SOUTH BEND — A nearly four-hour hearing Wednesday, July 16, in the fraud case of an Elkhart businessman included recordings of heated jailhouse phone calls and powerful testimony from witnesses, but the drama started even before the judge entered the courtroom.
The hearing was called to determine whether U.S. District Judge Jon DeGuilio should grant defendant James LeDonne’s motion to be released from jail until his Jan. 16 jury trial. As the parties were waiting for the judge to enter, assistant U.S. attorney Donald Schmid handed a set of documents to LeDonne’s Elkhart attorney, William Cohen.
LeDonne, dressed in a green jail jumpsuit but no longer handcuffed, erupted.
"You can’t give us this the same day, Schmid!” LeDonne said. “You’re a thief and a liar. Slimeball! I don’t want this hearing to go forward. This is bull----.”
Two U.S. marshalls quickly got up from their seats and stood next to LeDonne before he calmed down.
"We can’t have these outbursts,” Cohen told LeDonne. “I’ll explain this to the judge.”
LeDonne, who normally lives in a $1 million Granger home with his wife, Stephanie, and four of their five children, has spent the past two months in the St. Joseph County Jail. On May 14, he was arrested on a federal indictment alleging he accepted down payments, usually equal to 50 percent of the vehicle’s cost, to make fiber-optic splicing vehicles ordered by fiber optic line contractors outside of the Elkhart area, but never delivered the units.
As part of the multi-million dollar fraud scheme, claiming more than 50 victims, LeDonne used a series of bankruptcies to avoid refunding their money, the indictment alleges. He then would create a new company and victimize more prospective customers through the new company, the indictment alleges.
His indictment and arrest followed a May 9 raid of his business at C.R. 6 and Dexter Drive in Elkhart, in which federal agents filled a small U-HAUL truck full of evidence.
Upon his arrest, U.S. Magistrate Judge Christopher Nuechterlein approved Schmid’s motion to keep LeDonne jailed until his trial, agreeing with the government’s argument that LeDonne posed a flight risk and danger to the community. Since filing his motion to reverse that order, LeDonne has been mailing Judge DeGuilio letters from jail, pleading for his release because his wife and kids need him at home. He also has said he would never flee the area before trial because he is a “family man.”
But Schmid sought to dispel that notion by playing for the judge recordings of jailhouse phone conversations LeDonne and his wife have had. In the calls, Mrs. LeDonne, who has yet to attend a court hearing, is clearly annoyed by the calls.
"Why do I have to keep talking to you?” she said in a July 3 call, telling him she was tired of his lies.
"Everybody lies,” he replied.
In another call, he asks to speak to their son, but the boy can be overheard in the background saying he doesn’t care to talk with him.
Witness Aaron Martz, Stephanie LeDonne’s father, testified that their oldest daughter, now in high school, has lived with Martz and his wife for the past six years, traumatized since seeing LeDonne grab her during an argument when the girl was 8 or 9. Martz said his daughter has recently contacted a divorce lawyer and has reached an agreement to sell their home, with an expected closing date of July 31.
Martz, a retired Transportation Security Administration security officer, said his daughter didn’t know LeDonne was a convicted felon when she married him 15 years ago. He said their four children still living at home don’t want LeDonne to return, and Schmid said Mrs. LeDonne has told him that she will not allow him to move in with the family when they find a more “modest” home after closing on the sale of their existing home.
Martz, responding to questions from Schmid, added that LeDonne’s brother called his home Monday and said LeDonne is not welcome at his home if he wins pre-trial release from jail, and said LeDonne is also estranged from their father and sister.
Schmid also elicited testimony from U.S. probation officer Melissa Brashier, who interviewed LeDonne shortly after his arrest, that LeDonne initially told her he had no criminal history or debts or liabilities, other than two car loans and his marital interest in the Granger home. In reality, LeDonne in 1993 was sentenced to more than five years in prison after he pleaded guilty to orchestrating fraudulent check and check kiting schemes in Elkhart.
He has also state court convictions for theft, forgery, auto theft and check deception from 1993, and will soon have a pending theft/check deception case pending in Elkhart County, Schmid said.
To draw out an example of LeDonne’s debts, Schmid called to the stand attorney Christopher Potts, a former business partner of LeDonne’s. Potts testified that in the late 1990s he, LeDonne and Loren Herebrandt each owned one-third of a company called Coachcraft Technologies. Potts said LeDonne ordered his accountant to “cook the books” so that the company’s financial statements showed profits instead of their actual losses. When Potts objected to this, he said LeDonne and Herebrandt forced him out and filed bankruptcy, leaving Potts to pay a $345,000 balance on an operating loan from a bank.
Potts said LeDonne now owes him about $500,000.
In one of the jail phone calls with his wife, LeDonne tells her he will have $2,000 placed under the mat on their doorstep, without telling her the source of the money.
Investigators have learned LeDonne has managed to send his wife $9,000 in cash while behind bars, Schmid said.
His apparent access to cash, giving him means by which to flee, his lack of family ties, his lack of employment, his lack of a home once the Granger house sells, his record of dishonesty and the fact he’s facing 17 to 27 years in prison at age 59 add up to a flight risk if LeDonne is freed before trial, Schmid said.
"He has essentially burned his legitimate, authentic bridges to keep him here,” Schmid said.
At that, LeDonne threw up his hands.
"Your honor, I can’t listen to him!” LeDonne shouted. “He’s a liar, fraud and thief!”
DeGuilio responded calmly.
"Let your attorney say that,“ the judge said. “You can’t burst out and say those things. We have a process we have to work with here.”
Possible release conditions?
Schmid said no conditions of pre-trial release, such as electronic monitoring in home detention, will protect the public or ensure LeDonne will appear at trial.
"He is a really good con man,“ Schmid said. ”He’s been able to con people since the 1980s ... he can basically do it from anywhere. All he needs is a phone and maybe a computer.“
Schmid said an ankle monitor can only tell authorities he has fled his home after it’s happened.
Cohen countered that electronic monitoring could work, and he could be banned from using a phone or computer. DeGuilio asked how that could be regulated, and Cohen admitted he didn’t yet know.
"There are no direct facts of any sort that he will flee this area,” Cohen said. “If he did start to take off, you could quickly apprehend him.”
Cohen noted that even convicted fraudster Bernie Madoff was allowed pre-trial release. But Schmid said that was under armed guard, 24 hours a day.
"He was effectively jailed, albeit in his penthouse suite,“ Schmid said. ”He had a place to stay.“
Cohen then told DeGuilio that LeDonne wanted to testify, against his advice.
Because the hearing already had run nearly four hours, DeGuilio said that wouldn’t happen Wednesday.
Since Cohen only received the government’s evidence Wednesday morning, DeGuilio agreed to postpone ruling on the detention order. He gave Cohen until Friday, July 25, to file documents stating whether he wanted to cross-examine the government’s five witnesses who testified Wednesday, after reviewing the documents and consulting with LeDonne, and to state whether LeDonne still wanted to testify himself.
DeGuilo advised LeDonne to listen to his attorney, and convey what he wanted to say via documents written and filed by Cohen, a procedure known as a “proffer.”