Judge rules in favor of bank officials [The News Herald, Panama City, Fla.]

Sept. 28--PANAMA CITY -- Attorneys for three former leaders of a failed local bank persuaded a judge this week to vacate a restraining order on property their clients, and one client's wife, argued the government had no authority to restrain, according to court records.

The government had succeeded in getting a restraining order against Terry Dubose, Elwood West and Frank Baker earlier this month. The government's motion nor the order itself is available in the publically available court record, but it apparently would have restricted what the three men were allowed to do with property that included real estate, automobiles and bank accounts.

Dubose, West and Baker were officers or directors of Panama City Beach-based Coastal Community Bank before it failed in 2010. They were arrested in August after a federal grand jury returned an indictment charging them with several counts of conspiracy, wire fraud and making or causing false claims against the Federal Deposit Insurance Corporation (FDIC). The three are accused of ripping off millions of dollars from an FDIC program designed to ensure banks could find loans from other banks.

The defendants will need to pay for what likely will be a costly defense, James Judkins and Larry Simpson, two attorneys representing Baker, argued in a motion to vacate the restraining order filed earlier this month. The evidence the government will produce is expected to be hundreds of thousands, perhaps even a million or more, pages. Judge Richard Smoak granted it Thursday.

Defense attorneys argued the language in the indictment would allow the government to seize property "including but not limited to" Baker's home and law office in Marianna, several vehicles purchased in early 2012, bank accounts and even a property owned solely Baker's wife, who is not charged.

"This language is overbroad and fails to inform Baker what he is restrained from doing," the attorneys wrote in their motion, which was adopted by Dubose and West.

Federal law allows the government to seize assets derived from the proceeds of a charged crime or substitute property, but courts cannot restrain them before a trial, the attorneys argued.

"The government has no statutory authority or other right to a lien on Baker's assets, and the mere return of an indictment does not give the government any rights superior to other creditors," the motion says.

Smoak had given prosecutors time to respond to the motion and scheduled a hearing for Thursday, but it was not needed. Judkins and Simpson said they had spoken to prosecutors about the motion and learned it was intended only to secure the items so the government could recoup some of the nearly $4 million it claims the defendants fraudulently caused the FDIC to pay.

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