The criminal tax evasion trial of Houston lawyer Jack Stephen Pursley was notable for many reasons.
It’s not exactly routine for a newly minted business lawyer to find himself involved in a multimillion-dollar offshore tax fraud scheme. And not every trial features the disqualification of a bird-flipping, profanity-spewing juror.
But it was also a very quick trial — one that lasted comfortably inside a single, holiday-shortened business week. A lot happened in four days that got short shrift in the crush of a fast-moving trial.
Pursley was convicted on all four counts of tax evasion and conspiracy to defraud the federal government. That was the news.
But, of course, there was more to the story. Between the arrival of the jury pool and the final verdict, there were some interesting – and sometimes telling – moments. Here are a few of them.
The Bird is the Word
Perhaps the most unexpected moment of the trial came when the judge decided to dismiss a juror.
Known to the courtroom only as Juror No. 5, he was a young man with light hair and glasses who often shook his head during testimony — in ways that could be read as either amusement or disbelief.
But what became the final straw was his seemingly unprovoked use of an upraised middle finger, a gesture that caught the attention of a clerk for the presiding judge, Lynn N. Hughes.
“I didn’t even know what that was until my law clerk explained it,” Judge Hughes told the courtroom. Though it remained uncertain exactly what provoked the gesture, Hughes said he was worried that the juror might be disruptive once deliberations began. “Shooting people the middle finger is probably not conducive to deliberation.”
“My concern is not that he favors IRS or Pursley, but that he’ll be erratic and mess the whole thing up,” Judge Hughes said. “He could hang the jury.”
The role of Juror No. 5 in the trial is probably not over. Defense attorney Victor Vital objected to the dismissal and indicated it may play a role in a potential Pursley appeal.
“None of the other 13 (jurors) have complained about him being disruptive,” he said during an impromptu hearing. “Everybody’s talking on observations based on their own interpretations. None of the seated jurors have brought the issue … (on) the record.”
“As human beings, they’re going to have emotions,” he said.
The Basics
Pursley was accused by the government of helping his college friend and client Shaun Mooney in the tax-free repatriation of $18 million from an offshore oil rig recruiting company called Southeastern Shipping. For that Pursley was paid $4.825 million – upon which he also paid no taxes.
The scheme came to light when Mooney disclosed it to the IRS under the Offshore Volunteer Disclosure Program. Mooney was not prosecuted and, as the key witness against Pursley, admitted he had lied to the government; Pursley, in his defense, claimed Mooney had lied to him.
Key to the cases for both sides was whether Pursley knew Mooney actually owned Southeastern Shipping, instead of its owner of record, a Brazilian oil rig safety advisor named Eduard Venerabile.
In her closing argument to the jury, Department of Justice lawyer Grace Albinson – unsurprisingly – emphasized documents that indicated Pursley had to know the Mooney connection: travel records.
She showed that Pursley had twice traveled with Mooney to Panama, where Southeastern originally had been incorporated in 1999.
“Pursley knew from day one that Mooney was the owner of his company.”
Moreover, Pursley knew that ownership was being questioned by a compliance officer in the Isle of Man and that he seems to have been paid to convince her that Venerabile was the actual owner.
Albinson reminded the jury that Pursley provided the compliance officer with purported ratification of Venerabile’s ownership, a copy of Venerabile’s passport, and “a live person in the Bahamas” to convince her that Venerabile, not Shaun Mooney, was the true the owner of Southeastern Shipping.
It was a conclusion that the compliance officer, Kerry Smith, was pressured to reach at her own firm; others at the Isle of Man Financial Trust were not keen on losing their biggest client.
After that flurry of activity, “$3.6 million goes into his account,” said Albinson. “This was his motivation.”
In his first 48 minutes, Vital reminded jurors that it was another lawyer who Mooney listed as his legal counsel when he set up the company in Panama in 1999. And before he learned of Mooney’s confession to the government, Pursley had initiated a lawsuit against his former college friend Mooney — where all documents would reach the public domain.
“What criminal defendant in a tax conspiracy goes to the civil courthouse and files a lawsuit?” Vital asked.
He argued to jurors that the reason Mr. Pursley stood trial was not because he was a criminal, but because Mooney wanted a leg up in their long-running civil dispute.
And seemingly mindful of the impending weekend, he urged jurors to not cave to others’ opinions just because people want to go home.
“My client wants your individual decision,” Vital said. “If it’s different from others, listen … but do not give up. Don’t sacrifice what you truly believe.”
On the Clock
Both sides were given 45 minutes to close. Albinson had used 30 and the prosecution reserved the remaining 15 minutes for rebuttal.
But a clock-management issue arose when, after 48 minutes, the judge called time on defense attorney Victor Vital, who seemed surprised that he wasn’t being given an hour to make his case. Even prosecutors seemed sympathetic, at one point backing up Vital and telling the judge that they too recalled the judge giving Vital one hour.
“Judge, I respectfully request 12 more minutes,” Vital asked, explaining that he had been pacing his argument for the full hour of time he had anticipated. “I’m begging you.”
Judge Hughes changed his mind, and Vital continued. In light of the immense stress he had just endured, his voice cracked for a couple sentences before he resumed his passionate tone.
“The evidence shows he didn’t act willfully,” Vital continued with the judge’s blessing. “My client didn’t have a criminal mindset.”
In rebuttal, prosecutor Sean Beaty was blunt. He threw down stack after stack of paperwork involved in the convoluted financial transactions that Pursley supervised.
“Math doesn’t lie, ladies and gentleman,” Beaty said. “Eighteen million came back to the United States. How much did Mr. Pursley get? 26.3 percent.”
“One of them came clean to us, said what they did and paid a penalty for it,” Beaty said.
He concluded with what had become obvious to many in the courtroom: “What did Mooney learn? It would have been cheaper to pay his taxes in the first place.”
The International Wait Line
One of the hidden dramas behind the case was the difficulty for both sides in obtaining testimony from an overseas witness. Though the case was originally set for November 2018, the trial was delayed in order to accommodate overseas testimony that could benefit both sides.
Kerry Smith, the compliance officer whose firm provided financial services in the Isle of Man, was finally deposed for two days this spring.
But before deposing Smith, the government had to obtain a Rule 15 order from Judge Hughes. Then they submitted an MLAT request — mutual legal assistance treaty request — with the Isle of Man to compel Smith’s testimony. Then, through the Isle of Man court, Smith provided her testimony under a nonprosecution agreement with the U.S. government.
Two weeks after the deposition, Pursley’s lawyers asked for dismissal under the Speedy Trial Act. When that was denied by Judge Hughes, Pursley switched lawyers, asking for a delay of his own.
The Man from Rio
Shaun Mooney may have been the star witness of the trial, but Eduard Francisco Venerable stole the show. Because of the mystery built around the Brazilian, his testimony was one of the most anticipated moments of the trial.
Venerabile, who works offshore in Africa, flew to Houston from Brazil to voluntarily testify. Fluent in multiple languages, he rolled his name off his tongue in practically one word, “EduardFranciscoVenerabile,” prompting the court reporter to ask him to slow down.
Identified initially in the indictment only as “Individual 1,” Venerabile certainly proved to be one of a kind; a person who had acknowledged he would willingly give up his ownership in a $15 million company in exchange for $100,000.
Venerabile’s candor, enhanced by his occasionally exotic use of language, made him an obvious courtroom favorite – a fact acknowledged by Judge Hughes in open court.
“Our friend from Brazil has been used by everyone as a punching bag,” Judge Hughes said, with the attorneys chuckling in response. “He ought to be mad at everyone … he didn’t act like he was seeking vengeance.”
Here Comes the Judge
Every day, three bangs of a gavel announced Judge Hughes’ arrival, signaling to lawyers that it was time take their places.
Fiercely protective of the juror’s time, Judge Hughes refused to let lawyers waste it. On the first day, both jury selection and opening statements were done before the lunch hour.
During voir dire, when one person mentioned he had “irreversible” travel plans during the week of Sept. 23, Judge Hughes had a quick retort: “We’ll be done long before that, or I’ll shoot myself.”
At one point during Mooney’s testimony, Judge Hughes warned the defense to pick up the pace of questioning.
“Jurors know when people are dodging or evading questions; they have teenagers,” he said.
And on another day, when it was 4:58 p.m., Vital said he wanted to re-cross the witness for two more minutes.
“I’ll split it with you — 45 seconds,” Judge Hughes replied.
If attorneys ignored him, Judge Hughes let it be known — but sometimes in a lighthearted way. Once, after an objection, DOJ lawyer Grace Albinson continued questioning a witness.
“I’m sorry, have I been overruled? It happens all the time at home,” Judge Hughes quipped.
From the Person Jurors Wanted to Hear, Only Silence
Pursley’s lawyers chose not to put him on the witness stand in his own defense. When the jury did hear from Pursley, it was via a 12-minute clip from a video deposition from his own civil litigation. It was designed to prove that Pursley possessed a 2005 memo stating Mooney was the de facto owner of Southeastern Shipping, but it also showed that under cross-examination Pursley could be far more polite than Mooney.