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Vindication will require beating banks

A broker acquitted of fraud has waited a decade for a civil trial.

By GRAHAM BRINK
Published October 15, 2006

TAMPA - Howard Littell once lived the good life.

Nice car, expensive suits, a successful brokerage firm. On his way to the big time.

Then, one summer day, a dozen federal agents walked through his door. They accused him of defrauding banks.

The dream was over.

Littell, 41, was acquitted of the charges, but the taint took down his business and drained his spirit. For the past decade, he has told anyone who would listen that he was wronged.

On Monday, the final chapter begins in federal court. Littell's civil trial starts against the banks that he says threw him to the feds to cover up their own lies and misdeeds.

The banks deny doing anything improper. They could lose millions of dollars if a jury decides otherwise.

For Littell, victory means vindication.

* * *

The story begins when Littell met the Fish.

Littell had recently moved to Clearwater from New Jersey, where he had worked for a company that brokered certificates of deposits. CD brokers act as middlemen, finding banks offering good interest rates for credit unions with money to invest. Littell received a commission from the credit unions of about $125 per $100,000 trade.

Littell opened his own brokerage, Professional Rate Services, in his apartment. Soon, PRS took off and Littell moved the company into the Feather Sound Corporate Center. In a good month, the company brokered $40-million worth of certificates of deposit.

When Littell met Paul Cappola, he thought he would be an asset to PRS. Littell thought of Cappola as the type of guy who could charm his way out of anything. Littell and a friend jokingly began calling him the Fish, for his ability to wiggle off the hook.

Within a year, the relationship turned sour. Pinellas County prosecutors charged Cappola with stealing trade secrets from PRS and trying to extort money from Littell. Cappola received pretrial intervention and was cut loose.

Littell thought that was the end of it.

Then the feds showed up.

* * *

Cappola had contacted the federal agents and accused PRS of systematically defrauding banks.

Federal laws forbade banks from accepting brokered deposits unless they had a certain amount of money put aside to repay depositors. Banks with enough funds on hand to accept brokered deposits had to report them all to the Federal Deposit Insurance Corp. four times a year.

Littell and two of his PRS employees were accused of duping banks into accepting brokered deposits. Federal agents talked with top officials at the banks, who denied knowing that PRS was a brokerage firm.

Littell and the others called the charges bogus. Littell had phone records that showed bank officials called PRS over and over again. Bank employees sent them holiday cards.

At the criminal trial, lower-level bank employees testified that they knowingly accepted brokered deposits. Even an FDIC specialist testified that one of the banks had a "money desk" set up to accept brokered deposits.

When testimony concluded, the federal judge threw out almost half of the charges. The jury acquitted Littell and the two PRS employees of all of the others.

Littell was free, but PRS was in ruins.

His clients - including credit unions at IBM, Mattel, Texaco, the Florida Department of Corrections, the University of South Florida and the U.S. Treasury Department - had fled.

Littell eked out a living with one loyal client, a teachers credit union. For a decade he has waited for his chance to take on the banks.

He gets his chance this week.

* * *

The civil trial pits Littell against Washington state's Cascade Savings Bank and American Bank, based in Maryland.

Another former PRS employee, Robin Brandt, reached a settlement with the banks. Several other banks that played a role in the criminal indictment are no longer in business.

Littell and his lawyer, T. Patton Youngblood, will try to convince the jury that the banks influenced the criminal prosecution by lying to federal investigators or knowingly withholding pertinent information.

Youngblood believes the banks needed the money and told brokers they were allowed to accept the deposits. To avoid FDIC scrutiny, the banks did not report the tens of millions of dollars they received using brokers. Failing to report brokered deposits can result in million-dollar fines.

So when FDIC agents came sniffing around about PRS, the bankers pretended not to know about the brokered transactions or that PRS was a brokerage company, Youngblood said.

"We feel we have the facts to prove those points," said Youngblood, who represented Littell in the criminal trial, as well. "The evidence is on our side."

Lawyers for Cascade Bank and American Bank did not return phone calls seeking comment.

In court filings, Cascade lawyer David S. Preston stated that PRS passed itself off as a firm that compiled the best interest rates, not as a company that actually brokered trades.

Preston added that federal officials had decided to go ahead with the criminal prosecution before meeting with any Cascade employees and that Cascade never involved itself in the criminal prosecution.

The investigators had probable cause to proceed with the criminal case, and the prosecutor, not Cascade, made the call to go forward, Preston stated.

"They cannot prove Cascade acted with actual or legal malice in assisting the federal authorities in the criminal prosecution," Preston wrote.

* * *

Littell has used the prospect of a civil trial as a lifeline. The possibility of winning has helped him cast off the malaise that followed losing his business.

He never got a chance to testify at the criminal trial. He knows this time around will likely be the last chance to tell his story to anyone who can make a difference.

"This is everything I've been working toward for so long," Littell said last week.

He doesn't like to dwell on what will happen if the jury or judge sides with the banks. He says he has waited too long to think that way.

He wants the good life back.

Graham Brink can be reached at brink@sptimes.com or 727 893-8406.

[Last modified October 14, 2006, 23:58:13]