTS, and other information submitted to the OTS about: (a) the value of TierOne's loan and real estate portfolios; (b) the amount of TierOne's reserves and Loan Loss Allowance; (c) whether TierOne had met or exceeded the 8.5% ...