James D. Stout, once a prominent real estate developer in Orange County, was found innocent Tuesday of charges that he accepted $1.5 million in kickbacks in land deals involving Beverly Hills Savings & Loan Assn.
A jury acquitted Stout following a two-week trial before U.S. District Judge Consuelo B. Marshall in Los Angeles. The jury deliberated less than a day before delivering its verdict.
Law enforcement officials have mounted a major nationwide effort to deter criminal fraud in the U.S. banking industry. Late last month, in another case related to the crackdown, a federal jury in Iowa cleared Texas real estate developer Thomas Gaubert, a well-known Democratic Party fund-raiser, of several fraud charges against him involving a now-defunct thrift in Mount Pleasant, Iowa.
Law enforcement officials maintain that successful prosecutions in bank fraud cases are crucial to maintaining confidence in the banking system and in deterring future misconduct, but prosecutors point out the charges are difficult to prove.
Stout, who now lives in Florida, used to run his own real estate investment and management firm in Irvine and once headed the Orange County-based American operations of Daon Corp., a large Canadian real estate development firm.
Stout was indicted in June on charges that he collected secret commissions from a real estate brokerage to which he had channeled purchases financed by Beverly Hills Savings from 1982 to 1984. Stout’s company was a partner with Beverly Hills Savings in the purchase of dozens of apartment buildings worth more than $450 million.
Stout was acquitted apparently because the jury did not believe that he had done anything criminal in not telling Beverly Hills Savings about the secret payments, which the prosecution had labeled as kickbacks.
“There was no evidence to support the kickback allegations,” said Randall J. Turk, the Washington-based attorney who defended Stout. “The evidence was that these were lawful and appropriate finders’ fees.”
“He took the stand and said he did not feel it was any of Beverly Hills Savings’ business,” added Anita Dymant, the assistant U.S. attorney who handled the prosecution.
Beverly Hills Savings, now headquartered in Mission Viejo, failed in 1985 and has been kept open ever since as a virtual ward of the U.S. government. Its former business activities have been the continuing focus of a criminal investigation.
Dymant, who confirmed that the probe is still going on, maintained that the Stout verdict will not affect the high priority that the U.S. attorney’s office in Los Angeles has placed on combating bank fraud.
“This was an unusual case with an unusual set of facts,” she said. “Each case is decided on its merits.”