More cash going out than coming in, FBI witness says in Edwards trial

Natalie Gott

Wednesday, March 1, 2000 | 10:15 a.m.

BATON ROUGE, La. - Former Gov. Edwin Edwards' lawyer lost an effort today to throw out the testimony of an FBI accountant who said Edwards' meticulous records do not show the source of almost half the $1.6 million in cash he spent from 1994 through 1996.

Edwards attorney Daniel Small said Laura East's testimony should be removed from the court record, that she should not be designated as an expert witness, and that she should be charged with perjury for testifying that she had been designated an expert in an unrelated 1993 case.

U.S. District Judge Frank Polozola denied all of Small's motions during a hearing held with the jury out of the room.

Polozola said East appeared to have the training, knowledge and experience that an expert witness must have.

"It's not for me to eliminate her testimony right away and say she shouldn't be qualified as an expert. That's for the jury to decide," Polozola said.

East had testified that she believed she was testifying as an expert witness in the unrelated case of Jack Sternberg, a businessman convicted in a real estate scam. But defense lawyers discovered that she had never been qualified as an expert.

Polozola said that if defense lawyers really believe she lied on the stand they should complain to the U.S. Attorney's Office in Baton Rouge. The Edwards case is being tried in Baton Rouge but the New Orleans-based U.S. Attorney's Office is handling the case.

East, a former FBI agent on the Edwards case who now does consulting work for the agency, said Tuesday that her estimate of how much cash Edwards spent could be conservative because it does not take into consideration Edwards' personal living expenses, such as dining out at a restaurant.

Defense attorneys said her figures are highly highly inflated.

Edwards, 72, his son Stephen and five other men are accused in a series of extortion and bribery schemes centered on the licensing of riverboat casinos before and after his last term ended in January 1996.

Large bundles of cash play a big part in the government's case. One former casino owner and one former casino consultant already have testified that they paid hundreds of thousands of dollars for Edwards' help in getting licenses and fending off competition.

East said their testimony is consistent with the analysis she did on Edwards' bank statements, ledgers and tax records.

"It appears he has some other source of money than his showable income," East said.

More than a half-dozen witness, many of them contractors or retailers who sold big-ticket goods and services to Edwards and his family, have testified they received tens of thousands of dollars in cash for their services.

Edward had a Merrill-Lynch checking account against which he could not write checks for cash, and there is no indication of automatic teller withdrawals, East said.

East said Edwards' records indicate that he spent nearly $1.6 million in cash from 1994 through 1996. Only $855,652 could be accounted for, East said.

A large portion of that amount of cash was spent on Edwards' home that he built in 1995 in the upscale gated community called Country Club of Louisiana. Edwards paid $733,567 in cash for the $1.3 million house, its landscaping and home furnishings, East said.

Edwards kept ledger books - seized by the FBI - in which he recorded checks he deposited into his account with Merrill-Lynch as well as cash payments he did not deposit into the account. The ledgers were about 99 percent accurate when compared to tax returns and bank statements, East said.

To determine how much money Edwards actually had, East said she added up the amount of cash he had on hand with Edwards casino winnings and profits he recorded from his sales of cattle, timber and guns. She then subtracted the money he spent and his casino losses.

From those calculations, East noted that Edwards spent at least $742,301 more than he had recorded as earning.

Defense attorneys claimed the figures were inaccurate and inflated and tried to block some of East's testimony.

Before jurors entered the courtroom, Small said that in some instances, witnesses have testified to paying Edwards much less than what East has recorded in her charts.

For instance, a payment from a witness who said he installed audio equipment in Edwards' home was really only $9,000, instead of the $24,000 that East indicated on her charts, Small said. The witness testified he received $9,000 from Edwards but did not remember whether his partner received any money from Edwards.

Prosecutor Mike Magner argued that the government's charts are based on Edwards' records and interviews East conducted.

"He has created his own paper trail in a case where cash is very difficult to trace," Magner said.

Defense lawyers have also noted during questioning of various witnesses that Edwards is an admitted high-stakes gambler, raising the possibility that the bundles of cash he handed out for construction of a Baton Rouge home and other services came from casino winnings.

East said she reviewed a diary that Edwards kept of his gambling wins and losses and said that they were recorded on his income tax forms. For the three-year period of 1994-1996, Edwards took home $332,600, even after $410,100 in losses, East testified.