One Business Owner’s Legal Saga
On the most recent episode of Atlanta’s Most Trusted Advisors, Stone Payton and Bonnie Buol Ruszczyk welcomed Amy Brown Williams and Sandy Wallack, an Atlanta attorney who handles criminal matters in state and federal court at the trial and appellate levels. Sandy briefly outlined their situation, saying, “Amy is a former client at this point. I represented Amy for approximately six to seven years. She was charged federally with bank fraud, and we had a week-long trial this August when she was acquitted of all charges.” And since Sandy wasn’t Amy’s first lawyer in the matter, her legal saga has been a very long journey indeed.
It all started in the 80’s housing boom. Amy begins, “I entered the mortgage banking business in ’84 […] and built a reputation in Atlanta, particularly Gwinnett County, for being an FHA expert. If anybody had a loan that they needed to get through the FHA, they needed to come through me, because I knew it like the back of my hand. I decided to go into business for myself, which is the American dream, isn’t it? I opened up United International Mortgage Corporation (UIM) when the economy was just booming. Money was prolific, banks were handing it out like bubble gum. So I opened the company and immediately started getting things thrown at me that I wasn’t even aware of, to be honest with you, lines of credit, hedge fund lines, things like that.”
Amy’s company did well, and she was making a big mark in the mortgage industry. She reports, “The company grew, and as it grew, I brought on people to help me run it. I was the first woman in the southeast United States to close a $50 million guidance loan for the purpose of lending construction money for rehabilitation homes here in Atlanta. So you see a house on North Druid Hills Road that’s run down, an investor goes and purchases it, they need money to tear down the collateral and build it back. Banks do not like for you to tear down collateral. So, I allowed that. I allowed them to tear down that little brick bungalow and build back the mansions that you see around Atlanta, Georgia. So I am part of the McMansion effect.”
Bonnie: We will let that slide. So all things were going great. What happened?
Amy: Well, as we all know the economy started rumbling probably earlier than we know. But we did not see it because things were too good, and a lot of times you wear rose-colored glasses and you forget to clean them. And so, we just kept business as usual and then all of a sudden my customers were unable to pay me in timely manner. And so, as the economy began to spiral, so did I, as did many, many mom and pop shops. Being in the industry for so long, I made it through the SNL crisis, I made it through the dotcom crisis, and so I thought, “Well, I’ll be able to ride this wave as well. Let’s just tighten up our belts.” But we all know that that was the worst downturn since the Great Depression in the late ’20s or early ’30s. And so, pretty much no one survived.
Bonnie: Lots and lots of businesses went under and it was absolutely a tragic time for so many people, but you had this extra layer of complication to deal with. So, what brought all of that on? How did that happen?
Amy: I had an employee who ran a branch for me, and unbeknownst to me he was creating some fraud, not with my bank, but with another bank that I had no idea he had affiliation with. And so, FBI shows up in my office one morning, looking for information on him. And I fully cooperated, of course, got them anything and everything that they needed. And at that point, because my business was beginning to fail as well, they thought, “Well, let’s just investigate the whole gamut.” And that’s how it got started.
Sandy: The irony with all of this and what Amy left out is not only that she cooperated with the authorities, with the FBI, with the FDIC, and with the US Attorneys’ Office in regards to the investigation of that other person, she actually got an email back that thanked her for going above and beyond in her assistance. And within months, that same prosecutor, that same Assistant U.S. Attorney then alerted Amy’s corporate counsel that Amy was a target of investigation.
So, essentially at the same time they are shaking Amy’s hand and saying, “Hey, thank you so much for all your help and for everything that you’ve done,” they are also saying, “Well, but we are investigating you criminally too, and we think that you committed crimes.” There’s nothing you can to do to avoid that as a business owner. There’s nothing that you can do to keep from being wrongfully accused of something. So in this situation, Amy is notified that she’s a target, she gets counsel, and it all starts at that point. And we are talking about late 2008, early 2009.
And at that point it really just dragged on. The U.S. Attorney’s Office played a game of poker with Amy and wanted her to roll over and take a plea, and admit to guilt, admit to doing something that she didn’t do. And Amy dug her heels and then said she wasn’t going to do that. The U.S. Attorney’s Office wasn’t ready to move on the case, and it sat, and it sat, and it sat for a number of years. It changed hands between prosecutors. The case moved on and it ultimately found me in 2010.
Bonnie: So, the official charge was fraud?
Sandy: It was bank fraud. Ultimately in 2016 when we went to trial, it was that Amy had lines of credit with two different banks and that money was dispersed in that line of credit to her business, UIM, for two specific construction projects, and that instead of being used for those construction projects, it was used for other purposes, personally used by Amy and other uses by the business.
Bonnie: So what made them think that was taking place?
Sandy: I guess from their end of it, it’s looking at bank records, it’s looking at checks, it’s looking at payments, and it’s following the trail that way. Money did go all over the place. In these instances, we had something that was very different going on, because there’s different agreements with each of the banks. And so, one of the issues was, as to one of the particular banks, whether the agreement actually limited UIM’s use of the funds to begin with. Because if the agreement didn’t limit it, then UIM and Amy are allowed to use it for whatever purpose that they wanted to.
And so it became essentially interpretation of the contract, interpretation of the bank fraud statute, and then it becomes a factual issue as to what really happened. Within all of that, there has to be criminal intent that is proven. There has to be an intent to deceive and intent to defraud. And I think ultimately what the jury found in listening to all of the evidence, the witnesses and everything that was presented, was at no time did Amy had any intent to deceive or defraud either of the banks. She was conducting business, and that just because, ultimately, she wasn’t able to pay back the money from the lines of credit didn’t mean that she committed fraud.
Bonnie: Okay. And my understanding too is that there was one of your employees who was testifying against you, right? That’s kind of one of the reasons why it wasn’t settled before trial. Correct?
Sandy: Well, yeah, the way for it to be settled before trial is one of two ways. The prosecutor’s office can decide to dismiss it and the U.S. Attorney’s Office rarely does that. I consider them to be like a little bulldog that once they get a hold to your pant leg, they just don’t let go in that office. They have enormous resources and they will continue to investigate, continue to go after it, and use leverage, because federal sentencing is very excessive and harsh, and they will use that to their advantage. And that’s what they tried to do here with Amy. They can choose to dismiss it or the defendant, in this case Amy, can choose to enter a plea, and Amy wasn’t willing to do that.
Amy: Entering a plea, to me, meant that I had to lie. I had to lie to say I did something wrong when I didn’t. So Sandy and I had that heart to heart conversation, and I said, “As much as I want this to go away, because living under that, I can’t even describe the emotions. You just want to wake up one morning and it be gone and it be over. And often your thoughts go, ‘Well, if I can just do this and it will go away, then why not?’”
But doing that meant that I had to enter into agreement that admitted that my intent, my heart, my whole reason for being in business was to have ill-gotten gain, and that is not who I am. That is not anywhere in my core. And so I told Sandy, “I’ve got to prove myself,” and thank God for Sandy Wallack.
Bonnie: Statistically, the chances of somebody winning a federal case in this sort of situation is pretty low. Correct?
Amy: Very low, very low. I had a 5 to 10% chance of walking out of that courtroom a free woman. But I knew, in my heart, that I needed to take the chance because I knew the truth.
Stone: Wow. So, I’ve got a quick question. Win, lose or draw, aren’t you out money when you have to go through this process? I mean, Sandy’s got to be paid, you got to…
Amy: Oh, absolutely. That’s a whole other layer. Well, not only when the economy tanked in ’07 and ’08 did I financially lose everything that I had worked for 30 years of my life, and I was doing okay for myself [but] I was a very self-sufficient person. I took care of a lot of people, because I was taught that when much is given, much is required. So I went through that emotional rollercoaster of being financially wealthy to being so broke that I was rolling pennies and quarters and dimes, and I mean literally.
And so I went through the emotional loss or the financial loss, and that’s an emotional headache in and of itself, and then now I am facing criminal charges for something that I did not do. And so, yes, the money, the money aspect of it is unbelievable. Now, Sandy was court appointed to me. So, personally I did not have to pay him. He did not get a fraction of what he deserves for representing me. And so, there’s not enough money in this world, in my opinion, to pay Sandy Wallack. But yeah, the money aspect of it was huge.
Bonnie: And he was your third attorney, too?
Amy: He was. When my corporate counsel called and said, “You are a target, get an attorney,” I was still able to work in the mortgage banking industry and I was employed. And so, my partner and I made the choice to go get a really, really good attorney, and her rate was $500 an hour, and the rate for the forensic was $150 an hour. So I had to earn $650 an hour to just pay them.
Stone: Ouch. Now, is there some mechanism in place to recoup that when you do come out of it and you are found not guilty or anything?
Sandy: Nope, nothing. So, that’s one of the reasons why folks often enter guilty pleas. It’s the emotional toll. It’s the years that you’ve already had living under it. And so by the time it comes around, you are willing to just do whatever you need to get it done. It’s the financial expense of it. And all of those things work against the defendant. And it’s somewhat similar for state courts and state charges, but particularly for someone facing federal charges, the government is unlimited into its resources. The U.S. Attorney’s Office doesn’t have to factor money into a decision on how it’s going to handle a case. It has tunnel vision in terms of what it thinks it needs to do. Whether that’s good or bad, that is the way it is. And so for any defendant, you are facing such an uphill battle.
Stone: That will be enough to turn you into a criminal next time around. I feel like we’re putting an innocent person in jail.
Bonnie: It’s almost like you need to rob a bank to pay the attorneys to cover the cost.
Bonnie: That’s incredible. What was the defense at trial? How did you argue this case?
Sandy: Well, the defense was that she never had fraudulent intent, that she never intended to deceive. And so, part of that, as I mentioned earlier, was legal interpretation of the contract. That’s something not typically done in a criminal case, but that’s what we had here, and that’s something more that you would see in a civil case. And then the second, and the important aspect to it was, what was Amy’s frame of mind? What did she have in her head when she entered into those agreements? What did she have in her head when she was conducting business?
And what was clear throughout all of the witnesses, the government’s witnesses, through the documents that came in, was there was nothing to show that she ever intended to deceive the banks, that she ever intended to defraud the banks and put one past them. The banks went in with their eyes open, they knew what Amy’s’ business was. Amy’s customers were not necessarily the folks with the best credit.
And the banks knew that. It wasn’t something that they weren’t aware of. The banks were making a lot of money and they were more than happy to do business with UIM because of that. And it was important for the jury to hear that. Some of the things that came out of trial was the government wanted to make it out that all the banks went under because of United International Mortgage and Amy Williams.
Bonnie: Oh my, gosh. You have a lot of power.
Amy: I do, don’t I!
Sandy: And that the builders involved all went bankrupt because of United International Mortgage and Amy Williams. And as to both of the builders and both of the banks, what we were able to show is that the part that Amy had to do within UIM was just small percentage for them.
Amy: It was a fraction of a percentage.
Sandy: You can’t look at that and say, “Well, it’s all her fault.” And that is exactly what the government put in front of the jury.
And so at some point, I think, the jury looks at it and says, “B.S., that’s just not the way it is.” And thankfully we had a jury that really was able to see through what the government was putting out there and was able to see this case for what it was. It was business. And certainly you can go back and look at it, and the banks would do things differently, and Amy would do things differently, the builders would, we all would. But at the time nobody was committing a crime. Everybody was just conducting business. Whether it was good decisions or bad decisions, it was just business.
Stone: But it was a jury trial. So you’ve got human beings, one or two or three of which may have been through their own set of challenges through this time. Now, are you allowed in that setting to talk about the plea deals that were offered and turned down?
Sandy: The plea deals don’t come into it. But one of the things that we did in terms of the jury and who is out there and what their experience are, is that’s the jury selection process.
Bonnie: So, as a business owner, I am sitting here going, “I don’t see a whole lot that you could have done different.” You went, you hired a really good, reputable attorney who wound up breaking you financially. What advice do you have, either one of you, for business owners to avoid this sort of situation, or if, God forbid, you are faced with the FBI or IRS at your door, or any governmental agency, what can you do?
Sandy: Well, I will say it from of the lawyer prospective. There’s nothing that you can do to avoid somebody wrongly accusing you of a crime. But you do need to boy scout it, and that is to say that, as business owner, even as an employee, you need to document things the best that you can. So that if something comes up and you need to go to 10 years back to look at agreements or to look at financial records, you have the ability to do that. And for our personal financial records as well. And the other thing is that at the first sign of anything, any investigation, anybody looking at you from law enforcement, you need to retain counsel and you need to retain counsel who is experienced in whatever the area is and knows what they are doing.
Amy: I can agree with Sandy. The first thing that came to my mind was documentation. And that’s one thing that I think Sandy found that I was really good at; I had saved everything. We had backed up my servers, and I can’t tell you how important that is, so if any employee decides to go and erase anything, you’ve got it backed up on a thumb drive or an external hard drive.
And then the other thing is, I am a very trusting, naïve person. My family will tell you my biggest quality is also the biggest weakness. And so, when you hire, you have to have a little bit of cynicism to make sure that you go behind them, and I didn’t do that. I trusted some of the people that I hired exclusively.
Sandy: And just to come back to what Amy was talking about, one of the important things for us was, because Amy hired counsel right away, despite the fact it was too expensive for her to keep with that counsel, they went through everything with a fine-toothed comb. And so, years later, when we finally got trial in 2016, the work that they did in 2009 was invaluable, and we had all of that. Because she jumped on it and had counsel who jumped on it right away, they had all those records and they retained them.
Bonnie: I can’t imagine going through that. I want to go back to one thing that you had mentioned. You were talking about hiring. You say you were a little bit more trusting than you probably should be. If you could go back and ask certain questions or do certain investigations or things like that to make sure that people that you hired were the people you thought they were, what would you do?
Amy: Well, I think most importantly I would make sure they were qualified for the position. Just because they have a certain diploma may not mean that they are qualified to do that certain role. And then I think I’ll check more into the personal aspects of their life. It’s crazy, but my grandmother taught me that and she said, “Find a person to walk the journey of life with, who loves their mother and loves the earth. And if somebody loves the earth and takes care of the earth and takes care of their mom, that’s good soul.”
Bonnie: Interesting. I can see there’s a challenge there. I can absolutely see asking some of these questions. But you also have to be careful with what you are legally allowed to ask too. I could even see working with an HR consultant or somebody that knows those lines and how to do that would be an important person to bring in as a business owner, too.
Amy: Totally, totally agree with that. Bringing in an HR specialist, whether you are a small or large business, to me, is critical because they know the right questions. They’ve been through the studies, they’ve studied psychology, and they know all of that instead of just saying, “Oh, you look good on paper.” It’s easy to look good on paper, I think.
Amy’s story is a frightening lesson for every business owner (you can hear more details about her saga by listening to the full interview on Business Radio X) but it ends well. She says, “I went from being a 30-year seasoned mortgage banking professional to a farmer.” These days Amy is working on a farm in South Georgia, and she loves it. “The best thing that’s ever happened was to whisk me out of the common and get me down to the uncommon, and get my body, mind and soul and spirit back to the earth, back to the dirt, back to growing, planting seeds and watching them grow, and harvesting them, which is a lesson in and of itself for business, life, spiritual, whatever.”