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DBJ: UDF CEO, Execs Seek New Trial After Securities Fraud Convictions

February 17, 2022 Bill Hethcock of the Dallas Business Journal

Hollis Greenlaw, CEO of Grapevine-based lender United Development Funding, and three other UDF executives convicted of duping investors and banks in a scheme involving loans to developers of hundreds of residential communities across Texas, have demanded a new trial based on their claim of a “mosaic of cumulative error” by the federal judge presiding over the case.

U.S. District Judge Reed O’Connor put strict time limits on defense attorneys to present their side of the story to jurors and committed multiple other legal errors, according to claims in motions filed by lawyers for Greenlaw and his UDF colleagues.

“There was ‘mosaic of cumulative error’ that undermined the fairness of the trial for Mr. Greenlaw and his three codefendants,” a motion filed by defense attorney Paul Pelletier states.

O’Connor unconstitutionally imposed a 15-hour limit on the four defendants’ cross-examination of the government’s witnesses and presentation of all four codefendants’ cases, according to the motion.

In addition, O’Connor wrongly denied defense requests to push back the trial date, forcing Greenlaw and the others to proceed “in a highly complex case with a massive amount of discovery only three months after the indictment was returned by the grand jury,” Pelletier’s motion states.

O’Connor’s denial of a continuance, or postponement of the trial, forced the defense into the position of providing ineffective assistance of counsel for lack of sufficient preparation time, the newest motion states.

“Trial commenced on January 12, 2022 — exactly three months from the date of the indictment’s return, a fraction of the typical time between the return of an indictment and the commencement of a jury trial in a federal criminal fraud case,” according to the motion.

The 15-hour total time limit for all four defendants to present their case and cross-examine federal prosecutors’ witnesses came after the executives’ lawyers had requested 15 hours per defendant.

“This Court nevertheless proceeded with its 15-hour cumulative time limit, leaving each defendant with just 3.75 hours on average both to cross-examine the government’s witnesses and also present their cases (including, in the case of three of the defendants, to testify on their own behalf),” the motion says.

The lawyers contended before trial and argue in current filings that O’Connor’s imposition of the time limit was “arbitrary and unreasonable.”

Federal prosecutors declined to comment on post-trial motions and have asked O’Connor to give them until Feb. 25 to file a response in court to the defense’s request for a new trial.

O’Connor is set to sentence the UDF executives on May 20. The four face sentences ranging from 12 to 27 years in federal prison, prosecutors said at a detention hearing on Jan. 24. 

Some of the other grounds for a new trial claimed in the latest motion are:

  • O’Connor’s denial of the defendants’ pretrial request to prohibit jurors from viewing and hearing evidence and testimony related to an FBI raid of UDF’s headquarters in Grapevine. The defense contends the raid and presentation of related evidence violated the UDF employees’ protections against unreasonable searches and seizures under the Fourth Amendment to the Constitution.
  • A jury instruction based on an allegedly erroneous definition of “intent to defraud” as an “intent to deceive or cheat someone.”
  • A jury instruction based on the allegedly flawed definition of “scheme to defraud” as meaning “any plan, pattern, or course of action” intended either to “deprive another of money or property” or to “bring about some financial gain to the person.”
  • The government’s allegedly improper opening statement and closing argument.
  • O’Connor’s exclusion of certain defense exhibits.
  • The government’s presentation of allegedly perjured testimony at trial.

For more DFW business news, please visit the Dallas Business Journal.

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