Flying under the radar screen of the more well-publicized criminal trials of unpopular businesspersons, jury selection began yesterday in the retrial of the corporate fraud criminal case against former Westar Energy Inc. executives David Wittig and Douglas Lake in Kansas City federal court. Here is a previous post on the mistrial that occurred in the first trial of the case.
The retrial of the case is particularly interesting because of a battle over whether Westar is responsible to pay the defense costs of the defendants. In an order this past Friday, the 10th Circuit Court of Appeals denied the two former executives’ motion that sought a postponement of the trial while they appealed an a trial court order that bars Westar from advancing their legal fees. Although the appellate court turned down their stay motion, the 10th Circuit did agree to dispose of the appeal of the legal fee issue on an expedited basis.
To date, Westar has advanced about $8 million for the attorney’s fees and expenses the men have incurred in the ongoing criminal case. Westar’s by-laws provide for payment of such fees in litigation arising from its executives’ employment. After the first trial ended in a mistrial, however, prosecutors contended that the money was the product of the defendants’ illegal activities and was subject to forfeiture. Last month, U.S. District Judge Julie Robinson — who battled with defense attorneys throughout the first trial — sided with prosecutors and reversed her earlier order that authorized Westar to advance the fees.
While the 10th Circuit considers the executives’ appeal on the legal fee issue, Westar will place funds equal to their defense costs in escrow. If the 10th Circuit reverses Judge Robinson’s ruling, then the money will be made available to pay the executives’ defense costs. If it upholds her ruling, then the money will be released to pay the fees if the executives are acquitted or, possibly, if the case ends in a mistrial again.
If the first trial was any indication, this retrial is one worth watching.