Update by Chuck Fager
Wichita, Kansas — Amid legal wrangling over an investigator’s report and a son’s testimony on behalf of his mother, the defense in the Priscilla Deters-Productions Plus case rested its case on Wednesday.
Deters is charged with 13 federal counts of wire and mail fraud, in connection with a church fundraising plan that authorities call a fraudulent Ponzi scheme. Her attorneys have labored to portray her as an honest Christian businesswoman whose companies ran into legal and funding obstacles.
Kansas state investigator Gary Fulton, who presented much of the evidence in the prosecution’s case last week, was put back on the stand Wednesday morning, as defense attorneys called into question his report of where Deters spent more than $6,400,000 of investors’ money between 1990 and 1995.
Fulton conducted a search of Deters’ home in December, 1994. The search yielded six boxes of documents, including checks and bank records. Based on these records, Fulton prepared a chart for the jury which showed that only a little over $2,000,000 was returned to investors, while $3,000,000 was spent on Deters’ family and other business expenses.
Defense counsel Steve Gradert pointed to $986,000 of receipts classified as “unknown” by Fulton, and asked if these could not in fact have been profits from her business.
“If there were business profits,” Fulton answered, “I couldn’t find them. These could be personal loans; a lot of people loaned her money. But if your question is, could I positively say there were no revenues? I don’t know.”
In rebuttal, Prosecutor Allen Metzger reviewed Fulton’s work establishing that funds from later investors were used to pay “matching gifts” to earlier investors, which constitutes a Ponzi scheme. “Based on these records,” Metzger asked, “did you form an opinion as to whether this was a Ponzi scheme?”
“What was it?”
“She was running a Ponzi scheme,” Fulton insisted. “That’s all it was.”
The final defense witness was Deters’ son Loren. Loren Deters, 28, told the court he often heard his mother talking about the nature of her businesses while he was growing up in their house in Walnut, California, until he went college in Berkeley in August of 1991. But when defense counsel Steve Gradert asked him to describe how the business worked, prosecutors objected strenuously and repeatedly that his report would be irrelevant hearsay.
U.S. District Judge Monti Belot was also uneasy. He sent the jury out, then conducted an extended conference with the attorneys over whether federal rules of evidence permitted the son to be thus questioned repeatedly about what his mother said.
“If all we’re going to hear is what the defendant told him about this and that,” Belot declared, “I have real problems with that.”
Gradert argued that because the younger Deters had lived in a house with is mother over an extended period, and had worked in the business while a student, his knowledge was more firsthand than typical hearsay.
Belot ultimately ruled that some of these statements would be allowed, but cautioned that, “I won’t allow the defendant to put in her exculpatory testimony through this witness.”
Loren Deters then stated that his mother’s business was built on joint fundraising ventures with nonprofit groups. The group put up some money to help finance a particular fundraising event or program; Mrs. Deters then organized and conducted the program, in cooperation with the sponsoring group; and then she and the group split the proceeds, if any.
Gradert asked if Priscilla Deters had described the goal of this program.
“Yes, was the reply. “It was to help nonprofit groups.”
Gradert’s next question was, “Loren, do you love your mother?” “Yes,” he replied. “With all my heart.”
“Would you come in here and lie for her?”
“No,” Loren answered. “I have a pregnant wife back home, and I wouldn’t do anything to mess that up.”
Asked if he had an opinion about his mother’s character, he said she was, “Incredibly kind-hearted, incredibly honest, and a lot of people misunderstand her.”
Cross-examination was brief and pointed. After establishing the Loren Deters knew little about the difference after leaving for college in 1991, Prosecutor Allen Metzger bored in on the difference between what he had heard and what his mother had written to her client groups.
“You knew the business from firsthand experience prior to August, 1991,” Metzger said. “Even then, your mother didn’t show you the written documents she was sending to the nonprofit groups, did she?
“You didn’t go with her on trips when she talked with these groups?”
After her son’s testimony, the defense was faced with a crucial decision: whether or not Priscilla Deters herself would testify. Under federal rules, she could not be forced to take the stand. But without her direct testimony, the defense could not be sure it had gotten her version of her career to the jury.
After a long recess in which she and her attorneys huddled in a conference room, the session resumed to hear Gradert announce, “The defense rests.”
Belot later told the jury to expect closing arguments and instructions Thursday afternoon.
NOTE: The outlines of the prosecution and defense arguments closely parallel and corroborate my reporting in “Fleecing the Faithful”.