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"The total maximum penalties for the two misapplications offenses was 10 years and $500,000 in fines."
--The Advocate (Baton Rouge, La.)
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Reggie Gets 120 Days at Home in Bank Case
BRUCE SCHULTZ
Lafayette, LA – September 24, 1993
Edmund Reggie must serve a sentence of 120 consecutive days of home detention and pay a $30,000 fine, a federal judge ordered Thursday.
Reggie, 67, was convicted last year in a trial of one count of misapplication of funds. He also pleaded no contest in July to another misapplication charge, both involving loans by Acadia Savings and Loan of Crowley where he was board chairman.
U.S. District Judge John Shaw considered, but rejected, a recommendation by the Federal Deposit Insurance Corp., urging the court to impose $5.1 million in restitution in connection with the conviction and plea.
"A stiff restitution order is not only justly deserved for Reggie, but would also send a clear, deterrent signal that misapplication of bank funds will not be tolerated lightly by the courts," concluded a letter by FDIC senior counsel Robert W. Russell.
But Shaw refused, saying much of the evidence being cited by the government for the amounts was never introduced into the court record.
Reggie's attorney, William Jeffress of Washington, D.C., contended that a pending civil suit by federal authorities will serve as the proper means for arguing possibilities for restitution.
Thursday's sentencing resolves the criminal case against Reggie, a former Crowley City judge. But the civil suit by the federal government will be resumed against Reggie and several other Acadia Savings officers.
Federal authorities filed the suit in 1988 seeking a total of $40 million in connection with the thrift's 1987 failure, but the litigation had been put on hold by U.S. District Judge Nauman Scott of Alexandria, pending resolution of the criminal case.
A no contest plea cannot be used against a defendant in a civil matter. Jeffress said a settlement is possible in the suit.
Reggie's legal career may be jeopardized because of the conviction, the judge indicated.
Afterwards, Reggie's co-counsel and longtime friend, Camille Gravel of Alexandria, said the Louisiana State Bar Association's disciplinary board could take action against Reggie in connection with the felony conviction, including possible suspension of his license.
His friends and family members filled the courtroom, and they tearfully hugged him after the proceeding, joyful that he will not go to jail.
"It was a very, very fair resolution of this whole problem," Gravel said.
The total maximum penalties for the two misapplication offenses was 10 years and $500,000 in fines.
His daughter, Victoria Reggie Kennedy, called her husband, U.S. Sen. Ted Kennedy, from a pay phone outside the courtroom. She said the senator was "very positive" and pleased in his reaction to news of the sentencing.
The Reggies and Kennedys have been close friends since the late 1950s.
"We know Edmund Reggie; we know who he is and obviously the judge showed today he knows too," the defendant's daughter said.
She said her brothers and sisters encouraged him to resolve the case "because we wanted our father with us."
"We wanted him to be over this burden," she said.
The two men who investigated Reggie, former U.S. Attorney Joe Cage and FBI agent Ellis Blount, were in the courtroom with Assistant U.S. Attorney Duro Duplechin who also prosecuted Reggie in the conviction, and they left shortly afterward.
Cage declined comment on the sentencing, but he disputed Gravel's claim that Reggie had endured 11 years of investigation.
He has said he would not have accepted the no contest plea by Reggie and that he would have pursued two stronger cases, dismissed with the no contest plea, in which the government alleged that Reggie received almost $400,000 in exchange for Acadia Savings making loans to a Baton Rouge real estate investment firm, Louisiana Real Estate Equity Ltd.
Cage had been silent each time during the past few years after he was castigated by Reggie who called Cage "a colossal liar."
"I think that was shown to be totally false at trial," Cage said.
Outside the courthouse, Reggie said he was relieved to have the matter resolved, and he was satisfied with the sentence.
He said the past several years were plagued by the specter of a federal investigation.
"Every otherwise festive moment that we had, like a child's christening a son or a daughter getting married, has always had that dark cloud over it," he said. "That's over, for the first time in a dozen years."
Reggie was charged in a 13-count indictment. He was acquitted on six counts in his first trial.
In his second trial, he was convicted on two charges but one conviction was reversed by Shaw. He pleaded no contest to one charge, and the remaining four were dismissed.
In the no contest plea, the government alleged that Acadia Savings was in the process of foreclosing on several Arkansas ranches to be purchased by Irrigation Equipment Ltd. and the company expected to receive one ranch free in exchange for getting a $425,000 loan from Acadia Savings, with the free ranch being used for collateral.
But the government alleged that the Irrigation Equipment loan was made before completion of the foreclosure process, that title to the ranch was never obtained and the loan was never secured.
In the charge which resulted in conviction, the government convicted Reggie of requiring Triad Enterprises to buy 69 acres of foreclosed property from Louisiana Bank and Trust of Crowley for $700,000 in order to get a $2.5 million loan from Acadia Savings.
Shaw sentenced Reggie on the conviction to 120 days of home confinement, and ordered him to pay a $30,000 fine during three years of probation, all running concurrently with 120 days home confinement for the charge in the no contest plea.
He is to begin the home confinement at his Crowley residence on Oct. 15.
Before sentencing was imposed, Jeffress told the court that federal statistics show that probation is given to 71.5 percent of the average first offenders in cases similar to Reggie's.
Shaw rarely, if ever, explains his rationale for his sentences. But Thursday was different.
The judge said the public isn't likely to forget "the defendant was convicted of a crime."
The judge said Reggie didn't pocket any money from the circumstances which led to the conviction and the no contest plea, and his actions did not involve a matter of "public trust."
If anything, he said, the charge resulting in the conviction may have strengthened Louisiana Bank and Trust temporarily, forestalling its eventual failure in 1987.
Shaw said Reggie is "not in the best of health," and he should not be faulted for failing to accept responsibility for what he did, because to make statements to that effect on the record would damage his case in the civil suit.
The judge acknowledged the seriousness of failed financial institutions in Louisiana, and he commended the U.S. Attorney's Office for prosecuting cases involving banks and thrifts.
He also credited Assistant U.S. Attorney Howard Parker for bringing the case to a conclusion.
Parker, who took over the case after Cage [a Republican] was ousted this year by the Democratic administration, said the government entered into the plea agreement "fully aware that the court's sentencing options included probation or home confinement."
The prosecutor said the plea agreement was a compromise that factored the length of the case.
Reggie had been under the current indictment since 1989, and Parker said it's rare that a case is pending for more than four months.
"The United States is well aware that the protracted nature of this court action has taken a toll on all parties, particularly the defendant's family," Parker said.
The FDIC letter urging restitution says that the two transactions involved in the no contest plea and conviction were "only a small part of the far greater price the American taxpayers have paid as a result of the failure of Acadia."
Jeffress argued in written response to the FDIC letter that the $5.1 million amount is "an astonishing claim."
He said the claim for restitution is an attempt to punish Reggie with a 1989 law for acts committed in 1985 and 1986.
Jeffress also disputed Russell's claim that Reggie could easily afford to pay $5.1 million in restitution.
The FDIC argued that Reggie's net worth exceeded $18 million, with assets including a $300,000 home in Nantucket, Mass., but Jeffress argued that estimate was from 1984 and that his true net worth is now $103,829, not counting contingent liabilities of $2.3 million.
Jeffress added that the prosecution against his client has "resulted in a terribly frustrating inability by Mr. Reggie to earn the income necessary to pay debts to his lawyers, his family, and the Internal Revenue Service."
"The prospects of him doing so in the future, given his conviction, are highly discouraging," Jeffress ended the letter.
"Mr. Reggie does not have the means to pay a substantial fine, much less restitution, and the FDIC's arguments to the contrary are utterly baseless."
Copyright 1993, The Advocate,
Capital City Press, Baton Rouge, La.
From: The Advocate, Baton Rouge, Louisiana, September 24, 1993. Page 1-A, Section: STATE. Reprinted in accordance with the "fair use" provision of Title 17 U.S.C. § 107 for a non-profit educational purpose.
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