Now comes state trial's big U.S. twin
By DAVID BARSTOW
© St. Petersburg Times, published February 28, 1999
Last month, during opening statements in the State of Florida vs. Henry J. Lyons and Bernice Edwards, a man sat alone in the rear of the courtroom, quietly jotting notes on a legal pad. Few took notice of his presence. He kept to himself.
His name: Neil V. Palenzuela.
Palenzuela is the lead FBI agent in United States vs. Henry J. Lyons, Bernice Edwards and a third defendant, Brenda Harris.
More important, he is a reminder that as crushing as Saturday's guilty verdict was for Lyons, and as much relief as Edwards feels from her acquittal, they are soon to face a tougher challenge.
In April, they are scheduled to be tried on federal charges that dwarf the allegations they confronted in state court.
Think of it this way: If the state trial was like a tropical storm, the federal trial promises to be a hurricane.
Lyons, president of the National Baptist Convention USA Inc., was charged with three state crimes; he faces 54 federal charges. Edwards, the NBC's former public relations director, faced a single state charge; she is accused of 25 federal offenses.
The federal case encompasses every allegation contained in the state case, but then goes further -- much further -- to include broad new offenses such as tax evasion, bank and mail fraud, conspiracy and forgery. The charges allege many new victims, including six banks and several corporations not cited by state prosecutors. If convicted, Lyons and Edwards face long prison sentences and millions in fines.
There's more bad news for Lyons and Edwards. The state racketeering trial, which included hundreds of exhibits and testimony from some 70 witnesses, handed federal prosecutors several new evidentiary weapons and tactical advantages.
"Oh, absolutely," agreed Denis de Vlaming, one of Lyons' attorneys in the state case. "I don't think the defense gained any benefit, but the feds gained a very distinct benefit."
Take, as but one example, the federal tax-evasion charges.
Edwards is accused of failing to report $513,237 in income during 1995 and 1996, years when she failed to file a tax return. Federal prosecutors allege that Edwards defrauded this money from corporations -- the same corporations cited as victims by state prosecutors.
In the state trial, when Edwards took the stand in her own defense, she all but conceded tax evasion when she repeatedly testified she earned hundreds of thousands of dollars from the corporations in question. "I earned it," she kept saying.
Asked if she ever declared any of this income to the IRS, she claimed not to recall.
In the federal case, Edwards also is accused of using fake Social Security numbers in her dealings with banks. Again Edwards was forced to testify about the same subject matter in the state trial.
Assistant State Attorney Bill Loughery asked Edwards why she used a half-dozen different Social Security numbers. Edwards offered that she had trouble with long numbers -- though she demonstrated a remarkable memory for dates, phone numbers and six-figure payments in the rest of her 10 hours of testimony.
Legal experts say this testimony surely will be exploited by federal prosecutors.
Lyons, in opting not to testify, cited his fear of compromising his defense in the federal case. But testimony from several of his witnesses will no doubt complicate his ability to rebut charges he evaded $534,689 in taxes.
"Any discussion about how money moved, who handled money, where it went, helps (the federal prosecutors)," de Vlaming said. "All those charts we did about the money flows, they help."
Throughout the state trial, Lyons' witnesses and his attorneys repeatedly characterized the six-figure sums he pocketed from lucrative corporate deals with the NBC as "endorsement" fees earned by Lyons. In other words: Lyons didn't steal any money -- he earned every penny of it, just like Michael Jordan.
If that's so, federal prosecutors likely will respond, why did he report just $28,034 in taxable income for all of 1995 and 1996? According to IRS investigators, Lyons failed to report an additional $1,369,567 in income during those two years.
Lyons has since filed amended tax returns.
As for tactics, federal prosecutors have been treated to an advance screening of the major defense arguments and themes.
They've heard the snappy defense slogans about "cultural differences" and the "moral police" and "victims who don't act like victims." Just as plaintiff's lawyers learned important lessons from prosecution errors in the O.J. Simpson case, U.S. Attorney Charles Wilson is in a position to benefit, too. (His office declined to comment.)
In the meantime, Lyons and Edwards face the challenge of raising enough money to mount a new legal defense.
Lyons had four lawyers defending him in the state case. Only one attorney, Grady Irvin, has thus far agreed to represent him against the more extensive federal charges.
His ability to raise cash was crippled by last summer's federal indictment. Simultaneously, authorities froze nearly 20 bank accounts and several houses. They also seized cars and jewelry.