The Trial and Tribulation of Larry Langford

by Kyle Whitmire & Madison Underwood

Larry Langford was a deceitful, greedy politician who deprived his constituents of honest services by taking bribes from friends in exchange for lucrative bond business …

Or …

Larry Langford was a flawed-but-good-hearted public servant who let two people he thought were his friends dupe him into steering them millions of dollars in fees on county bond business.

That’s how this trial started nearly a week ago.

“This is a case about a wheeling-and-dealing politician who sold out the public trust,” Assistant United States Attorney George Martin told jurors in opening arguments.

Defense lawyers placed blame on Blount and LaPierre, who they claimed entrapped Langford by using his weaknesses against him.

“A stab in the back and a deal with the devil,” defense lawyer Mike Rasmussen called it.

Prosecutors have accused Langford of directing more than $7 million of bond business to his friend, Montgomery investment banker Bill Blount, in exchange for more than $235,000 worth of clothes, jewelry and cash. Making their case, the prosecutors have taken jurors and the public deep into the Birmingham mayor’s strange and troublesome finances.

From the beginning, the defense had to acknowledge Langford’s obsessive and impulsive habits. Rasmussen told jurors in his opening argument that Langford was a shopaholic, but neither he nor the the prosecution really expressed in opening statements how garish and negligent Langford’s spending really was.

Three Birmingham clothiers testified against Langford. Richard Pizitz Jr. recounted to the court how Langford had rung up a store debt of more than $45,000 at his family’s store, Gus Mayer. At one point, the store had to sue Langford to make him pay his debt. That debt was paid shortly after Langford took out a $50,000 loan from Colonial Bank.

Despite having taken Langford to court, the store continued to let Langford have an account there. The current balanced owed to the store is more than $10,000, and the account has been put on hold, Pizitz said. Despite the debt, Langford had been in the store to purchase several suits within the last two months, Pizitz said. According to his testimony, suits at the store typically cost more than $1,000. Langford paid with cash, he said.

During the testimony, Langford tugged on his lawyer’s coat sleeve and whispered in his ear. The defense then asked Pizitz if the suits had been on sale for $399. Pizitz said that would surprise him if true.

(About two months ago, a federal magistrate declared Langford indigent and unable to pay for his own defense. Since then, taxpayers have been footing the bill for Langford’s defense.)

Another clothier, Remon Danforah, testified that Langford first came to his store with Blount and LaPierre. LaPierre told Danforah that he and Blount would pay for Langford’s purchases there. According to Danforah, Langford bought tens of thousands of dollars worth of clothes at his store.

Defense attorneys argued that Danforah was double-billing Blount and LaPierre for purchases Langford had already paid for, but Danforah denied the allegation.

Leo Shaia, owner of Shaia’s of Homewood, testified that Langford shopped in his store, too. There, he ran up a balance of $16,000 to $17,000 on his store account. After Shaia complained to Langford, he paid down his store credit with a $12,000 check. Eventually Langford paid the store completely about two years ago, Shaia said.

If the prosecution failed to prove anything else, it showed clearly that Langford’s spending habits are a serious problem. In an interview with the FBI, LaPierre likened Langford’s spending to heroin addiction.

“I’m not the guy feeding junk to the junkie,” LaPierre said in court. However, that’s not how it appeared.

Together, Blount and LaPierre arranged for Langford to receive more than $57,000?worth of clothes at Remon’s alone. But it was on the trips to New York where some of the more egregious purchases occurred.

Several times a year, Jefferson County commissioners, their bond counsel and financial advisors would travel to New York to meet with bond insurers and ratings agencies. Witnesses said that those officials actually did conduct some business there, but while the financial advisors were meeting with officials on Wall Street, Langford, Blount and at least one other commissioner, Mary Buckelew, were perusing Fifth Avenue and New York’s Garment District.

Before one trip, Langford told Blount he wanted to visit Oxxford Clothes, an upscale clothier that custom tailors suits by appointment. Blount testified that he had one of his girlfriends in New York set up an appointment at the store. Receipts show that Blount bought Langford a suit there and had it shipped to Langford’s office at the Jefferson County Courthouse.

In a frequent refrain throughout the trial, witnesses testified that Blount and Langford had their purchases shipped to Langford’s office from the many New York stores where they shopped. While this saved them from paying considerable New York sales taxes, it also left them vulnerable to federal mail fraud charges.

On trips to New York, Langford and Blount shopped at Salvatore Ferragamo, Tourneau, Turnbull & Asser, Ermenegildo Zegna and Century 21, among others. There, they bought suits, jewelry, watches and one cardigan sweater that cost $1,100.

Defense lawyers argued fiercely that Langford never asked for Blount to purchase these things for him and that there never was a promise of anything in return. Rasmussen asked Blount directly if Langford made any such request.

“He picked it out, put it on the table and didn’t reach for his wallet,” Blount said.

Blount’s testimony and documents produced by the prosecution showed clearly that Blount had bought myriad and expensive items for Langford on these trips.

That’s an important point because Langford has never been so forthcoming. In 2007, Langford gave sworn testimony to the Securities and Exchange Commission. In that deposition, investigators asked Langford directly if Blount had ever bought him anything on these trips to New York. Langford told them that Blount might have bought him a gift for his birthday. Investigators then asked Langford if Blount had ever bought him any clothes or other items on the trips, other than a birthday present. Langford said that Blount had not, and that he had paid for any clothing purchases with his own money.

That portion of the deposition, read to the jury by the prosecution, puts Langford squarely in the middle of two lies. First, the evidence that Blount bought him tens of thousands of dollars worth of clothes and jewelry is unequivocal. ?Second, none of the trips to New York coincided with Langford’s birthday, March 17.

At home, Blount and LaPierre helped Langford with some of his debts.

By 2002, Langford had accumulated debts with clothing stores, including Shaia’s and Gus Mayer. When Langford’s creditors threatened to sue, he asked LaPierre for $50,000. LaPierre said he told Langford that he didn’t have that kind of money and that he would have to make a phone call.

Defense attorneys contend that Langford didn’t know LaPierre was getting the money from Blount, and on the stand, LaPierre and Blount both said they never spoke to Langford directly about Blount’s role. However, LaPierre said he assumed Langford knew where the money was coming from, and an email from Blount to Langford references a loan request Langford was making at Colonial Bank.

In court, Blount testified that he contacted his on-again-off-again girlfriend at the time, Karyn Cope, to help him with Langford’s money problems. Cope worked at Colonial Bank, where she oversaw consumer lending. According to Cope and another Colonial employee, Cope did not usually approve or arrange loans to individuals, but on that occasion, she called a loan officer she knew in Birmingham to set up a $50,000 loan for Langford.

That loan matured in six months, but Langford couldn’t or didn’t pay it. When that happened, LaPierre took out a $50,000 loan at the same bank branch and paid Langford’s loan with the money. Later, Blount gave LaPierre the money he needed to pay off the loan.

Later, Blount asked Cope’s help again to get Langford a $75,000 loan, but that request was denied after bank officials were reluctant to take the risk.

When Colonial wouldn’t lend Langford that money, Blount channeled $69,000 through LaPierre to Langford. Blount and LaPierre both testified that it was a violation of Securities and Exchange Commission rules for Blount, an investment banker, to give or even loan money to Langford.

Later, Langford approached LaPierre with more money problems. He needed $30,000 dollars to pay his taxes and $3,500 in pocket money to spend gambling with former County Commissioner and now convicted felon, John Katopodis.

Prosecutors asked LaPierre what Langford said when LaPierre gave Langford the money.

“He said, ‘Thank you,’” LaPierre said.

Neither Blount nor LaPierre ever expected to be repaid, they said.

“Bill Blount got business. Bill Blount made money and I made money,” LaPierre said when asked why he acted as a conduit for the funds.

Defense lawyers argued fiercely that Blount and LaPierre never had an explicit agreement with Langford, and indeed, neither witness said they ever spoke with Langford about it directly.

“I certainly hoped that should Jefferson County do any public finance work, my firm would be included,” Blount said.

According to prosecutors, all three men constructed a fake paper trail to disguise the bribes as loans. On checks from Blount to LaPierre and checks from LaPierre to Langford, the men described the payments as loans on the check memo lines.

In 2007, SEC investigators asked Langford if he had any documentation to show the payments from LaPierre were actually loans. Langford told the investigators that he couldn’t remember.

According to Blount and LaPierre, they met with Langford at his loft downtown shortly after that SEC deposition took place. There, the three men signed promissory notes. Blount claims he had those notes drafted when the payments were first made. Regardless, none were signed until after the payments had been discovered, and the intention was to disguise the payments as loans, LaPierre and Blount both said.

That meeting is the only moment in the action of the supposed conspiracy when all three men were in the same room. LaPierre and Blount both testified that Langford was not surprised to see Blount there and that the only question Langford asked was where to sign on the documents.

Despite the help, the payments from Blount and LaPierre seemed only to put a dent in Langford’s personal debt problems, and the two men were not the only ones Langford approached for help.

Former Jefferson County financial advisor Norm Davis testified that Langford approached National Bank of Commerce for a loan shortly after Langford named them to the county’s financial team in 2003.

According to Davis, Langford at first asked for a loan of somewhere between $50,000 and $65,000. As collateral, Langford offered his share of a real estate partnership and his wife’s 401K.

The bank initially refused the loan and gave Langford a credit card instead. The card had a limit of $25,000, but bank officials granted incremental increases until the credit line topped out at $65,000. At that point, the bank converted the credit card into a personal loan, Davis said.

During Davis’ testimony, prosecutors were able to convince U.S. District Judge Scott Coogler to admit into evidence Langford’s credit reports and scores. One credit report reflected serious delinquency. In 2003, Langford’s credit score was 585, but by 2006 that number had fallen to 485.

Langford’s personal debts were a staggering $650,000, including $238,000 of credit card debt.

On cross examination, Davis said that Montgomery investment banker Bill Blount brought value to Jefferson County bond deals by facilitating discussions and making connections.

In a peculiar sidetrack, Davis said he had paid Langford $8,600 for a classic Chevrolet Corvair.

That Corvair has been the object of courtroom attention before, but not in Langford’s corruption case. Rather, in the corruption trial of former Jefferson County Commissioner John Katopodis, one witness testified that he had sold Langford a Corvair through the defendant. Langford had given him a guitar supposedly worth $4,000, the cost of the car, but when the witness had the guitar appraised, he found out it was worth only about $300. The witness complained to Katopodis, who paid him the remainder of the car’s cost with charity funds. That charity, Computer Help for Kids, received more than $1 million in public funds, much of it directed from Jefferson County by Langford.

According to Davis, Langford had told him he was charging only what he “had in the car.” On cross examination, prosecutors asked Davis if Langford had told him that Katopodis had given him the car for nothing. Davis said that Langford had not mentioned that.

Keith Anderson, an officer from BBVA Compass bank, helped prosecutors comb through Langford’s bank accounts, including a personal account he had directed to his office and not his Fairfield home.

Bank records showed money that came from LaPierre being used to pay taxes and debts at clothing stores, among other expenses. However, there were no records showing dental bills among those expenses. Langford has said that he needed the money to pay for major oral surgery.

The bank account was separate from the joint account Langford had with his wife, Melva.

While Langford was suffocating under his personal debt, his position at the county put him firmly in charge of one of the largest piles of municipal debt in the country.

In the 1990s, Jefferson County had entered into a consent decree with the Environmental Protection Agency. That decree required the county to repair the aging sewer systems here that were dumping raw sewage into rivers and streams.

County officials estimated the repairs would cost close to $1 billion, former county Finance Director Steve Sayler testified. However, that figure was just a guess, he said. Sayler currently serves as finance director for the City of Birmingham, a job to which Langford appointed him after being elected mayor.

While Sayler testified, Langford appeared sullen and even angry. Langford stared at Sayler during the testimony, but afterward Langford would not look at Sayler.

According to Sayler, Langford seemed to understand the sometimes-bewildering financial instruments the county used to structure its debt.

Under Langford, the county accumulated more debt and it used derivatives, called interest rate swaps, to speculate on interest rates. These derivatives were supposed to save the county money, but some of the parties involved charged the county exorbitant fees, and the county’s auction rate securities and variable rate demand warrants left it especially vulnerable to the financial crisis in 2008.

Defense attorneys argued that Langford was elected on a promise to get sewer rates under control, and most witnesses, including Sayler, agreed with that assertion.

Regardless of his public intentions, it was some of Langford’s more secretive deals that have landed him behind the defense table.

All totaled, Langford directed more than $7 million of fees to Blount’s firm, but not all at once.

Soon after being elected to the commission, Langford introduced Blount to Sayler and Davis. He told both men that he wanted Blount to be his preferred banker. This was not an unusual practice. In fact, it had been common for the five county commissioners to divide bond business five ways, each commissioner directing a portion to his or her preferred banks.

What was unusual were the lengths Blount, Langford and others took to hide the business Blount was receiving.

Blount’s firm, Blount Parrish & Co., was disclosed publicly on a few bond deals, but in many of the swap transactions, the counter parties disclosed Blount’s involvement only through so-called “side letters,” which were not included with the more openly available bond documents.

In its most basic form, an interest rate swap is a transaction with another party, called a counter party, to essentially trade interest rates on an equivalent amount of debt. Instead of the fixed-rate debt that it had, the county would trade with a bank for variable-rate debt.

Langford and Blount pressured the counter parties in these transactions — including JP Morgan, Goldman Sachs and Raymond James — to pay Blount as a consultant on the deals. The banks insisted on disclosing Blount’s role, but Blount and Langford usually convinced the banks to disclose his involvement only in the side letters. These letters were mailed either to the finance director, Sayler, or to Langford himself.

According to Blount, he and Langford were worried that Langford’s “nemesis” on the commission, Bettye Fine Collins, would leak the information to the press if it were sent to other commissioners.

On the stand, Sayler said that he had seen one of the JP Morgan letters. Others, he never saw or knew about until he was interviewed by the Securities and Exchange Commission two years ago.

Throughout the trial, many fingers pointed at Larry Langford, but very few witnesses accepted blame for anything but the crimes they’d pled to.

Responding to prosecutors’ questions, Blount was cagey and curt with his answers. If he could answer with a “yes” or “no,” he did, and not a word more. It seemed for a while that his testimony was not forthcoming and that he was still irritated that he’d been caught.

Prosecutors asked Blount why he bought particulars items for Langford.

“Because Larry wanted it,” Blount answered.

On the stand, Blount did not seem contrite at all, and his testimony did little more than support what investigators and prosecutors could already support with documents and other testimony. Finally, after a short break, prosecutors asked Blount directly if he had pleaded guilty to bribery. He said that he had.

“And who did you bribe?” Assistant United States Attorney George Martin asked.

“Larry Langford,” Blount said.

Defense lawyers said that the bond deals Blount worked on had been meant to help the county, and Blount gave the defense material to use for that argument. When Martin asked Blount how all those deals had worked out for Jefferson County, Blount argued that the bond insurers were to blame for the county’s debt implosion.

Davis also argued that the county’s debt problems were not Langford’s fault. The county had entered into swaps before Langford arrived and most of the swaps occurred before Langford got there, Davis said.

Both statements have a kernel of truth, and a hull of misdirection.

When Langford became commission president in 2002, Jefferson County had about $2.8 billion of bond debt. Of that, only $1 billion was variable-rate debt (underlying swap agreements). By the time Collins became commission president in 2006, that variable-rate debt had grown to nearly $3 billion, with myriad swaps built on top of it.

When the ratings agencies downgraded the county’s bond insurers, that triggered a disastrous chain reaction. The county’s variable rate demand warrants and auction rate securities soon burdened the county with outrageous interest rates of 10 percent or more, interest the county couldn’t pay.

Had the county stuck with fixed-rate debt, it would have struggled still to meet debt service but the sudden implosion in 2008 would not have happened.

Needless to say, the prosecution chose to let these matters lie and limited themselves to issues an Alabama jury could understand.

Near the conclusion of their case against Langford, prosecutors focused on three counts of filings false tax returns.

On the witness stand, IRS auditor Joe Elliot detailed nearly $77,000 of unpaid taxes Langford owes the federal government. According to Elliot, Langford had about $226,000 in unreported taxable income from 2003 through 2005. That income included the cash, as well as gifts, Langford received from Blount and LaPierre.

Tax charges carry a lesser burden of proof than some of the other corruption charges Langford faces.

Langford’s defense team did much of its work during cross examination of prosecution witnesses. Lawyers Rasmussen and Glennon Threatt drew jurors’ attention to the plea deals Blount and LaPierre made before testifying. Each of them pleaded guilty to two charges. Blount’s tentative deal is for 52 months in prison and a $1 million forfeiture. LaPierre has agreed to 48 months in prison and a $372,000 forfeiture.

Defense lawyers argued that prosecutors will decide whether Blount and LaPierre’s testimony is satisfactory before asking the judge to deliver those sentences. Both men admitted that was the case.

After the prosecution rested, the defense spent less than a day making its case, calling just six witnesses.

Ocie Oden, pastor at Antioch Missionary Baptist Church, testified that Langford had given him a suit from Oxxford, one of the men’s clothing stores where Blount bought Langford clothes.

Outside the presence of the jury, lawyers wrestled over whether Oden could tell the jury that he had received as many as 60 suits from Langford through the years. Judge Coogler ruled that Oden could testify only to suits that came with store tags or had store labels.

Acting as a character witness, Oden also said that he understood Langford to be a law-abiding citizen.

A lawyer for Bill Blount, Fred Simpler, told jurors he helped draft the promissory notes used to show Blount’s payments to LaPierre were used as loans and not bribes.

Under cross-examination, Simpler said that Blount had asked him in 2008 to print copies of those drafts for him because the SEC wanted to see them. Simpler also testified that the notes had been altered to erase the portion where a notary public would notarize them.

The defense’s third witness, Rick Fitzgerald worked as an investment banker at Goldman Sachs when that bank did business with Jefferson County. On the stand, Fitzgerald said that Goldman Sachs hired Blount because he had connections in Jefferson County.

Fitzgerald said that Jefferson County bond lawyer Bill Slaughter had spoken to him about disclosing Blount’s role in the bond deal. The investment bank wanted full disclosure of all parties. Eventually the bank used a so-called “side letter” to disclose Blount’s role in the bond deal.

On cross-examination, Fitzgerald said Goldman Sachs did not receive any more bond business after that transaction.

Before resting, the defense called one character witness, Mattie Jackson, a retired librarian. Jackson said she had met Langford about 40 years ago when she worked as a librarian at Lawson State. Jackson, who uses a walker and had to be assisted getting in and out of the witness stand, said that Langford was a law-abiding and honest person.

After a brief break, the defense rested, bringing to an end the speculation as to whether Langford would take the stand in his own defense.

In his political life, Langford is not a man who ever sat still, a friend and coworker from Birmingham Budweiser testified during the trial. Outspoken and larger than life, Larry Langford makes headlines and sound bites, but at last, in the courtroom, he said nothing at all.

UPDATE: Former Birmingham Mayor Larry Langford is a convicted felon. Read all about it: http://bit.ly/1NGprK