Judge Voids Guilty Verdict in Tustin Businessman’s Trial

The federal judge in the fraud and conspiracy trial of Tustin businessman John F. Hayden has rejected the jury’s guilty verdict on 27 fraud counts and scheduled a new trial for the former insurance company owner.

Hayden is accused of defrauding 22 banks and savings and loan associations of millions of dollars by issuing worthless loan guarantees through his now-bankrupt company, Glacier General Assurance Co. of Montana.

In his ruling Monday, U.S. District Judge Harry L. Hupp found that the Justice Department had not presented sufficient evidence to convict Hayden. The ruling came in response to a motion from Hayden’s attorneys for a full acquittal. A new trial has been scheduled for June 6.

First Voided Verdict

Assistant U.S. Atty. Terree Bowers said Tuesday that his office intends “to consult with the Justice Department to determine whether or not to appeal the judge’s ruling.”

Hupp said this is the first time in 17 years on the bench that he has voided a jury’s verdict.

Hayden, who owned Glacier General Assurance Co. of Montana, was convicted in February after an 11-week trial. Jurors acquitted him of one count of interstate transportation of stolen goods and were unable to reach a verdict on a single county of conspiracy.

Government prosecutors had argued that Hayden was a willing participant in a massive loan fraud scheme in which falsified applications were used to secure tens of millions of dollars in loans that were diverted into the borrowers’ personal accounts rather than being used for real estate purchases.

Hayden’s company was one of several that insured the loans. The guaranteed loans then were used to back securities sold by a number of banks, including Bank of America. When many of the loans went into default, Glacier was unable to make good on the guarantees.

Bank of America Loss

Bank of America blamed the loan scam for a loss of about $100 million in 1984.

Throughout the trial, Hayden maintained that he was a victim of the scam rather than a participant.

Hayden could not be reached for comment, but his attorney, James C. Chalfant, said the judge found that the evidence “weighed heavily against the jury’s verdict.”

“We feel the original verdict was erroneous, and we submitted declarations to the court from seven jurors saying that they had changed their minds and no longer believed Mr. Hayden was guilty,” Chalfant said. “We think the judge made the right decision and, when the new trial comes, Mr. Hayden will be vindicated.”