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Michael D. Pitman reports about Butler County, Ohio, politics, county government, countywide issues and Butler County people just like you for Cox Ohio Publishing (including the Hamilton JournalNews, Middletown Journal and several weekly papers in Butler County). He wants your suggestions and questions for more news stories. Leave a comment for him here or e-mail Michael at Home > Blogs > Butler County News and Issues > Archives > 2009 > August > 04
Tuesday, August 4, 2009
Former GOP director testifies in Carter trial
Former Butler County GOP executive director Scott Owens testified this afternoon that Dynus Corp. paid him $100,000 to peddle influence with county officials.
Owens was a paid lobbyist working through the Lang Agency, which is owned by West Chester Twp. Trustee George Lang, Owens said. He said it was part of more than $300,000 Lang’s company was paid to help secure the company contracts with the county.
For his part, Owens said he introduced company officials to former county commissioner Michael Fox, former auditor Kay Rogers, current Commissioner Gregory Jolivette and Prosecutor Robin Piper.
“Were these people you were hired to make political connections with?” asked Assistant U.S. Attorney Richard Chema.
“Yes,” replied Owens.
The deal that emerged after these meetings led to Rogers resigning after pleading guilty to bank fraud for her part in Dynus securing a multi-million dollar loan in the county’s name without county approval.
Owens’ testimony came in the federal trial of former Dynus owner Orlando Carter today, Aug. 4.
Carter is fighting an 11-count indictment, including charges of bank fraud and forgery. Carter is alleged to have misrepresented his income to secure a $1.2 million home and misled banks about business deals with Butler County. He’s also accused of lying on a bankruptcy petition.
After making introductions, Owens said he left his work with the Lang Agency and was hired directly by Dynus for a salary of roughly $60,000, plus commission.
One of his key responsibilities there was getting Piper — who he had a close relationship with, having worked on his campaign — to sign an opinion of counsel letter confirming that the county had the loan.
But Piper wouldn’t sign, and Owens didn’t push it. Carter yelled so loud when he learned this that the person in the next cubicle could hear him, Owens said.
“He was upset and said it’s unacceptable, that it has to be signed,” Owens said.
“I can’t make something happen that’s not going to happen,” Owens said. “And I’m not going to break the law.”
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TweetDynus employee says she forged signatures of bank official, Kay Rogers
Former Dynus employee Karin Verbruggen testified in federal court this afternoon, Aug. 4, that she forged the names of a Butler County official and bank executive to mislead people about business deals the company had.
Verbruggen said she traced the name of a National City Bank official to alter a document to make it look like the company had a lease from the bank that was actually in the county’s name.
At another point, when Fifth-Third Bank had a firm conducting an audit of the company to maintain a line of credit, Verbruggen said her boss Jim Smith asked her to sign then county auditor Kay Rogers’ name to a letter saying there were no strings attached to the National City loan. In fact, the company had defaulted on its terms under the loan, Verbruggen said, and had no way of paying it back.
Verbruggen said she told Smith she was uncomfortable with forging Rogers’ signature and signed her name to a piece of paper to show that her handwriting looked nothing like Rogers’.
“I threw it in his garbage can,” she said, adding that Smith picked the signature out of the trash and used it.
Verbruggen’s testimony came in the federal trial of former Dynus owner Orlando Carter today, Aug. 4.
Carter is fighting an 11-count indictment, including charges of bank fraud and forgery. Carter is alleged to have misrepresented his income to secure a $1.2 million home and misled banks about business deals with Butler County. He’s also accused of lying on a bankruptcy petition.
On questioning from prosecutors, Verbruggen said she had conversations with Carter about a deal in which the company took out a multi-million dollar loan in the county’s name without the county’s approval.
On cross-examination, Verbruggen said she took her orders from Smith.
Verbruggen’s testimony was a requirement of her plea agreement after pleading guilty to bank fraud in relation to the deal.
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TweetDavid Pepper to speak to local Democratic PAC
Press release from Butler County Progressive PAC:
Hamilton County Commission President and Ohio Auditor candidate David Pepper will be the featured speaker and guest of honor at the Thursday, August 13 meeting of the Butler County Progressive Political Action Committee.
The meeting of the Progressive PAC begins at 7 p.m. at the LCNB Bank Building, 30 West Park Place, in uptown Oxford. Commissioner Pepper is scheduled to speak at 8 p.m.
David Pepper was elected to the Hamilton County Commission in 2006, unseating an incumbent Republican. His election created a Democratic majority on the commission for the first time in forty years.
Before becoming a commissioner, Pepper served four years on the Cincinnati City Council. In his first race for political office in 2001, Pepper came in first out of 26 Council candidates. He repeated his first-place finish in 2003.
From 1993-1996, Pepper worked as an aide to former National Security Advisor Dr. Zbigniew Brzezinski in Washington and then St. Petersburg, Russia. He has worked with Henry Kissinger, Paul Bremer, and Vladimir Putin.
Pepper graduated magna cum laude from Yale University, where he earned Phi Beta Kappa honors and served as Managing Editor of the Yale Daily News. He is also a graduate of Yale Law School, where we won several school-wide awards and published three articles.
Pepper is a Democratic candidate for Auditor of the State of Ohio in the November 2010 election. He has been endorsed by Ohio Governor Ted Strickland, Ohio Democratic Party Chair Chris Redfern, and leading Democrats across the state.
The David Pepper visit is co-sponsored by the Butler County Democratic Party, the Preble County Democratic Party, Change Butler Political Action Committee, the Hamilton-Fairfield Democratic Alliance, and the Miami University College Democrats.
The Pepper meeting is open to all Butler County Progressive members and their guests. Memberships may be purchased at the door by paying the annual dues of $10.
Before Pepper’s address, the PAC membership will vote on candidate endorsements in the November 3 general election. Limited tickets for the Sept. 30 fund-raising Oxford concert with Chris O’Brien will go on sale at the meeting.
Formed last January, the Butler County Progressive Political Action Committee is an Oxford-based grassroots organization developed by neighborhood volunteers of the Obama-Biden campaign and sparked by President Obama’s Organizing for America movement.
The PAC’s mission is to promote the Obama administration agenda locally and to more firmly establish a progressive presence in Butler County politics, primarily by recruiting, educating, electing, and sustaining progressive candidates.
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TweetEx-Dynus exec: ‘Kickback’ went to auditor
Update: Smith says “kickback” was more of a “bribe.”
Original post:
Former Dynus Corp. President Jim Smith testified this morning about how he gave then-Butler County Auditor Kay Rogers a $9,500 “kickback” in 2005 while trying to get business with the county.
Smith said he tried to cut a company check, but was told not to by the company’s chief financial officer. So he wrote a personal check, he said, which was returned to him months later.
Smith’s testimony came during cross-examination during the federal trial of former Dynus owner Orlando Carter today, Aug. 4.
Carter is fighting an 11-count indictment, including charges of bank fraud and forgery. Carter is alleged to have misrepresented his income to secure a $1.2 million home and misled banks about business deals with Butler County. He’s also accused of lying on a bankruptcy petition.
Defense attorney Wende Cross suggested that Smith didn’t tell Carter about “the kickback to Kay Rogers in the Butler County deal.”
Smith said he told Carter everything, but maybe not some of the specifics about how Rogers was paid.
“You told the FBI that there was a phony company you were trying to take the money through to get it to Rogers, correct?” Cross asked.
“I think it was a company she worked for,” Smith said, believing it was called Capital Concepts.
This follows testimony Monday, Aug. 3, that Dynus had arrangements with several county officials to secure a deal with Butler County that the company had already told the bank existed — and had already borrowed millions of dollars for. Rogers resigned last year after pleading guilty to bank fraud for her role in the Dynus deal.
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TweetDynus trial continues. What new details will emerge?
The defense team for former Dynus Corp. owner Orlando Carter will continue cross-examination of former company president Jim Smith in federal court today.
This follows Smith’s tell-all testimony yesterday:
Former Dynus Corp. President Jim Smith told a federal jury Monday, Aug. 3, how he lied, forged documents, paid elected officials and concealed information from others to over-inflate his company’s profits.
Smith’s testimony came in the second week of the trial of former Dynus owner Orlando Carter, who is fighting an 11-count indictment including charges of bank fraud.
Smith said the company’s motto was “Up and to the right,” with Carter demanding that revenues increase every single month — even if it was just on paper.
Smith admitted to forging the name of former West Chester Twp. Administrator Dave Gully — currently administrator for Warren County — on a 2005 contract to make it look like he had a contract with the township that didn’t exist.
“(Carter’s) words were I don’t care if you have to sign it yourself, I want to book the revenue this month,” Smith said.
At the same time, Smith was trying to secure a deal with Butler County that he had told the bank already existed. In the process, he said he worked with then-Butler County Commissioner Michael Fox and then-Auditor Kay Rogers to conceal details of a deal between the county and company from other county officials.
Smith said he was introduced to Rogers and Fox through West Chester Twp. Trustee George Lang. Smith said he met Fox and Rogers at Jags, a restaurant owned by Lang, and discussed the need to hide the details of the deal from the county administrator, deputy administrator and Commissioner Charles Furmon.
“They would stop or slow down the deal,” Smith said.
For giving them access to county officials, Lang was paid more than $300,000, Smith said, roughly $100,000 of which was given back to Smith in “kickbacks.”
Smith said the company also paid $50,000 to Scott Owens, then executive director of the Butler County Republican Party. Owens was Lang’s campaign manager and worked on the campaign of county Prosecutor Robin Piper.
The hope, Smith said, was that Owens would use his connections to get Piper to sign an opinion of counsel letter that said a deal with the county indeed existed. Dynus needed that letter because it had already borrowed $4 million in the county’s name.
Smith’s testimony is part of his 2006 plea deal, in which he pleaded guilty to bank fraud in relation to the Dynus deal.
Rogers also pleaded guilty in relation to the deal and is awaiting sentencing.
In this story, we explore Smith’s motives, and his relationship with Carter:
Former Dynus Corp. President Jim Smith testified against his former boss and close friend Monday, saying that company owner Orlando Carter asked him to take the fall for the company taking out a multi-million dollar loan in Butler County’s name without county approval in 2004.
“(Carter) was like a brother to me,” Smith said. “We had a lot in common, we would go different ways and tell each other we love each other.”
Smith took the stand in Carter’s federal court trial Monday, Aug. 3, describing Carter as a shrewd businessman with direct oversight of how his company was run.
Carter’s defense team has argued he was not involved in the details of the Butler County deal.
The Mason man is fighting an 11-count indictment, including charges of bank fraud and forgery. Carter is alleged to have misrepresented his income to secure a $1.2 million home and misled banks about business deals with Butler County. He’s also accused of lying on a bankruptcy petition.
Smith described himself as ambitious, with a personal goal of retiring by age 40. He said he met Carter in early 2004 through his business dealings with West Chester Twp. Trustee George Lang, and found a mentor in Carter.
“If you want to learn to make a lot of money, you learn from somebody who has made a lot of it,” Smith said.
Smith quickly rose through the ranks from a consultant to company president.
But in its quest to chart unbridled profits, the company soon turned to unscrupulous means, Smith testified. He admitted to forging documents, saying the company had contracts with governments that it didn’t, lying to banks to borrow millions of dollars and bolstering the company’s books with contracts that didn’t exist.
“Why did you do those things?” asked assistant U.S. Attorney Richard Chema.
“Misguided greed and ambition,” Smith replied.
Smith said several public officials got pulled into the issue. This included then-Butler County Auditor Kay Rogers, who resigned after pleading guilty to bank fraud for her role in the Dynus deal.
Smith said he signed on behalf of Butler County for a $2.5 million loan from National City Bank for equipment to use the county’s fiber optic ring to build a telecommunications company in the county.
“Who told you to go ahead and do that, to sign for Butler County?” asked Chema.
“Kay Rogers,” replied Smith.
Smith said he later took out another $4 million loan from National City in the county’s name on the promise that he would produce a letter from the county attorney saying a deal existed.
When the bank balked, Smith said he had Rogers and then-county Commissioner Michael Fox — who later retired after serving as Children Services director — lean on a bank employee.
“They called me and told me they called and quote, unquote lit him up,” Smith said of the bank employee. “They basically told him they don’t know who we are, we’re the auditor and commissioner of the county and you need to get this done or we won’t do business with you.”
The bank agreed to the loan, with another $1.2 million to follow once the letter was produced. Despite repeated attempts to trick county officials into signing such a letter, Smith said a letter never came.
When other county officials and the banks caught wind of the dealings, Smith said Carter came to him and made him an offer.
“He said he wanted me to take the blame and that would be rewarded to me in the future,” Smith said.
Smith said he initially lied to the FBI during its investigation of the deal, but he had woven too tangled a web.
“It was overwhelming, trying to keep up with your own lies and what you’d said and what you hadn’t said,” he said.
Carter’s defense team had only begun its cross-examination of Smith when court adjourned Monday.
Smith said on cross-examination that he hoped to gain favor from U.S. District Judge Sandra Beckwith for cooperating in the trial under the terms of his plea agreement for pleading guilty to bank fraud.
Defense attorney Wende Cross stressed how freely and often Smith had lied during the investigation and that Smith was one of several Dynus employees Carter had close relationships with. She implied that the pressure to grow the company’s profits was personal, not a directive from Carter.
“You put a self-imposed pressure on yourself to do well, correct?” she asked. “You wanted to prove yourself to Orlando Carter, right?”
“Yes,” Smith replied. “I wanted to be a part of something big.”
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