Only hours after allegations of jury tampering first surfaced, United States Judge Kristi DuBose allowed the tax evasion trial of Mobile County License Commissioner Kim Hastie and her husband to proceed.
During a brief hearing before the trial, prosecutors suggested John Melvin Hastie Jr. made attempts to contact potential jurors to discuss facts about the case.
It was also alleged in a separate briefing that certain law enforcement officials also made attempts to influence or find out information about potential jurors.
Prosecutors said they were alerted by Monroe County Sheriff Thomas Tate that other law enforcement officials, particularly two other sheriffs, had attempted to garner information about potential jurors in the trial. Tate chose to relay that information to federal prosecutors in Mobile.
Despite his concerns, DuBose said after interviewing the jurors she felt those those selected were “uncompromised” and thus qualified to decide the trial.In his opening statements, U.S. Attorney Gregory Bordenkircher said this particular case is about “greed, lying, cheating and living beyond your means.”
He told jurors that by the end of the trial the federal government would prove beyond a reasonable doubt Hastie and her husband conspired to conceal more than $58,000 of income from the IRS the couple received on five separate occasions.
“Hastie is the top tax collector for Mobile County, yet she placed herself above the law and hid income to support their lavish lifestyle,” Bordenkircher said. “Then they drew their own daughter into their illicit scheme.”
The facts in the case revolve around land deals Hastie’s husband brokered between acquaintances and monies paid directly to his daughter through deals facilitated by his employer, Cooper Marine & Timber.
The first such deal involved the sale of land from Tommy Oswell to John Zuckley, president of Mobile Forestry Products, both of whom have an undisputed working relationship with Hastie Jr.
According to his own defense attorneys, Hastie Jr. negotiated the sale of the $1.9 million property and received a 2 percent fee in a “handshake agreement.” That 2 percent calculates to just more than $38,000. According to bank records and testimony from a defense witness, Hastie Jr. opted to receive two payments for that deal — one in 2009 and one in 2010.
Hastie Jr. failed to disclose that income on his 2009 and 2010 tax returns, but his defense attorney, Jeff Dean, said it was a simple oversight instead of the willful scheme to defraud the United States prosecutors have alleged.
As an elected official, Kim Hastie is required to disclose her and her spouse’s income each year through the Alabama Ethics Commission’s annual Statements of Economic Interest. She failed to disclose the $38,000 received for the land deal on those forms, and because she files jointly with her husband, there was also no record of the income in her personal taxes either.
Kim Hastie’s attorney said that’s because she was unaware of the transactions, but bank records produced by the prosecution show it was received in a joint account she has access to. In fact, of the eight bank accounts the Hasties share, there isn’t a single one the License Commissioner isn’t listed on.
During cross examinations, Kathryn Scott, a forensic accountant with the Federal Bureau of Investigation, discussed why the Ethics Commission public disclosure forms are significant.
In those forms, elected officials select increments of $150,000 their financial assets and the assets of their immediate family members fall into. Defense attorneys made the argument that the $38,000 in question wouldn’t have changed the bracket Hastie disclosed for her husband, but Scott said the amount of income isn’t the point.
“It’s the sources of the income that are important,” Scott said. “So the public can understand where the income of public officials comes from.”
Scott said it was Hastie’s duty to fill out those reports accurately, but defense attorneys argued she “couldn’t disclose funds she was unaware of.”
“Kim didn’t know about the land transaction deals,” attorney Neil Hanley told the jury in opening arguments for the defense.
Hanley also denied the prosecution’s claims that such funds were sought because the Hasties “need money” saying, “these were deals that were two years in the making, they weren’t something that was drummed up overnight because they were all of a sudden broke.”
Arguing on Hastie’s behalf, a significant portion of Hanley’s defense was focused on showing that the License Commissioner’s finances were separate from her husbands, despite the couple having joint checking accounts.
Hanley tried to make the argument that each spouse very seldomly wrote checks on the joint checking account commonly used by the other. However, Scott said in her testimony checks weren’t the only way to transfer money from the accounts.
She highlighted 585 transfers moving money back and forth between the accounts typically used by Hastie and the account predominantly used by her husband.
Two of the first witnesses called to the stand were Hallie Brown, the contractor who built the Hasties’ home and Dorothy T. Atchison, the couple’s longtime accountant.
Brown said there were issues he brought up to the Hasties about a lack of funding in an account earmarked for the construction of their home. He testified saying he had told the Hastie’s he needed to be paid as soon as possible so he could compensate his subcontractors.
Atchison testified saying, as the couple’s tax professional, she was never made privy to the additional income Hastie Jr. garnered from the sale of land and timber.
Kim Hastie’s attorneys have maintained that she hasn’t had any involvement with filing the family’s income taxes for some time and was unaware of the transactions federal prosecutors are currently scrutinizing. Additionally, Hanley made the case that the fraudulent income tax submissions weren’t physically signed by Hastie because they were submitted electronically.
However, when the couple refinanced their home in 2012 they were asked to sign several documents verifying their income including two tax documents from the years the government is questioning.
According to prosecutors, signing those 1040 forms ties the allegations to Hastie, even if it was done so retroactively.
John Tharp, a bank loan manager who oversaw the mortgage loan the couple sought at the time, was also called to the stand. Tharp told jurors he as well as other individuals witnessed both Hastie and her husband sign the documents in 2012.
The Hasties children became involved because of a second land deal with Zuckley and stumpage fees for timber sales, some of which involved checks written directly to Jordan Hastie.
According to prosecutors and evidence presented at trial, Jordan Hastie — the couple’s oldest daughter — was listed as a vendor on a W-9 received from Hastie Jr.’s employer Cooper Marine & Timberlands. That particular form is used to collect personal or corporate tax information preceding the issuance a 10-99, which most contractors use to submit their taxes.
“They listed her as a vendor for lumber? Yet, all the evidence shows John Hastie picked that check up at work and deposited it into his own account,” Bordenkircher said.
To back up their claims, federal prosecutors called to the stand Michael Johnson — a staff accountant at Cooper Marine & Timberlands. According to Johnson’s testimony, he typically oversees the accounting related to timber sales facilitated through the company.
He went on to say that in late 2014, Hastie Jr. provided him with a rate sheet for a timber clearing project in Stockton. However, when the company had trouble paying the land owner, Johnson said he was instructed by Hastie Jr. to make the check for the stumpage fee out to a Jordan Hastie — never once disclosing to Johnson that the new vendor was his daughter.
Hastie Jr. provided an unsigned W-9 for the vendor, a subsequent signed W-9 and gave a final supervisory approval for the payment without disclosing his relationship to Jordan Hastie. Johnson said Hastie Jr. also opted to physically take the check to Jordan instead of mailing it.
As a result, Jordan Hastie was written a check for $5,232.66 on Jan. 7, 2015, and prosecutors say it was almost immediately deposited into a joint account shared by the Hasties. According to uncontested bank records, their daughter does not have access to that account.
The defense was unable to cross examine Johnson because of time, but is expected to question the witness in the morning. Jordan Hastie herself is also expected to be called to the stand on Wednesday.