WASHINGTON -- Former PaineWebber Inc. vice president Lance Wilson was just doing his job when he tried to generate new bond business by writing financial commitment letters aimed at securing grants for housing projects, Mr. Wilson's attorneys argued at his trial before the U.S. District Court here last week.
The independent prosecutor in the case, Arlin Adams, is charging that Mr. Wilson's letters were fraudulent because they pledged PaineWebber to underwrite bond financings, which Mr. Wilson knew were not likely to be carried out, solely to obtain federal Urban Development Action Grants for a co-defendant's housing projects.
The prosecutor also alleges that the letters were written on behalf of the codefendant, Florida and Texas developer Leonard Briscoe, without regard to the financial viability of the projects. In return, Mr. Adams charges, Mr. Wilson received a 5% to 15% business interest in the developments.
But in his opening statement outlining Mr. Wilson's defense Thursday, Theodore Wells of the New Jersey-based law firm of Lowenstein, Sandler, Kohl, Fisher & Boylan insisted that commitment letters such as those written by Mr. Wilson were "common" in the bond industry and were a necessary part of generating new business.
When Mr. Wilson was recruited by PaineWebber in April 1986 to be its highest-ranking black executive, the attorney said, his mission was to develop new business for the underwriter. "Lance's job was to find people who wanted to borrow money, like Mr. Briscoe," Mr. Wells told the 18-member jury.
His remarks echoed the testimony of PaineWebber executive vice president and general counsel James C. Treadway before a House subcommittee investigating Mr. Wilson in 1989. Mr. Treadway said Mr. Wilson's "job was to get new bond business," primarily in the housing area.
Mr. Wells pointed out that PaineWebber typically would get a 2% of bond proceeds fee for
underwriting the kinds of financings V
promised in Mr. Wilson's letters. "This is a very lucrative business," he said, and added that Mr. Wilson was paid highly for his services.
In one of the projects cited in the lawsuit, the Wedgewood Apartments in Florida, PaineWebber was the co-manager of a $15 million bond offering, though the company had not supplied the financial commitment letter needed to obtain a grant for the project, Mr. Wells said.
Yet PaineWebber did not carry out the financing on another project, the Belle Glade apartment complex in Palm Beach Country, Fla., where Mr. Wilson did provide the commitment letter, he said. Instead, Mr. Briscoe privately placed a $9 million issue for the project through the Boston firm of Homans, McGraw, Trull, Valeo & Co.
"It was common practice for one dealer to give a commitment letter and then go out and shop the deal," as Mr. Briscoe did in the Belle Glade case, Mr. Wells asserted.
The fact that bond dealers and developers rarely view the commitment letters binding is evidenced by their lack of detail, he added. The interest rates and prices on the promised bond offerings, for example, are never stated in the letters, he said.
In presenting his defense of Mr. Wilson, Mr. Wells also broadly attacked an individual who will be the government's key witness on charges that Mr. Wilson and Mr. Briscoe conspired to defraud the government of the grants.
That individual, DuBois Gilliam, a former deputy assistant secretary of the Housing and Urban Development Department, approved the grants for Mr. Briscoe's projects. Mr. Gilliam was given immunity from prosecution in exchange for his upcoming testimony in the case under a May 1990 agreement with the independent prosecutor, Mr. Wells said.
But throughout the time that Mr. Gilliam cooperated with the prosecutor, as well as with a House subcommittee investigating the so-called HUD scandal in 1990, he was taking bribes for favors he granted during his term at the department, Mr. Wells charged.
The alleged bribes were negotiated unbeknownst to the prosecutors and congressional staff, but have since been acknowledged by both, he said.
"Gilliam tricked them all. He tricked the White House, Congress, two federal judges, and the prosecution, and they never did anything about it," Mr. Wilson's lawyer said. Thus, any oath Mr. Gilliam takes on the witness stand in coming weeks to tell the truth about Mr. Wilson and Mr. Briscoe is nothing but a sham, he charged.
The real "victim" in this trial is Mr. Wilson, Mr. Wells argued, because he too was "tricked" by Mr. Gilliam.
Deputy prosecutor Roscoe Howard interviewed his first witness in the case on Friday, a HUD official who currently manages the urban development grant program. The trial is expected to continue for another six weeks.