Tucker/McDougal Trial Closing Statements:
W. Ray Jahn, Associate counsel, office of the independent counsel
(beginning)

MR. JAHN: May it please the Court. I told you it wasn't going to be easy. Remember it was, like, what, 10 weeks ago, first mistake I made was saying we'd try to finish this case in six to eight weeks, but then when you sit back and look at the testimony, we have 42 days worth of testimony during this course of time. believe I also told you that trials weren't like T.V. programs where they started on the hour and finished on the hour with breaks every 10 or 15 minutes to sell products.

It is now at the stage, though, as the Court instructed you, that I have a chance to get up and summarize for you what I anticipate the evidence will be, or what I anticipate the evidence has established. I've told the Court I will be finished with that particular portion of my argument by 5:00, so we will be going home by 5:00 this evening. Tomorrow the defense counsel will get a chance to sit down and visit with you and tell you how they viewed the evidence, how they reviewed the evidence, and how they view what happened over the last weeks. And then on Wednesday, I'll get a chance to come back and respond to that.

And then the Court will give you the jury instructions, and that will be the instructions to you as to how to apply the law, and I'll discuss them a little bit this afternoon, and I'm sure all the defense counsel will all have a chance to discuss it.

We talked about a book that was going to be handed to you and be asked for you to review it and review that book. And I talked to you concerning trust, I talked to you concerning public trust, I talked to you concerning private trust. I talked about the trust the depositors of Madison Guaranty Savings & Loan placed in Jim and Susan McDougal. I talked about the trust that the SBA and the taxpayers placed in David Hale, and I talked about the abuse of that trust.

I submit to you, ladies and gentlemen, the government has established each and every essential element of the crimes that are facing you or that been charged in the particular case and that you now have to resolve. It will be your determination, though, as to whether or not those essential elements have been met, and in order to try to help you a little bit, I'm going to talk to you a little bit about what the Court is going to charge to you as the essential elements and where I think you should look to for some guidance.

I think we need to think in terms of the essence of the crimes involved here. Count No. 1 involved here is a conspiracy. The essence of the conspiracy count is an agreement, an agreement between two or more persons to violate the law. That agreement, as the Court will instruct you, doesn't have to be in writing, doesn't even have to be explicit. An example that's been used before is a man who decides he's going to rob a bank and he goes down and gets a mask and he gets a gun, and he goes up to the front door of the bank and he sees another man with a mask and a gun getting ready to go in. They nod to each other, go in and rob the bank, come out and split it up. They never said a word to each other, they never agreed to anything or anything else, but by their actions, by their conduct, they reached an implicit -- not explicit, not expressed, but an implicit, an implicit, and implied agreement between each other to commit an offense.

So now you have to have an agreement, you have to have an agreement between the defendant you're looking at and at least one other person. That agreement has to be to violate the law, and when you get down and examine the essential elements, you'll see the Court has given you kind of a smorgasbord of crime that's laid out in the conspiracy.

The Court will charge you that it's not going to be your responsibility to determine every particular crime that was committed or the full extent of the agreement, because even the defendants don't have to know the full extent of the agreement that exists between the two individuals or between the three individuals or between however many people are in the conspiracy. But all you have to do is, you have to come to the conclusion that there was an agreement and that that agreement entailed violating a particular crime, and the crime can be anywhere in the smorgasbord.

It could be misapplication of funds, and we'll talk about what misapplication means. It could be false entries in bank records or in Capital Management Services' records. We'll talk about what the essential elements of that are in a second. It could be the participation, illegal participation in the proceeds of these particular loans, when the money came out, diverting them from their true purposes into other purposes. It could be an offense involving false statements in connection with the applications themselves, lies to David Hale, lies to the SBA concerning what these applications were for.

But you have to make a determination there was an agreement and that they agreed to violate a statute, any particular statute, and then you have to agree at least one overt act was committed. And the Court will tell you what an overt act is. The Court will tell you that it's not necessary, for instance, that an overt act be a crime. It can be a simple, honest thing. For instance, let's go back to the bank robbery example again.

Two men decide to rob a bank. One says, "Okay, fine, I'll go out and buy the getaway car." Buying the getaway car, there's nothing wrong with that, it's not illegal, but yet it can be an overt act, it can be part of the offense, it can be an essential step in the offense and, in fact, what makes that essential step or what makes that agreement strive towards success.

What about success? I think the Court will instruct you, ladies and gentlemen, that success is not an element of the crime. It doesn't matter whether or not the conspiracy succeeded in what it is was going to do. It doesn't matter whether or not it accomplished its goals or not. The question is, it's for the lack of effort; in other words, it's the effort that the law looks to, it's the agreement the law looks to, and then from there, it's the commission of the overt act in furtherance of the conspiracy. That's a conspiracy.

One of the other essential elements, and this is when I'm going to pull out the book that I anticipate the Court will charge you on, is the concept of misapplication of funds. What constitutes a misapplication of funds? Let me get down to the -- okay. The Court is going to charge you, basically, as far as misapplication of funds, and this applies to virtually every one of the substantive loans we're talking about here. It will involve the Smith Communications loan, Communications Company loan, it will involve the Master Marketing loan, it involves the Bill Henley backdated lease at Madison Guaranty Savings & Loan, and it involves the Southloop loan.

So what is a misapplication of funds? Well, the Court will charge you that basically in order to prove the essential elements of misapplication, you're going to have to go back and examine the particular transaction that was in effect. First of all, there has to be an insider, there has to be somebody connected with the institution involved, and there are two people here, ladies and gentlemen, that are alleged as insiders. For those matters involving Madison Guaranty Savings & Loan, one, of course, is Jim McDougal. For those matters involving Capital Management Services, one is, of course, David Hale.

Now, you stop for a second and you say, wait a second, Jim McDougal owned Madison Guaranty Savings & Loan, didn't he? Yes, he did. And David Hale, David Hale owned Capital Management Services, didn't he? Well, yes, he did. Well, it's their company. They can do anything they want. I submit to you, ladies and gentlemen, the answer to that is no. They are not speaking for the companies when they take their actions. Even though they own the corporations, even though they own the stock in Madison Guaranty Savings & Loan, the law has looked toward these particular institutions as being institutions of trust -- we already talked about trust -- institutions in which the depositors can say, here, take my money, make yourselves loans, make yourselves profits, but you have to follow the rules. You have to follow the regulations.

No one made Jim McDougal buy stock in Madison Guaranty Savings & Loan. No one made David Hale create Capital Management Services and get funds from the federal government. They agreed by their actions in buying the stock and by their actions in creating Capital Management Services, they agreed to abide by the rules. They agreed to abide by the law. And I think there's one thing that we're going to talk about today, we're going to talk about tomorrow, we're going to talk about it on Wednesday.

This country, ladies and gentlemen, is founded upon an extremely important concept, which is, no person is above the law, no matter who they are. These individuals agreed that they would abide by the law. They didn't give -- weren't given the power to go ahead and violate the law as far as loan applications were concerned, violate the law as far as agreeing that, oh, yes, you can lie to Madison Guaranty Savings & Loan in connection with this particular offense, this particular loan or whatever. They weren't given that authority by the law, and they weren't given that authority by the depositors.

David Hale wasn't given the authority by the SBA to agree to throw away the money which was part his, one-fourth his and three-fourths federal money. He wasn't given permission to go out and scatter that money across the State of Arkansas to anybody that he chose. He was given that license, a federal license, and there's a copy in evidence, he was given that charter and he was given that federal money to make those loans under certain circumstances, and you heard the testimony, and I'm not going to bother you by going back over a lot of details. I'm going to hit some high points. You obviously followed the evidence and made notes.

You remember Ms. Patricia DiMuzio, the lady who was down here who has spent 30 years at the SBA. She's the one who told you how the SBA set up this project. She's the one who told you about the purpose of the Minority Enterprise Small Business Investment Corporation. She's the one who told you what their goals and what their ambitions were. True, there was some testimony that certain people might have said, well, those regulations are unenforceable. Well, the fact that the regulations might not be able to prevent people from in good faith making loans to people who aren't qualified to borrow isn't a license to throw away the money, isn't a license to lie, isn't a license to go back and create false corporations, create phony transactions, to create bogus applications in order to line your pockets with that federally insured money.

And David Hale, even those he's the owner of Capital Management Service, and even though he's the primary stockholder and the manager and a co-conspirator, and there's no question he's a co-conspirator, doesn't have the right to preempt the federal government and preempt the trust that's been placed in him by the federal government.

The same thing can be said of Jim McDougal, exactly the same thing. The fact that he owns that Madison Guaranty Savings & Loan, the fact that he's president of Madison Financial Corporation doesn't give him a license to go about and misuse the funds.

The essence of the misapplication, ladies and gentlemen, is that someone connected with the institution has a misapplied the monies, funds of that institution. Misapplication means the unauthorized or unjustifiable or wrongful use of the funds of the institution. Misapplication includes wrongful taking or use of the funds of the institution -- and both were savings and loans or Small Business Investment Corporations, that's the reason I'm changing the institution -- by a person connected in a capacity with that association for his own benefit or for the use and benefit of some other person. He doesn't even have to take it for his own benefit.

It fits exactly the same type of transaction that David Hale testified about and the type of transactions that the documents exhibit, where I'll trade you loans, you give me a bogus loan, you give me an inflated loan, you give me a fraudulent loan and I'll give you bogus loans, inflated loans, fraudulent loans in return, because there they are benefiting each other. One is taking it to benefit the other set of conspirators, and David Hale then is making loans to benefit his co-conspirators.

There is also an action or requirement, ladies and gentlemen, that it must be done with an intent to injure or an intent to defraud, and if you remember, I told you at the very beginning that these were going to be crimes involving the pencil rather than the pistol. And I told you that the conspiracy that was going to be established was an effort to commit the perfect crime, an effort to take this money, to make unauthorized, unlawful, illegal loans, invest those in various business deals -- and that's exactly what we have here, a bunch of wheeler-dealers -- invest these in various business deals, make a profit, make a killing on it, and then come back and pay off the loan, to get away with it.

I told you that there was no intent to steal, and that's a legal concept, and you won't hear it during the course of the Judge's instructions, because stealing means to take with the intent to permanently deprive, as opposed to an intent to defraud. An intent to defraud means to act with the intent to deceive or cheat.

What they are doing is, they are taking away the money by deception, by false pretenses, by false representation, for the purpose of causing a financial loss to someone else or bring about a financial gain to the defendant or to another. And so that's what we're talking about as far as an intent to defraud.

You can also find either an intent to defraud or an intent to injure. An intent to injure means with the intent to cause a monetary loss. And I submit to you, ladies and gentlemen, that wasn't their intent. Their intent was to defraud, their intent was to deceive.

You'll find, for instance, on some of these crimes we're talking about that there actually can be two people that were deceived. On the misapplication of funds, the allegation has to be that the person who was deceived was the institution. Not David Hale, not Jim McDougal. Don't confuse them with the institutions. It was the institution itself, Capital Management Services an institution, as a licensed, federally programmed lender, or Madison Guaranty Savings & Loan.

You'll also find that with every one of these misapplications, there are offenses involving false entries in the books and records of these institutions. And you'll find that there the intent to deceive can be either -- and this is going to be up to you find, and you just need to find one or the other -- can either be an intent to deceive the institution or an intent to deceive the examiners of that institution; that is, the examiners who were coming down.

And you heard the testimony and I think it's beyond dispute that Jim McDougal was worried about the examiners that were coming. The institution was expecting an examination, that he had problems in the institution, he was worried about various things. We submit that the evidence will show and that you can find based upon this evidence that there was, in fact, when these false entries were made an intent to deceive those examiners.

The same thing with Capital Management Services. How many times did you hear David Hale testify about the reports that he had to send off to Washington and about his concerns about the auditors that would come in? In fact, you saw some of these exhibits, and we'll talk about them as we get down to talking about the specific evidence.

The letters that Susan McDougal signed, the notices to the auditors of the SBA that Susan McDougal signed claiming that these were operating expenses, the letters and notices to the SBA that R. D. Randolph signed concerning the Southloop loan. This we submit will show you these were false, which supports the idea that these individuals wanted to perform the perfect crime. They wanted to get the money, wanted to put it in their pocket, they wanted to conceal it from the auditors and the examiners, they wanted to make their killing, and then they wanted to get away with it, they wanted to pay it off and get away with it.

You will hear instructions, for instance, on a particular matter which the Court has told you over and over and over again as far as other evidence of other acts that can be used by you in arriving at intent, plan, idea. I submit to you, ladies and gentlemen, the basis, or not the basis, but the proof of the United States's assertion that the intent was to commit the perfect crime is in the D & L loan. And the D & L loan, if you'll remember, is not charged in this indictment. This is strictly what the Judge referred to as a 404(b) matter.

This is a matter that was offered strictly to show Jim Guy Tucker's fraudulent intent, and you remember that particular transaction. Now, I'll show it to you a little bit later on in detail, but if you'll remember Donald Smith, the television man or the construction man from Florida who came in here and testified, you remember David Hale showing you these, the letters, the application, the transaction that occurred in June of '87 where there was a loan for $300,000 that was extended to Mr. Tucker in the name of D & L Communications.

And remember, this is when Mr. Tucker's corporations already had up to the loan limit. There was no way that he could legally borrow $300,000. So Mr. Tucker came in and created this false loan, created a loan in the name of D & L Telecommunications, took that money and made $10,000,000, ladies and gentlemen. $10,000,000. You saw the check that David Hale talked about going to the IRS for a million dollars. You saw that as soon as the stock in that cablevision company that he purchased was sold, what happened? He came in immediately and paid off the D & L loan. He came in and immediately got rid of it so there would be no questions about it.

That's the kind of evidence we're talking about as far as showing their intent, showing the intent of Jim Guy Tucker to commit the perfect crime. And look how long he succeeded in it, ladies and gentlemen. The evidence shows that he did exactly what he was trying to do in connection with the Castle Sewer & Water transaction and even in connection with the Southloop transaction and in connection with this 34 acres that he borrowed the $260,000 on. That's where we come down to the question of intent.

And I submit to you the Court will also instruct you basically -- well, let me see.

And for that reason, ladies and gentlemen, I submit to you that any evidence of an intent to pay back, since it's not an essential element as far as a permanent loss, is completely irrelevant as far as proving the fraudulent intent of these particular defendants.

We talked about conspiracy, we talked about misapplication, we talked about false entries. There's also an offense charge in here, ladies and gentlemen, involving Count 2 and 3, wire fraud. I think I talked briefly about that when we started off. But, first of all, you'll have to show, or you'll have to find that there was, in fact, a scheme, there was a plan, a scheme to defraud somebody. And we submit to you, ladies and gentlemen, in this particular instance, the person that was being defrauded or the individuals being defrauded were Madison Guaranty Savings & Loan and Capital Management Services, and the overall scheme is the basis for these particular transactions; that is, I'll take my piece of property out here called Etta's Restaurant, called Woodson Lateral Road, we'll get an unscrupulous appraiser named Robert Palmer to come in here, and he's going to inflate those appraisals to an outrageous amount, we're going to borrow $825,000, which is $500,000 more than what it's worth by a long shot, pocket that $500,000, put it in the Capital Management Services, and send off to Washington to the SBA to get a three-for-one matching grant. Okay. You've got that particular scheme.

And in exchange for that loan, I will give you loans out of Capital Management Services, and those loans are going to be to people like Larry Kuca who's going to come in with Jim McDougal's assistant, he's going to come in and lie about what that money is going to be used for, why that money is going to be used, because it doesn't fall within the program. It will be Dr. Stephen Smith who with Jim McDougal's help is going to come in and lie about what that particular money is going to be used for because it doesn't fall within the program. It's going to be Jim Guy Tucker who is going to create a bogus -- not a bogus, but a brand new, off-the-shelf corporation because he personally can't borrow that money. He's borrowed up to his maximum limit. And, by the way, we're not going to use the money for what we say in the application. We're not going to use the money for improvements, for painting, things like that, operating expenses. We're going to use it for a down payment. But never mind about that. That's part of the deal.

And then we're going to have Master Marketing, which is basically a company that never was. And that's going to be Jim and Susan McDougal, and that in exchange for that, you're going to get those loans, I get my Dean Paul loan, which is what David Hale says, and you'll get your loans. And who gets taken to the cleaners

Well, Madison Guaranty Savings & Loan gets taken to the cleaners on an unclear loan. Eventually the Federal Savings and Loan Insurance Corporation gets taken to the cleaners. Capital Management Services gets taken to the cleaners on these pipe dreams in the air. Eventually the taxpayers get taken to the cleaners. And that's the fraud.

Now, the wires consist of the money that's transferred back down. Now, if you'll remember during the opening statements -- and the Court has already told you on a number of occasions that the arguments of the attorneys aren't in evidence, the statements of the attorneys made aren't evidence. You should basically ignore what the statements say. If I say something you disagree with, ladies and gentlemen, please ignore, please take that as a mistake on my particular part and go back and examine what your own recollection is.

But he told you that arguments of the attorneys aren't evidence. And I think if you remember, I showed you a chart, I showed you a chart that involved certain transactions involving the Dean Paul transaction, and I showed you a chart as to where the money came from, and how or where it was going.

Don't worry. I found it.

And there was quite a to-do concerning that particular chart and whether or not it was a misrepresentation during the -- this was the chart that was there, the "Deals" chart. And I think if you remember, ladies and gentlemen, this was the one in which I even at one point held up a pointer right here and I said this is actually when the Dean Paul loan took place.

If you go back and look at the indictment and look at what I said during this time, I never once said that the money which Mr. Hale was getting from Madison Guaranty Savings & Loan and from the Small Business Administration was actually going to be the money that went down to fund these particular loans. I said it was a quid pro quo, Latin for you give me something, I'll give you something. There was a quid pro quo. David Hale said, "I'm not going to lend you any more money after this Capital Management loan unless you give me the Dean Paul loan."

So he gave these first two loans, they went out to them, but as far as the Capital Management loan, he insisted his Dean Paul loan come in. He testified, ladies and gentlemen, that he had something in the neighborhood of 7- or $800,000. I think, if you'll remember, even Dean Paul said at one point David Hale told him that he wasn't going to lend out all of his money until he got the Dean Paul money in. He wasn't going to place that much trust in his business associate Jim McDougal and his political associate Jim McDougal and his friend Jim Guy Tucker or his lawyer Jim Guy Tucker. He wasn't going to place that much trust where he spent all of his money.

Now, not once in the indictment and not once in the opening statement did I suggest to you that that was going to occur, but I think, if you remember, there was quite a fuss over that. There was a fuss in terms of whether or not I agreed with Mr. Sutton that I, in fact, represented that. I want to ask you to listen very carefully with what I say, and if you disagree with what I say, ignore it. Listen very carefully to what the lawyers say, and if you disagree with what the lawyers on the other side say, ignore it. The Court will instruct you that the statements of the lawyers are not evidence. The Court will instruct you that the questions that the lawyers ask are not evidence. It's the answers you heard that from the witness stand, it's the exhibits, it's the documents. That is the evidence in this particular case.

The Court will also give you an instruction, ladies and gentlemen, on the burden that's on the government, and this is something that comes up all the time. Beyond a reasonable doubt. We talked about movies, we talked about T.V. programs. You hear a shadow of a doubt, all conceivable doubt, you hear all kinds of wrong definitions as to what constitutes beyond a reasonable doubt, and that's the reason I think it's very important that you listen to the Court's instruction, because the Court's instruction is going to be quite simple as to what is a reasonable doubt. And basically he's going to tell you that a reasonable doubt -- and I know you teachers on the panel are not going to like this because you're not supposed to do this, but a reasonable doubt is exactly that: It's a doubt founded upon reason. It's not based upon speculation. I said the teachers won't like that because you're never supposed to use the word that you're defining to define the word. But it's based on common sense.

You'll be instructed, ladies and gentlemen, to leave your prejudice behind you, to leave your bias behind you, to leave whatever you might perceive to be the attitude of the community behind you, to go in and act as the representatives of your community, the conscience of your community, and return a verdict based upon reason, based upon common sense. The question then becomes is, is the doubt which you may have concerning a particular fact, is it based upon reason or is it based upon suspicion, conjecture, prejudice, is it based upon the desire, in some instances, not to convict? If it is, ladies and gentlemen, that's not a reasonable doubt. That's not a doubt based upon reason. That's not a doubt based upon your common sense.

And the Court will basically tell you a reasonable doubt is one in which it would cause you to hesitate concerning the more important actions in your life, and that's what reasonable doubt is. It's not every conceivable doubt. It's not beyond a shadow of a doubt. If that were the case, ladies and gentlemen, our jury system would grind to a halt. The enforcement of doubt of the laws would grind to a total and complete stop because it's never possible to prove something beyond all possible doubt. The question is, has the particular evidence, has the particular fact been proven beyond a doubt based upon reason, based upon your common sense. You don't leave your common sense behind.

And the same thing then goes to another major feature which you're going to have and which the Court will give you instructions on, which is witnesses' credibility. That's going to be where you're going to have some problems and that's where you're going to have to sit back and approach this with your reason and approach it with your common sense and approach it with your horse sense. I'm going to go ahead and read you what I anticipate the Court will instruct you, and, of course, the instructions are what the Court gives you, and, again, if I misspeak, and whatever I say, ignore what I say; it's going to be what the Judge gives you. But I would anticipate he's going to give you some instructions along this way: "In deciding the facts, you are to decide what testimony you believe and what testimony you do not believe. You may believe all of what a witness said or only part of it or none of it."

And the reason that this limitation is given -- and it's just the beginning, there's more to come -- but the reason this limitation is given is because you use your common sense again, you use your horse sense again, and you recognize that people see things differently, people remember things differently, people perceive things differently. The old story about the three blind men and the elephant. One feels the trunk, one feels the body, and one feels the tail, and each one, based upon their limited ability to perceive and based upon their limited knowledge, each one comes back with a different description of what it is that they felt because of the limitations. Okay. That's common sense, and that's the reason then that the law says you may believe all of what a witness said or only part of it or none of it at all. That's your decision to make. That's your determination to make.

It goes on to say, "In deciding what testimony to believe, consider the witness's intelligence, the opportunity the witness had to have seen or heard the things testified about" -- his chance to perceive, his chance to see it here -- "the witness's memory" -- how good it is -- and, there again, you're not required to accept the representation of the witness concerning his memory, and I think you know exactly what I'm talking about, and if not, I'll get down it to a little bit later, and that's Mr. McDougal. You're not required to accept Mr. McDougal's -- let's go ahead and read this and then we'll talk about Mr. McDougal's memory. "Any motives that the witness may have had for testifying in a certain way."

And, of course, Jim McDougal did testify, ladies and gentlemen, and I think you can take into consideration, I submit, the very close, personal motive that he has in testifying in a particular fashion. "The manner of the witness while testifying"; that is, how he looked, how nervous he was, whether or not he scrunched around in his seat, "whether that witness said something different at an earlier time," which I think we used the word "impeachment" a lot. You heard that during the course of cross-examination as to whether or not a person was being impeached because he said something before at a different time.

And there again, though, you have to even then evaluate what he said before in terms of his ability to observe, his motives for testifying truthfully, was he under oath, was he trying to conceal something. Mr. Hale testified, yeah, he lied to Special Agent Aaron of the FBI, that Jim Guy Tucker called him and told him the FBI was coming by and told him not to tell him everything he knew, so he didn't tell him everything he knew. So even when you're talking about impeachment and talking about previous testimony, you have to take that and evaluate that in the same way. Okay.

"The general reasonableness of the testimony." Go back to your common sense. If it defies common sense and defies human nature as to what that particular witness is testifying, then you're entitled to believe all of it, some of it, or none of it. So you need to go back and look at your reasonableness.

I'll give an example of that. Mr. McDougal in one of his fits of pique sat there and said that I had forged something in connection with this case. Never said what it was. Ladies and gentlemen, that's unreasonable, I submit to you. I submit that you could find that is unreasonable. Go back and examine it in terms of that.

"The extent to which his testimony is consistent with any other evidence that you believe." And we're not talking just about other witnesses, but we're also talking about other documents. And, finally, inject some common sense, even the law has some every now and then. "In deciding whether or not to believe a witness, keep in mind that people sometimes hear or see things differently and sometimes forget things. You need to consider, therefore, whether a contradiction in the testimony of a witness is an innocent misrecollection or a lapse of memory or an intentional falsehood, and that may depend on whether it has to do with an important fact or a small detail."

Now, these are some of the guidances that the law during several hundred years has come together to give to you, the jury. And, of course, I'll come back in a little bit and we'll talk a little bit more about that. But use as an example, use Mr. McDougal's testimony, ladies and gentlemen. Did Mr. McDougal get up here and tell you the truth about everything that he said? I submit to you that the evidence is that you can interpret that, no, he did not. Did Mr. McDougal get up here and testify falsely concerning everything he said? I submit to you, ladies and gentlemen, that the evidence can help you find that, no, he didn't tell about -- he didn't tell falsely about everything. So what do you have to do? You have to go back and you have to use your common sense and you have to evaluate it.

Say, for instance, on his statement that he has memory problems. Well, you sit there and you think about, remember how he testified in connection with Mr. Heuer's questions. Straightforward. He basically said, "Tell us about yourself," and he spent 15 minutes, 20 minutes, talking about his childhood, talking about his education, talking about his father's grocery store, talking about those important things that he recalled, and he recalled specifically. And you sit back and you say, well, do I believe that? Does he have a reason to remember? Of course he has a reason to remember. He was there. Does he have a motive for telling the truth? Well, maybe he has a motive for telling the truth, but he also has perhaps a motive to tell a lie. These are all matters that benefit.

What happened then when it came time to question him about things that didn't benefit him, didn't help him? What happened to his memory then? Then all of a sudden, ladies and gentlemen, it started changing. I think you'll notice that if it benefited Jim McDougal, his memory is pretty good, his memory is pretty sharp. If it benefited Susan McDougal, I submit to you, ladies and gentlemen, you could find that his memory was pretty sharp. If it didn't benefit Jim McDougal, ladies and gentlemen, his memory got very poor, his memory got very selective, and there were several instances in which he was, in fact, impeached, contradicted by what he had said previously, contradicted by documents he had written before, contradicted by memoranda that he had prepared.

And, in fact, at one point it came down to choosing between whether or not his testimony was going to benefit Jim McDougal or was going to benefit Jim Guy Tucker, and that was on a particular issue involving the $260,000 loan and the 34 acres. And he testified that, no, Jim Guy Tucker had not told him he was going to use that for a loan to Irene Garner and instead he told him he was going to use that to improve that particular property. Why was he saying that?

Well, because, I submit to you if you can find that the evidence is, if he had told that, yes, Jim Guy Tucker had told me he wasn't going to use that money in that fashion, he was going to use it to pay off another particular loan, a personal loan, that Mr. McDougal then was incriminating himself, and so when it came down to choosing, agree he was involved in a conspiracy to misapply and misuse the monies of Madison Guaranty Savings & Loan, so I submit to you, ladies and gentlemen, you could make the determination when it came down to choosing between Jim McDougal and Jim Guy Tucker, Mr. McDougal chose himself. That's, again, using your common sense, that's a common motive people might have, a benefit to themselves. A common motive people might have to lie.

I think in this particular instance, ladies and gentlemen, I submit to you the evidence could support a conclusion by yourselves that he wasn't telling the truth there, that Jim Guy Tucker had, in fact, told him. You saw the memo saying, telling about Irene Garner. You saw the documents coming out of there going immediately over to Savers Federal Savings & Loan, that Jim Guy Tucker did, in fact, tell Jim McDougal what he needed that money for. That, of course, is the reason that he made the statement to David Hale that Jim McDougal made him an offer he couldn't refuse. He needed that money. He was in dire straits. He had to borrow that money from somewhere in order to pay off Savers to keep from having a foreclosure on his name and a big blotch on his credit, so he made him an offer he couldn't refuse. And also, I believe, ladies and gentlemen, you should see it's consistent then with the statements that Mr. Tucker makes later on, Mr. Grant, Mr. Pitts, and Mr. Grant, that he was coerced by Jim McDougal. And I don't believe Mr. Tucker meant that he held a gun to his head or anything, but that if you want this money, this $135,000 to pay off Savers, you have to buy this 34 acres for $125,000.

Now, I submit to you, ladies and gentlemen, it's just as Mr. Hale testified to, there was an agreement there that they were going to help them out because that's the kind of people that they were. They were going to help each other out. Mr. Hale was going to help out Jim Guy Tucker, and you can see plenty of evidence supporting that as far as the own handwriting of Mr. Tucker showing copies of the contracts going to David Hale and David Hale paying for the study that was made out there to try to make that into a paying organization. There was an agreement, ladies and gentlemen, there was a friendship here, there was a business association between the three of them, between Mr. Hale, between Mr. McDougal, and between Jim Guy Tucker. That's the kind of evaluation that you have to go through to evaluate credibility. You have to go through and just make a determination. It can be mentally or it can be through deliberations, sitting around the table, exchanging ideas, discussing back and forth as to what's going to happen next.

I talked to you concerning the various crimes that were involved. There's one other crime involved, ladies and gentlemen, and that's what they call a participation, a fraudulent participation, and it applies only to Mr. McDougal and it applies only to Count 6. Now, Count 6, when you get back to the jury deliberation room, Count 6 involves the Larry Kuca transaction where Larry Kuca gets the money from Campobello Properties Ventures, which is a partnership of the wholly-owned subsidiary, so you've got Madison Guaranty Savings & Loan money, and what happens? It's to benefit -- and this is going to be a question of credibility and we'll talk about the exhibits in a little bit -- it's to benefit Larry Kuca and Jim McDougal. It's to buy some property up in Canada. Later on he even signed an agreement, a written agreement called KUMAC. Okay?

The law says, ladies and gentlemen, that if you are -- again, you have to have an insider. If you're connected to a federally insured institution, in this instance Mr. McDougal was a major stockholder, he is connected in a capacity to Madison Guaranty Savings & Loan, also the president of Madison Financial, which is the managing partner. If you're connected, you cannot participate in a particular transaction of that institution --

MR. HEUER: Your Honor, I'm going to object to that. That's not in the instructions anywhere, and counsel is bound by the instructions of law that will be given by this Court.

MR. JAHN: I'll read the instructions, then, Your Honor.

MR. HEUER: I wish you would.

MR. JAHN: Sure. "One, the defendant James B. McDougal was connected in a capacity with Madison Guaranty Savings & Loan." That's an instruction. "Two, the defendant participated or shared in any money, property, profit, benefit through a transaction of Madison Financial Corporation" -- remember that was the partnership of Campobello Properties Venture -- "a wholly-owned subsidiary of Madison Guaranty Savings & Loan" -- remember there was a number of people that testified concerning the wholly-owned subsidiary -- "and that the defendant did so with the intent to defraud Madison Guaranty Savings & Loan or the Federal Home Loan Bank Board and its examiners."

We go back to an intent to defraud means an intent to deceive, to cheat, or merely for the purpose of causing a financial loss to someone else or bringing back a financial gain to the defendant or to another. Okay? That's what I was saying. It's a participation, and it's a participation with the intent to deceive. He did it because of the secret agreement.

Remember his own testimony. This is a portion I think you can believe. I could have lent that money to Larry Kuca, but if you do, it sends up a red flag. He knew the examiners were coming. He would have had to have explained it in great detail since Larry Kuca was an insider. He would have had to explain it in great detail as to what this money was for, why it was being spent, where it went, and, most importantly, ladies and gentlemen, who it benefited. And Larry Kuca, I submit to you, ladies and gentlemen, would have told them the same thing that he told you; that is, it was going to benefit Jim McDougal.

So in order to conceal from those examiners, what did he do? He wrote a check. He wrote a check on the Campobello Properties Venture in the amount of $150,000 which Mr. Kuca then used immediately to pay for and buy that property up in Canada which was later the subject of the KUMAC agreement. That's the kind of participation that's charged in Count 6, and I submit to you ladies and gentlemen, and we'll go over a little bit more of the details later on, that's the kind of evidence that establishes clearly actions on the part of Mr. McDougal with an improper intent to deceive, an intent to obtain money through false representations, through deceit and the like. Okay.

We talked about the mail fraud -- the wire fraud. There's also the mail frauds, the instances in which the Form 1031s were prepared by Mr. Hale and mailed off to the SBA. He told you how important those were to his scheme, or to their scheme, because if the forms weren't sent in and didn't appropriately report the right lie, then, lo and behold, what happens? The examiners come down, they start looking at it, it flags them. And I believe his testimony is that they take us all to jail and send a paddy wagon after Jim McDougal and take him to jail as well. That's the mail fraud again, to obtain the monies and funds from the SBA and then to conceal those particular actions to keep the SBA from finding out what they are so they can go ahead with their scheme, so they can continue to take the money out of Capital Management Services, again with the intent to defraud. Not to steal, the intent to defraud. To take the money, the money they weren't entitled to, use that money, and when they made their killing, to give it back.

We also have, ladies and gentlemen, counts involving just plain old ordinary bank fraud; that is, to execute or attempt to execute schemes to defraud Madison Guaranty Savings & Loan. And those schemes to defraud Madison Guaranty Savings & Loan revolve around the same type, again, and the essence, ladies and gentlemen, goes back to my opening statement as far as lies told and truths concealed. That's where the evidence of the intent to deceive and the evidence of the fraud comes from, is from the actions of the defendants which they took some or 10 or 11 years ago. There's no question about it, it happened a long time ago, but you're being asked now to evaluate the credibility of the witnesses and go back and look at what you might call the secret witness.

Go back and look at the documents. Now that you know and you've examined these particular witnesses and you've heard from these particular individuals, you can go back now and you can examine these documents. And we'll go through them in a little bit and you can track along and see. And in some instances documents are like individuals, you have to sit down and evaluate their credibility. You'll have to see, was there a motive to tell the truth at the time this particular document was created? Was there, in fact, a reason for a person to lie in connection with this particular document? And these are all matters that we can discuss as we go along.

There are other instructions that the Court will give you that I think you will also find extremely helpful in connection with reaching your ultimate determination; that is, whether or not a crime was committed and did these defendants commit it. And that is not only the actions which take place while the crime is going on, but what the defendants did after the crimes are, because quite often, ladies and gentlemen, that is the most telling event, that is the most telling procedure and the most telling evidence.

For instance, the most obvious one, Susan McDougal signed a lot of documents in connection with this case. One of the documents that she signed, and we'll show it to you in a second, was a questionnaire that the SBA sent out concerning this Master Marketing loan, and in that questionnaire -- and it was addressed to 1310 Main, by the way, and she got a hold of it -- and in that questionnaire she had to answer, and I showed it to you on the screen when I was cross-examining Mr. McDougal, she had to answer what the balance was, and she put down $300,000; she had to answer what the use of those funds were, and in that particular instance, someone, someone, ladies and gentlemen, and I'm not going to overstep what the evidence is, someone wrote the word "operating capital" on that particular document. Now you've heard evidence then, and at the bottom and pursuant to the stipulation by the defendants, Susan McDougal signed that particular statement at the bottom. Okay?

What is the evidence then that assists you in making a determination as to knowledge? Did Susan McDougal know, in fact, that this was a false representation concerning operating capital? Intent. Did she intend to deceive someone when she signed that particular document? Plan. Was there more than one person involved? The Court is going to instruct you that attempts by a defendant to conceal or make up evidence or influence a witness in connection with the crime charged in this case may be considered by you in the light of all the other evidence in the case. You may consider whether this evidence shows a consciousness of guilt and determine the significance to be attached to any such conduct.

You heard testimony from the man who sat across the table from her while she gave her handwriting exemplars that she intentionally tried to conceal or change or alter -- I believe the word he finally used was disguise her handwriting. You heard the testimony -- and that was Mr. Hillman. You heard the testimony from Mr. Riordan, the handwriting expert from the IRS in Chicago that based upon his examination of those examples, those exemplars, this was not Susan McDougal's ordinary handwriting, this was not her natural handwriting, the inconsistencies from within the known samples.

I submit to you, ladies and gentlemen, using your common sense, you can come to the conclusion that Susan McDougal was trying to hide her handwriting, was trying to hide the fact that she was the person who had written some of these documents. And why? I submit to you it's because she knew she was guilty, she knew she had done what she was charged with and she was trying to keep the truth from coming out. That's what the law says. The law says you can take that into consideration and you can weigh that. I submit to you, ladies and gentlemen, I think the Bible even had a saying one time about the guilty flee when no man pursueth. This is the kind of evidence that is very important because it's evidence, spontaneous evidence. It's evidence created some nine years later that demonstrates a consciousness of guilt.

There's another instruction, too, concerning whether or not a defendant voluntarily and intentionally offers an explanation or makes some statement tending to show his innocence, and this explanation or statement is later shown to be false, you may consider whether this evidence points to a consciousness of guilt. If there is a question as to whether or not the explanation or statement was false, you must determine whether the evidence shows that the statement was false. The significance to be attached to any such statement is a matter for you to determine.

There's going to be evidence, or we're going to examine -- it's already there in the record, ladies and gentlemen -- concerning several instances in which Jim Guy Tucker, for instance, makes false exculpatory statements. There's evidence concerning a letter that was written by his law partner or signed by his law partner that was composed within his law firm, typed by his secretary, Lorita King, and you'll see the slug down on the bottom, based upon a questionnaire that Mr. Speed sent out concerning what are your activities, and in that particular questionnaire, ladies and gentlemen, in that particular letter -- and we'll show it on the screen in a few minutes -- we submit you can find that Jim Guy Tucker lied concerning his role in the $260,000 loan and the use of those funds that were used in that 34 acres. And I submit to you, ladies and gentlemen, this is compelling evidence created back in 1986 that Jim Guy Tucker was guilty, that Jim Guy Tucker was aware of what he had done, and Jim Guy Tucker was fearful of disclosing that information.

I submit to you, ladies and gentlemen, as far as the testimony is concerned, that you will remember the testimony by David Hale that at one point Jim Guy Tucker came to him concerned about the investigation that was going on at the institution and concerned about the fact that he was in trouble. And remember the words of David Hale, "Not civil trouble, but criminal trouble," and we'll get down to that in a second, ladies and gentlemen. We'll see again there was a misrepresentation made to the RTC, the Regulatory Trust Association, or Corporation, that was set up to take over after the Federal Home Loan Bank Board went broke, that there was false representations made.

But even more so, ladies and gentlemen, I think you can take a look at the statement that Mr. Tucker made to Judge Watt, to Bill Watt concerning what happened to my money on the 32 Pine Manor transaction involving David Hale. And I think you can recall, ladies and gentlemen that -- and you'll see a letter where Mr. Tucker authorized David Hale to take that hundred thousand dollars and to put it into his Greenfield Properties transaction. Mr. Tucker knew that Bill Watt was involved; otherwise, he never would have called Bill Watt and asked him to come up and leave Gaston's on that Saturday and come up to the mansion and bring his files and give him his copies of his files. What was he doing? He was making a false exculpatory statement. He was claiming that he didn't know what happened to that hundred thousand dollars. He was claiming that he didn't know what David Hale was making. And I submit to you, ladies and gentlemen, you can find that that was a false statement, that was a false exculpatory statement, and is extremely incriminatory. It's compelling, ladies and gentlemen, and yells guilt on the part of Jim Guy Tucker.

The essence of the activity here, ladies and gentlemen, and the essence of the interest that you, the jury, has to look to is a common sense approach to the way we conduct our lives. We don't go into banks and make false statements in connection with loans. We don't go into our institutions that are based upon trust and lie. We don't go into these organizations and conceal the truth from them. I think you'll find the Court will give you an instruction basically that a false statement is not only something you say, that is something you say that is actually false, but also the concealment of a material fact. And one of the jobs you'll have to do during the course of these transactions or during the course of your deliberations is to determine whether or not these facts are material or not, and that is, are they facts that are so important that they mean something? It's one thing to ask a person, "What color is the sky?", and he comes back and says green and everyone knows it's blue, it's no big deal, but at the same time it's material. If it's capable of making some difference when you go in and ask what particular color a document is when the green document is important and the red document isn't, then it becomes material.

You heard testimony that the purposes for which all of these loans at Capital Management Services was made, the purpose was very material. It was something that the examiners looked at, it was something that the people in Washington needed to know, it was a matter in which whether or not the program was being conducted appropriately. Even if it was unenforceable, they could still come down and make a determination, do an examination and determine whether or not it's being done properly. You heard David Hale testify concerning the importance of making representations that these particular transactions were falling within particular areas in the field. That's what the interest here is in this particular case, and that's what the essence of these crimes are, whether or not there were misrepresentations, either direct, outright falsehoods, lies told, or whether or not it was the suppression of important facts; that is, the truth concealed.

One of the issues that we have to address is control. David Hale obviously testified that he was president of Capital Management Services, he has come in and he's pled guilty and the Court will tell you that his plea of guilty isn't evidence of the defendants' guilt; instead it's a matter for you to evaluate in making a determination as to what believability to give him, how much believability. Just like, for instance, the money that he received from the federal government for living expenses. That's a matter for you to take into consideration to see whether or not he is, in fact, believable or not, the existence of other documents, other witnesses who either contradict him or support him. But there's no question as far as David Hale's control of Capital Management Services.

Even to this good day, though, ladies and gentlemen, there has been no admission by Mr. McDougal of his control. Remember he got up on the stand and he testified, he testified that he had hired John Latham, that he had hired Greg Young, that he had hired Don Denton, that he had brought these people in to take over the transactions and that basically then he just kind of left it up to them and let them go about doing what they wanted to do as far as running this institution. He's quick to take the credit, ladies and gentlemen, for things that happened right at Madison Guaranty Savings & Loan, but even to this good day, he's extremely slow in taking the responsibility. Even to this good day, Jim McDougal is still trying to avoid his responsibilities.

So what do you have to do? You can't rely on what he testified to. Instead you have to go back and you have to look at the exhibits. You have to review the exhibits that came in that concern his exercise of control. Again, I told you during my opening statement, it's not a question of, did he come down and open the door every day and take out the books and lay them on the table. It's not a question of, did he come down, for instance, and fill out the loan papers. No, he's far too important for that particular matter. But did he exercise control over these particular transactions? And there's exhibit after exhibit after exhibit, and I'm not going to go through them right now because you've had a chance to see them. You've seen them so many times. I even told you it would be nice if you had a button that you could push when you've seen enough, a light would come on and we wouldn't have to go back and go over this again.

Government's Exhibit 15, the memo sent to John Latham saying he needed to discuss the Mitchell law firm business, Government's Exhibit No. 16, which was the memo he sent to John Latham about a member of the board of directors, make a loan to him for the term of $50,000, make him do this, tell him to do that, have his wife take care of it, but don't fund the loan, I'll tell you what to do.

Government's Exhibit 21. That was the long memo to John Latham where he expresses his state of mind, and I think you remember Greg Young testified about that. They brought them all into this meeting and he fussed at him, shook his fingers at them. What's going on here? The lending process is shutting down on the sales process. These people are actually requiring people who are borrowing money from Madison Guaranty Savings & Loan, they are actually requiring them to fill out an application before that loan is closed and goes out. This must stop. I will not abide by having the lending process interfere with the sales process. Okay. Ladies and gentlemen, this shows the kind of control they were talking about.

Government's Exhibit 24, this is the one that Mr. McDougal admitted he had told the press had been forged by some congressman, that it had been created by some congressman because it made reference to Hillary Clinton. Sue Strayhorn testified that she was the one who prepared it, she prepared it at Jim McDougal's specific instruction. Where it talks about "This is a time to get some cheap money, and, by the way, tell me everything you have in the securities department because I'm going to go talk to Hillary Clinton." This is evidence of control, ladies and gentlemen.

The Government's Exhibit 28, where he directs Mr. Latham that we're going to purchase the 145th Street property for a million and some-odd thousand dollars, and do you have enough money to cover it.

Government's Exhibit 32, a memo to Mr. Latham concerning a loan involving Jim Guy Tucker's property. Government's Exhibit 32 talks about how you will make a loan to Mr. Abernathy to buy this particular lot, and down at the bottom it says, "Jim Guy Tucker, deal only with me or John Latham about this loan." This demonstrates again Mr. McDougal's control of the institution, Mr. McDougal's close, personal, knowledge and involvement with those matters that are his pet projects.

Ladies and gentlemen, that's what we're talking about here. We're not talking about some loan out at Maple Creek. We're not even charging Mr. McDougal with the sale of his own house, to Lisa Aunspaugh. Those aren't charged here. These are the charges that involve his own pet projects and his own efforts then to divert the monies and funds of Madison Guaranty Savings & Loan to either directly or indirectly support those particular pet projects, and that's what the evidence shows. The evidence shows his control over those particular matters.

All the way down it, Government's Exhibit 642-A, which is a letter that Mr. McDougal writes to a man named Ben Rand in connection with the IGA organization trying to get a store put on Mr. Tucker's 34 acres where he says, "We at Madison Guaranty Savings & Loan are financing Jim Guy Tucker's transactions."

This is the type of evidence, ladies and gentlemen, that you can consider it for a number of purposes:

One, you can consider it to show there was, in fact, a conspiracy, there was, in fact, an agreement between Mr. McDougal and Mr. Hale and Mr. Tucker; that there was, in fact, an effort by them to misuse the monies, funds and credits of Madison Guaranty Savings & Loan, or Capital Management Services, because both of those were involved in that 34 acres, and it was used with the intent to deceive, the intent to obtain money by fraud, it was used to obtain money and benefits for themselves, deception through concealment, through the lies told and the truth concealed.

You also don't have to necessarily resort solely to the exhibits. You'll find, ladies and gentlemen, as you go through your deliberation that you're going to find numerous instances in which you'll be sitting back there and you'll be talking about, well, this exhibit shows so and so, but remember Don Denton said that, and remember Lisa Aunspaugh said that, and remember Greg Young said that, and remember David Hale said that. And you go back and you look not only at the evidence, the documents themselves, but you will also have instances in which you'll go through the particular testimony.

Now, this is important. One of the things that the Court will tell you is that you've been taking notes, and these notes are important to you. At the same time, these are your own notes. You use them yourself. You use them to refresh your own memory. You will find, ladies and gentlemen, that the jury is a remarkable institution, that your memory is superb, that your collective knowledge and your collective recollection will be tremendous in this particular matter. And when you go back into deliberations, you'll find that that particular event will occur. You'll find instances in which you'll be talking about these particular transactions.