Judge Declares Mistrial in Empire S&L; Fraud Case

The judge in the trial of D. L. (Danny) Faulkner and six others declared a mistrial Friday after jurors said they were hopelessly deadlocked in the largest savings and loan fraud case.

After deliberating for more than 16 days on the 88-count indictment, jurors told U.S. District Judge Sam Cummings that they could not come to an agreement.

“I know we’re disappointed a verdict has not been reached in this cas,” Cummings told jurors. “But I’m not disappointed in your performance.”

He told jurors that a gag order remained in effect. It was not immediately clear how the jury was split.

Assistant U.S. Atty. Terry Hart said the case would be retried.

Faulkner showed no emotion as the mistrial was announced, but 10 minutes later he fought back tears as he talked to reporters in the courthouse lobby.

“I think it’s been really hard on us,” Faulkner said. “I want to be remembered for the nice things I’ve done, not this.”

Co-defendant and former Garland Mayor James L. Toler put his arm around his wife as he walked out of the courtroom and said: “Let’s go to the showers. Get ready to fight again.”

Faulkner and Toler are accused of heading a conspiracy to steal $135 million from Empire Savings & Loan Assn. of Mesquite, Tex., and four other S&Ls; in Texas and Arkansas in 1982 and 1983.

The other defendants, former Empire Chairman Spencer H. Blain Jr.; former S&L; employee Paul Arlin Jensen; former real estate salesman Kenneth Cansler, and land appraisers Arthur Formann and Paul Douglas Tannehill also were accused of conspiracy.

Mike Fawer, Toler’s attorney, called the mistrial “an absolutely crushing defeat for the government.”

The indictment charged the seven with defrauding the savings and loans through fanciful real estate appraisals and sham land transactions along Interstate 30 in Garland, east of Dallas.

Prosecutors said the defendants gave themselves private jets, expensive watches and even a $4-million mansion with the money they borrowed ostensibly to buy land and condominiums.

All the defendants except Formann and Tannehill were charged with a count of racketeering, which allows the government to confiscate illegal profits. The government had accused the defendants of receiving $135 million from the alleged scheme.