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Former Bank CEO Acquitted In Mortgage Fraud Plot

Law360, Chicago (January 19, 2016, 8:21 PM ET) — A Chicago jury on Tuesday acquitted a former bank CEO on all counts following a weeklong bank fraud trial, rejecting prosecutors’ claim that he orchestrated a mortgage fraud scheme to help a business associate get cash to pay him thousands of dollars in late rent.

After a little more than four hours of deliberation, the jury found Robert Michael not guilty of one count of bank fraud, one count of making false statements to a bank and one count of money laundering. The verdict came after days of testimony in which the jury heard about how Michael allegedly used his power at the bank to get his renter, Regina Evans, a $650,000 loan he knew would be used to pay him back.

Michael faced a maximum penalty of 30 years in prison and a $1 million fine for the bank fraud and false statements convictions and up to 10 years in prison and a $250,000 fine for the money laundering conviction, according to the U.S. Department of Justice.

“We are really pleased with the verdict,” Michael’s attorney Scott Frankel told Law360. “They just looked at the evidence and saw what we saw.”

After the verdict was read, Michael mouthed “Thank you” to the jury.

Both sides made their final arguments to the jury earlier on Tuesday, with prosecutors going through the evidence they said proved their case piece by piece. The prosecution’s depiction of the scheme revolved around former Chicago police officer Regina Evans, who they said owed Michael $240,000 in rent for a nightclub space she leased from him as part of an entertainment business.

Michael “needed to make sure he kept putting money in [Evans’] pocket through his bank because he knew … in the end it always came back to him,” Assistant U.S. Attorney Joel Hammerman told jurors.

But during the course of the trial, “no one told you Bob Michael and Regina Evans were colluding together,” Michael’s attorney Scott Frankel told the jury, adding that some of the witnesses the government called “were in a position to know.”

The defense rested its case on Tuesday morning after Michael declined to testify. U.S. District Judge Samuel Der-Yeghiayan denied Michael’s motions for acquittal and directed verdict before the case was turned over to the jury.

Michael was indicted in 2013 along with former Chicago police officer Erroll Davis, who testified in Michael’s trial last week. Prosecutors said that Evans convinced Davis to serve as the straw buyer in a plot to secure a fraudulent mortgage from Citizens on an apartment building she owned so she could pay her late rent.

The building was part of a theater property that Evans purchased with a separate Citizens mortgage.

Through his role at the bank, Michael excluded the apartment building from the collateral on the theater mortgage, which prosecutors said was proof he was setting up the fraud. Then, Davis applied for a mortgage at Citizens to purchase the apartment building, prosecutors said.

Frankel told the jurors the exclusion was simply the work of a smart businessman and lender who wanted Evans’ business to be successful. Michael felt the loan was properly collateralized and knew that Evans’ entertainment company would need cash down the line, so he left the building free should she need it for future collateral.

As evidence of Michael’s role in the scheme, prosecutors pointed to Davis’ loan application, which they said contained information Michael added to inflate Davis’ income and assets. The bank approved a $650,000 mortgage, prosecutors said.

“He facilitated every step of the way,” Hammerman told the jury.

But Davis, who pled guilty to one count of income tax fraud as part of the indictment, is a liar, Frankel said.

“We know he and Regina Evans got together to lie to Citizens Bank,” he said.

An attorney who worked for Michael took the mortgage money and deposited it into his client account, later divvying it up into checks deposited in bank accounts belonging to Michael, Evans and Davis. Of that, prosecutors said Michael personally received $200,000.

While Michael was in a position of power at the bank, there were other people at the bank who signed off on Davis’ loan, Michael’s attorney told the jury.

“The bank was not a one-man show,” Frankel said. “To all those people, including Bob Michael, these two loans [Evans’ mortgage and Davis’ mortgage] looked like good deals for the bank.”

Davis is awaiting sentencing. Evans pled guilty in a separate plot to misappropriate state grant funds given to an educational program and was sentenced to five years in prison.

Michael is represented by Scott Frankel of Frankel & Cohen, and Mina Stojicic Zardkoohi.

The government is represented by Assistant U.S. Attorneys Megan Church and Joel Hammerman.

The case is U.S.A. v. Robert Michael, case number 1:13-cr-00902, in the U.S. District Court for the Northern District of Illinois.

–Editing by Stephen Berg.

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