March 2, 1998: First Defense Witnesses Roughed Up by Prosecutors in Productions Plus Trial

Update by Chuck Fager

Wichita, Kansas — Federal prosecutors aggressively questioned the first two defense witnesses in the Priscilla Deters-Productions Plus trial Monday.

Dominick Pepe, who was Deters’ banker in 1989-1990, was the first defense witness. He acknowledged giving favorable evaluations of Deters’ business to potential investors who called him as a reference. One of these inquirers was Maurice Roberts, former Superintendent of Mid-America Yearly Meeting of Friends.

Pepe’s bank was the depository of a trust which Deters controlled, but which was plagued by fraud throughout its brief existence. It was also disclosed that Pepe had much more than a banker’s interest in Deters’ company, Productions Plus.

While Deters was telling investors the trust was backed by up to fifteen million dollars of resources, in fact, according to Pepe, its biggest deposit was a $1,000,000 Oregon municipal bond that turned out to be a worthless fake.

Then the trust’s sponsorship of a planned run from Berlin to Moscow in celebration of the fall of the Berlin Wall collapsed when the runner allegedly plundered the advance funds for his personal benefit. Most of the funds in the account came from loans to Deters from individuals, he agreed.

Prosecutor Allen Metzger showed Pepe a letter sent to Deters’ potential investors claiming the $15 million backing. “Was there ever anything like that much in the account?” he demanded. “Even close?”

“Never,” Pepe stated.

Finally, Pepe testified, in May 1991 the trust was closed and all the remaining funds transferred to another account, which was under Deters’ sole control.

Prosecutors elicited from Pepe the fact that the trust account funds were supposed to be kept strictly segregated in certificates of deposit, each in the name of a specific investor, and not commingled. However, when confronted with copies of all the CDs purchased for the account, he admitted that all but one of the CDs was in fact solely in the name of the trust.

Only one of the trust CDs was in the name of an investor, he agreed, when the documents were presented in evidence. That investor was a California Quaker retirement home, whose director came personally to the bank with Deters to insist on having the CD designated that way before it was purchased. Thus the CD remained under the retirement home’s control, and when its term was up, Pepe said, the Quaker staff cashed it in and got their money back plus interest.

Other investors were not so lucky. After transferring the funds fromt he trust account, prosecutors presented bank records showing Deters then spent much of the money on her children, her aged mother, her mortgage, and other personal expenses.

This new account was not in Pepe’s bank. But Pepe did have an interest in it, because his church, the Covina Assembly of God, had invested $100,000 with Productions Plus in 1988. In addition, a day care center at the church put in $10,000 of its own.

Pepe stated that he was Treasurer of the church at that time. The church’s investment, he added, was supposed to be placed in a CD, and then doubled each year for three years, with the new funds coming from profits from Deters’ other businesses.

However, prosecutors presented him with a fax he sent to Deters in September, 1992, complaining that the church had thus far received nothing. Pepe then stated that the church had finally received its $100,000 back, but the day care center’s $10,000 was not returned.

Again prosecutor Metzger was insistent: “The defendant did not fulfil her obligations to your church, did she?

“No,” Pepe answered.

This was not the end of Pepe’s dealings with Deters, however. Under questioning, he acknowledged that he had privately borrowed $100,000 from Deters, in connection with a printing business he was involved in. But when the printing business failed, he only repaid her $20,000, and then discharged the rest in a bankruptcy proceeding.

Pepe denied Metzger’s sugestion that his private loan from Deters constituted a conflict of interest when she she was a customer at his bank, and when his church was also an investor.

Pepe left the bank not long thereafter in what he called a “downsizing.” He is now the business manager of a private Christian school.

The second defense witness, George Brown, fared little better. He was one of the trustees of the account at Pepe’s bank,and then later acted as an adviser to Deters in her business.

Brown acknowledged having loaned Deters a total of $225,000 over several years, not all of which has been paid back. Deters told him, as she did other investors, that she had several profitable businesses from which she reaped profits for her purported “matching gift” program.

However, Brown admitted under questioning that he never saw any financial records from these businesses showing that they actually were operating or generating any funds. He also insisted that he did not know she was spending investors’ funds on personal expenses and gifts to her family members.

      “This money was not to be spent on her personal expense, right?” Metzger asked.”Absolutely,” Brown agreed.”Did she tell you she was going to spend it on her mother?” Metzger asked.

“No,” Brown said.

“Was that an appropriate way to spend it?”

“The way you put it,” Brown countered, “no.”

What other way did he want to put it, Metzger retorted.

“Did any of her investors call you and say it was okay to spend it on her mother?” “No,” Brown said. “Did anyone write to you and say that?”

“No,” Brown repeated.

Metzger also challenged Brown’s contention that Deters’ matching gift program was to operate on a three-year basis. Brown had described a meeting in April, 1994 between Deters and Maurice Roberts and other representatives of Mid-America Yearly Meeting, after Mid-America had been participating in Deters’ program for almost five years.

Brown told defense attorney Steve Gradert that the meeting was intended “to correct some misinformation these leaders had in their minds about the program. They thought their money was to be doubled every year.”

Prosecutor Metzger pounced on this statement. He showed Brown a fax sent by Maurice Roberts to Deters in April, 1991, in which Roberts laid out his understanding that the matching was to be done on a year-by-year basis.

“Did you see that letter, and Mrs. Deters’ response?” he asked.

“I saw them,” Brown agreed.

“She never corrected Mr. Roberts understanding in writing?”

“Not at that time,” Brown said.

“So then his understanding was correct?” Metzger barked.

Brown paused, and then finally answered very quietly,”Yes.”

The defense will continue its presentation on Tuesday.

NOTE: The outlines of the prosecution and defense arguments closely parallel and corroborate my reporting in “Fleecing the Faithful”.

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