The fate of University trustee William Lane is still unclear.
Although U.S. District Judge James Ware filed an order Monday calling for new trials for Lane and his co-defendants, government prosecutors say they will appeal the decision.
Lane, 70, graduated from the University in 1944 and has served as a University trustee since 1983. He, along with four other businessmen, allegedly defrauded a Texas savings and loan as part of a scheme concocted by Robert Hopkins, one of the five defendants. Allegedly, it was Hopkins' intention to obtain personal control of a string of California banks.
A jury found Lane, in addition to Hopkins, Thomas Oliver, Blynn Shideler and Robert Bonner, guilty of bank fraud April 14. On May 11, Ware heard a motion for acquittal and a separate motion for new, separate trials of the five men. He set aside the guilty verdict and granted the latter motion because he found that "the defendants suffered an unfair prejudice and were denied a fair trial."
The original indictment included counts of both conspiracy and bank fraud. But the vast majority of the prosecution's evidence concerned the conspiracy charge, said Susan Illston, Lane's attorney and a University alumna.
"They thought the conspiracy charge would encompass all," Illston said.
However, after the prosecution rested its case, the defense made a motion to dismiss the conspiracy charge, and the charge was dropped, said Marcia Jensen, co-prosecutor for the case and assistant district attorney in San Jose. As a result, the jury only had to hear the five individual charges of bank fraud.
The government then had to contend with the fact that the applicable bank fraud statute did not go into effect until Oct. 12, 1984. Therefore, to prove bank fraud, the prosecution had to show that the entire scheme was devised and carried out after Oct. 12, Illston said.
"[The jury] sat through six weeks of evidence, almost all of which dealt with issues [i.e. conspiracy] they didn't have to decide upon," she said.
Illston argued that this created much confusion in the minds of jurors. Ware apparently agreed.
"To expect that jurors could ignore the tremendous amount of pre-October 1984 evidence and the evidence regarding a joint enterprise and focus on whether, as to individual schemes of bank fraud, all elements were proved beyond a reasonable doubt after October, 1984 is an unfair and unreasonable expectation," he stated in the order.
But the prosecution said that at the time of the trial the jury showed no confusion. Jensen said that "the jury was instructed as to what evidence to consider and what exactly the prosecution had to prove."
The court also addressed the problems that resulted from holding one trial for the five men. Ware found that there were "substantial differences among the defendants [and] that consolidation would result in unfairness, guilt by association, confusion and the admission of irrelevant evidence."
Illston agreed, saying that because the trial involved all five men, evidence was admitted which reflected badly on particular people, but not necessarily on Lane. "The fundamentally fair approach is to look at what each individual has done," she said.
Jensen contended in response that because the five men were joined in a scheme to defraud the bank,they should be joined in trial.
The government will appeal to a federal appellate court in the hope that the jury's original guilty verdict will be reinstated, Jensen said. The government has 30 days to file an appeal.
"The legal standard that we have to demonstrate is that the judge abused his discretion," Jensen said. The prosecution must file its appeal by June 15, she said.
If eventually found guilty, Lane would face a maximum sentence of five years in prison and $250,000 in fines.
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