SEC known Kelly hears Huard crossed in fraud trial
2003-10-07 09:39 ET - Street Wire
by Erik Schelzig in Miami
James T. Kelly, on trial for securities fraud in the U.S. District Court for the Southern District of Florida in Miami, listened as his defence attorney Norman Moscowitz wrapped up his cross-examination of Mr. Kelly's former business associate and former co-defendant Joseph Huard on Oct. 3. If convicted, Mr. Kelly could face 25 years in prison.
Mr. Kelly, the former head of Pennsylvania-based Shamrock Partners Ltd., is accused of conspiring with former co-defendants Mr. Huard and Bruce Cowen in a kickback and stock manipulation scheme involving shares of Lighthouse Fast Ferry Inc. All three were arrested in August of last year as part of Operation Bermuda Short, a two-year joint FBI-RCMP undercover sting. Mr. Huard and Mr. Cowen negotiated separate plea bargains in the case and are key prosecution witnesses against Mr. Kelly.
On Thursday, Mr. Huard was the first to take the stand to testify against his former Shamrock brokerage boss. Mr. Moscowitz picked up his cross-examination of Mr. Huard on Friday, questioning the witness for about two hours before U.S. prosecutor Thomas Hanusik took over for a 15-minute redirect.
GOING FISHING
Early in his cross-examination, Mr. Moscowitz displayed for the jury a promotion agreement between Shamrock and Lighthouse Fast Ferry inked in January of 2001. Under the terms of the agreement, Shamrock was to receive 10 per cent of any investment in Lighthouse Fast Ferry. Mr. Huard signed the contract on behalf of Shamrock.
Mr. Huard agreed with Mr. Moscowitz's characterization of the agreement as "a standard compensation deal."
The defence lawyer went on to offer an analogy, suggesting that the agreement between Shamrock and the ferry company was similar to closing a deal on a house where both the agent for the seller and the agent for the buyer receive a cut on the deal.
"Could be 10 per cent for you and 10 per cent for them, correct?" Mr. Moscowitz asked.
Mr. Huard agreed.
Just as he had done in his cross-examination of undercover FBI agent Michael Palasek, Mr. Moscowitz challenged Mr. Huard as to whether there was any way to tell that Mr. Kelly heard the discussion in which the undercover team laid out the details of their kickback and undisclosed payment scheme.
Under direct examination, Mr. Huard had testified that Mr. Kelly was in the room during the conference call in which those details were discussed. Mr. Moscowitz again pointed out, however, that there was no recorded vocal participation from Mr. Kelly during that part of the taped discussion.
Walking Mr. Huard through the transcript of the conversation, Mr. Huard acknowledged that while Mr. Kelly had been an active participant in earlier segments of the taped conference call, he was not heard responding to any parts of the undercover team's discussion of the kickbacks and secret payments.
Mr. Huard's attempts to explain that despite his voice not appearing on the tapes Mr. Kelly was in the room were cut off by Mr. Moscowitz as not part of his questions.
Mr. Moscowitz also raised questions about just how much Mr. Kelly really knew about the deal by again bringing attention to the fact that when the undercover operatives were calling around to advise the sting targets that the planned $5-million Lighthouse Fast Ferry share transaction had been cancelled, they did not call Mr. Kelly directly.
"Schlien asks, 'How is Jim?' and you say, 'Jim is considering going fishing,'" Mr. Moscowitz said, pointing out that Mr. Huard did not take the opportunity to give the Mr. Schlien an assessment of Mr. Kelly's feelings about the deal falling through.
"I had been keeping Jim updated -- " Mr. Huard started to respond before being cut off by Mr. Moscowitz.
"That's not my question," the defence lawyer interrupted. "You don't take the opportunity to tell them about Jim's feelings."
Mr. Huard said he did not.
Mr. Moscowitz moved on to challenge earlier government displays in which Mr. Huard testified that Mr. Kelly's handwriting was on Shamrock order tickets for purchases of Lighthouse Fast Ferry stock. Mr. Moscowitz had Mr. Huard read several other tickets and the witness acknowledged that many were in his and other Shamrock employees' handwriting.
Mr. Moscowitz also challenged Mr. Huard's motivation for testifying against Mr. Kelly. Mr. Huard drew back from agreeing with Mr. Moscowitz that he had signed his co-operation agreement to say that he would implicate Mr. Kelly fully as a participant in the kickback and stock manipulation scheme.
The defence lawyer went on to question Mr. Huard about his earlier claims of innocence regarding the scheme.
"You told people, other than your lawyer, that you hadn't done anything wrong," Mr. Moscowitz suggested.
Mr. Huard agreed that he had made those earlier claims.
"You felt that Schlien and Jones set you up, didn't you?" Mr. Moscowitz asked, referring to the co-operating witnesses David Jones and Robert Schlien.
"They set me up, but I went along with it when I should have hung up," Mr. Huard replied.
Mr. Moscowitz later asked, "But you thought what they did was wrong?"
"Yes I did," Mr. Huard answered.
Toward the end of Mr. Moscowitz's cross-examination there was a sidebar discussion, presumably with respect to the defence lawyer's earlier attempt to question Mr. Huard about Mr. Cowen's claim that he had checked the deal out with a lawyer and determined that it was legal. On Thursday, the prosecution had objected vigorously to Mr. Moscowitz attempt to pursue that line of questioning.
With the jury still present on Friday, Judge Cecilia Altonaga did not issue a public ruling on the sidebar discussion. Given that Mr. Moscowitz did not question Mr. Huard about the matter, however, it is likely that the judge would not allow him to pick up those questions in his cross-examination.
In a relatively brief redirect, Mr. Hanusik tried to show that Mr. Moscowitz's theory that Mr. Kelly was not in the room during the conference call in which the details of the alleged kickback scheme were being discussed was false, again drawing testimony from Mr. Huard that Mr. Kelly was indeed present.
Mr. Hanusik also challenged Mr. Moscowitz's earlier suggestion that Mr. Huard was more than just an employee of Shamrock.
In his cross-examination on Thursday, the defence lawyer had presented Mr. Huard with documents that identified him as a partner, founder, vice-president and chief financial officer of Shamrock.
"Was Shamrock Partners a corporation or a partnership?" Mr. Hanusik asked.
Mr. Huard replied that it was a Pennsylvania corporation. He also explained that he was neither a partner nor even a salaried employee; he said he was a contract worker who had to pay his own taxes and health insurance.
"Did you control Jim Kelly?" the prosecutor asked.
"No I did not," Mr. Huard replied with a laugh.
The trial continues. (
With files from Lee M. Webb.)
(More information regarding Mr. Kelly's trial is available in Stockwatch articles published on Sept. 25, 26 and 29; and Oct. 1, 2 and 3, 2003.) |
