Wednesday, September 29, 2010

Virginia Bankers Score Rare Victory against Federal Prosecutors

USA Today



Richard Holland Jr. beat the government — twice.

First he was acquitted in a criminal conspiracy case brought by federal prosecutors. Then he forced the Justice Department to help cover his legal bills.

Neither victory made up for nearly eight years of anguish he suffered when he and his father were investigated and prosecuted for allegedly hiding evidence that the small bank they ran in this rural area had made some improper loans.

Nor did the wins cover all of the Hollands' legal bills, even though they got $912,000 under the Hyde Amendment, a law that requires the Justice Department to reimburse such costs for wrongly prosecuted defendants. "We found out the law doesn't repay everything," Holland said.

Hyde Amendment cases are rare, and victories are even rarer. A USA TODAY investigation found just 13 successful cases filed by top attorneys out of 92 filed since the law's 1997 enactment. The Hollands were among the first defendants to win reimbursement.

The case against the Hollands began with a 1990 Federal Deposit Insurance Corp. review of loans to Holland's father, prominent state Sen. Richard Holland Sr., by the family-led Farmers Bank. The review ended in a settlement, but the FDIC began a new investigation in 1991.

The probe concluded the bank had exceeded lending limits on a few loans to developers, and the FDIC urged federal prosecutors to pursue criminal charges. In 1997, the Hollands were charged with hiding evidence about the loans.

The younger Holland, 58, felt compelled to stop teaching Sunday school for the seven months before the 1998 trial. He readied his family for the worst, telling them he faced prison.

In contrast with the long investigation, the Hollands' trial ended abruptly. After the government presented its case and before any witnesses testified for the defense, U.S. District Judge Henry Coke Morgan stopped the trial and acquitted the Hollands. It was the first time the judge had ever pre-empted a jury. "There's no credible evidence … that either of these defendants are criminals," Morgan told jurors. In a written order, he called the case "all smoke and no gun."

Federal prosecutors, the FDIC lawyer and the Justice Department declined to comment.

The elder Holland returned to the state Senate to a standing ovation. His son resumed his Sunday school duties.

Their lawyers filed the repayment claim. Morgan ordered the government to pay, saying "the lack of evidence of criminal intent was so obvious" that the prosecution had been "vexatious" and amounted to harassment. Under the Hyde Amendment, defendants must show a prosecution was vexatious, frivolous or in bad faith to qualify for compensation.

The money — $500,000 less than the Hollands' total legal bills — went to the bank, which had loaned them funds to pay their lawyers pending the trial outcome. Because the case dealt with their official duties, and they were acquitted, the bank did not require repayment of the rest of the loan.

The elder Holland lost a battle with cancer even before an appeals court upheld the Hyde Amendment ruling. His wife had died earlier during the probe. The younger Holland said the compensation didn't make up for the way the case darkened his parents' last days and clouded his own life.

"It was a bittersweet victory," he said. Unlike the prosecutors, he added, he faced the "risk of losing everything."

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