One of the four DBSI company officials convicted of fraud charges in 2014 says the judge overseeing the trial improperly prevented defense lawyers from questioning potential jurors on whether they were biased against Mormons.
Mark Ellison, who served as the company’s attorney, and three other men who were convicted — company president Douglas Swenson and DBSI secretaries Jeremy Swenson and David Swenson — are all members of the LDS faith. Their attorneys wanted to question jurors to see whether they might be inclined to convict the men because of their religion, which numbers more than 437,000 in Idaho, about 19 percent of the population, according to the LDS Church and the Pew Research Center.
Chief U.S. District B. Lynn Winmill, who is also Mormon, told the attorneys he didn’t believe jurors would answer honestly about being biased against the LDS Church, whether they were or not. The judge did concede before trial that even without a direct reference, jurors might figure out that the defendants were Mormon.
Jeffery Robinson, Ellison’s attorney, wrote in an appeal that Winmill during the conversation acknowledged a “significant level of bias related to LDS members in Boise and America, including the likelihood that such people would be included in the jury panel.”
After the jury’s verdict in April 2014, Robinson wrote that the jury foreman, who was not identified by name, had a Facebook friend write “Ha! The Quorum of the Twelve (Apostles) just put a hit out on you. Beware!,” referring to the church’s second-highest governing body.
The foreman responded by writing, “I will be steering clear of the temple on Easter,” Robinson said.
Robinson said he isn’t sure the foreman holds a bias against LDS members, but voir dire questions might have revealed attitudes or beliefs consistent with the Facebook post.
Juror questioning, known as voir dire, is critically important to ensure a defendant’s constitutional right to an impartial jury. Federal judges have wide latitude in determining how the questioning by prosecutors and defense attorneys will be carried out.
The 9th U.S. Circuit Court of Appeals is hearing the appeals of the four defendants. It has previously ruled that abuse of discretion can be found in cases where “questioning is not reasonably sufficient to test the jury for bias or partiality.”
Founded in 1979, DBSI managed office buildings, shopping centers and warehouses for investors nationwide until it collapsed into bankruptcy in 2008.
Prosecutors said the company was a Ponzi scheme, with money from new investors used to pay earlier investors. The defendants said they did not break and laws and claimed DBSI was hurt by the downturn in the economy.
Douglas Swenson, 68, was sentenced to 20 years in prison after the jury found him guilty of 44 counts of securities fraud and 34 counts of wire fraud. Ellison, 67, Jeremy Swenson, 43, and David Swenson, 38, were each convicted of 44 counts of securities fraud. Ellison was sentenced to five years in prison, while the younger Swensons, sons of Douglas Swenson, were sentenced to three years each.
All four men are free while appealing their convictions.
The appeals court has not indicated when it will take up the cases. The government has until Aug. 1 to file answering briefs, and the defendants have until Nov. 14 to file additional, optional submissions.
Judge strips millions in DBSI payments from IRS
A federal judge has ruled that a DBSI subsidiary improperly made payments to the Internal Revenue Service on behalf of company president Douglas Swenson and another company official and that the money rightfully belongs to DBSI’s investors and creditors.
The subsidiary, an investment company called For 1031, submitted payments of $17 million on behalf of Swenson; Thomas Var Reeve, the subsidiary’s former president; and others in 2005 to satisfy their personal federal tax liabilities for the previous year.
Bankruptcy trustee James Zazalli, former chief justice for the New Jersey Supreme Court, argued that the proceeds were derived from fraudulent activities by DBSI and its subsidiaries and should not have been used for the tax payments.
The IRS had sought to retain the payments, arguing they covered legitimate income taxes owed by the individuals and paid for by the company.
In her ruling, U.S. District Judge Marsha Pechman said the money should have never gone to the IRS. It should have been returned to investors, she said.
However, Pechman wouldn’t let the trustee recover $3.6 million refunded to Swenson and others as overpayments for what they owed in 2005.
More than 22,000 claims totaling $102 billion have been filed with the bankruptcy court. Previous filings have said DBSI’s 8,500 investors and vendors who did work for the company would be lucky to recover pennies on the dollar.