Denial of guilt surfaces at Davis sentencing

9/11/2007

Imprisoned investment executive William Davis refuses to take responsibility for his crimes, and that should be considered in setting his sentence, a prosecutor said.

Thomas Karol, an assistant U.S. attorney, made the comments at the start of a hearing yesterday in U.S. District Court in Toledo.

The main purpose of the hearing is to give Judge James Carr sufficient information to decide whether investors lost $7 million or $14 million in a fraudulent scheme carried out by Davis at defunct Continental Capital Corp. and related firms in Sylvania in the late 1990s and early part of this decade.

The outcome could mean the difference between seven years and 11 years in prison.

But a side issue has emerged over whether Davis, who is 61, has reneged on a promise to cooperate with authorities. Mr. Karol said that he has and that it is a factor that Judge Carr should consider in determining the sentence.

Davis, wearing a brown prison jump suit, was brought into the hearing in handcuffs. Throughout the hearing, he studied court documents and paid close attention to the proceedings.

Judge Carr expressed surprise about a recent letter and statements made by Davis in which he denied he had criminal intentions and claimed he did not gain personally from the crimes.

Prosecutors say that is at odds with his guilty plea to 25 counts during a hearing last year during which Davis declined an opportunity to dispute prosecutor's version of events.

"Although defendant at his August 11, 2006, plea hearing made statements consistent with acceptance of responsibility, many of his statements since that time under oath and to the probation office are denials of his fraudulent conduct to which he pled guilty," prosecutors wrote in a brief for the hearing. Also, they say he has not cooperated as promised with the Securities Investor Protection Corp., which is liquidating Continental Capital's brokerage arm.

Judge Carr agreed with Davis's attorney, John Minock, of Ann Arbor, that the hearing should focus on the size of losses suffered by investors.

The judge cautioned Davis, however: "If I find perjury or false statements made by you, that's something else."

Judge Carr heard yesterday from Garth Tebay, a forensic accountant who examined more than 3,000 file boxes from Davis-linked firms involved in the fraud.

Mr. Tebay said that he found that Davis took money from investors that was supposed to go into a series of small businesses including a restaurant chain and a company that owned radio stations.

The hearing is to continue tomorrow.

Contact Gary Pakulski at:

gpakulski@theblade.com

or 419-724-6082.