The Trial of Joe Russo

An intimate look at how -- and why -- Houston's high flyer of the '80s was taken apart in court

"Mr. Russo now rests his case," says Berg. While the lawyers mob the judge's bench, Russo retires to his chair in the far corner. He sits drawn and still, an occasional sudden twitch flickering across his cheek.

November 3 : Final Arguments
Everyone squashes into the courtroom pews for the spectacle that is final argument, from Piperi granddaughters in red-plaid school uniforms to federal attorneys watching to see how the home team fares against Berg and DeGeurin. It's a debut of sorts for John Lewis, a refugee from a blue-chip Manhattan firm who turned to "more interesting" bank-fraud prosecution -- but for two hours, he speaks with such lucidity and ease about this complex case that you would never know he is new to final argument. From the moment that $450,000 left Russo's Ameriway Savings at 2:20 p.m. on June 9, 1986, with $1.5 million departing from Piperi's Orange 99 minutes later, Lewis traces the tangled history of the disputed loans.

Without a whisper of arrogance or hostility, Lewis snatches loose ends from huge snarls of testimony. He sounds the sweetheart theme: "Russo's loan really stands out," says Lewis. "How many other $1.5 million unsecured loans did Orange make? None." He summons up such telling details as Ronald A.'s note to an Orange attorney who wanted some Russo collateral: "Nice try, Bob," wrote Piperi, "but that wasn't part of the deal." Lewis actually makes the case comprehensible, and when he sits down after two hours he still has the air of a man with no ax to grind.

David Berg plays his hour blisteringly fast, loud and angry. "This case is a disgrace to the Southern District of Texas," he says by way of setting the tone. Soon he is brandishing the Empty Chair, scornfully citing witnesses the prosecution failed to call. He intimates prosecutors manipulated Steve Raab, the convicted Orange banker who flouted the letter-of-commitment theory. "Miss-Margaret-$40,000-Rahn-Keene," the government's well-paid expert witness, appears as Berg's Greatest Hit. He revisits the moment when he got her to say that reasonable people could differ about the commitment letter. "That was the end of the case!" he declares. "That's the heart and soul of reasonable doubt!" At times Berg seems unaware, or determined to ignore, the impression his client created on the stand. Doesn't Russo have a right to expect that his bankers would make some mistakes? Berg demands, adding "not that he runs away from responsibility, but he has a lot on his plate." Berg makes a final, uncivil prediction that prosecutor Lewis will wake in the night regretting Raab's testimony. Then, seemingly spent by his slightly over-amped performance, Berg quietly asks the jury to give Joe Russo his life back, and sits down.

The lawyers for the Piperis, Dan Cogdell for the younger, Mike DeGeurin and David Gerger for the elder, follow, and repeat their mantras: Ronald Drew Piperi didn't know what was happening, father Ronald A. Piperi tried to be a good banker in bad circumstances, the bad old federal government was to blame for deregulating savings and loans in the first place.

Mike Clark, whose last act is to add emotion to John Lewis' logic, begins so softly that the courtroom must strain to hear him. But soon he grows indignant: Joe Russo lied, he tells the jury, in matters small (how often he flew in the famous Lear Jet) and large (when he began meeting with lawyers about bankruptcy). He paints as expedient Russo's poor memory of conversations and documents and calls the Orange loan "the best loan of Joe's life," reminding jurors that "we pay" when banking institutions go under. Why did it all happen? The defendants' "house of cards was coming down," says Clark. "Desperate times cause good people to do desperate things, and that's what this case is about."

What still lingers in the courtroom is Mike DeGeurin's final division of the universe into bees and buzzards -- the ones looking for "putrid decay." The government wants to turn you into the latter, he has warned the jury, giving them one last directive before he sits down. "The Constitution," said DeGeurin, "mandates that you not be a buzzard." Russo can only hope that the jurors agree.

November 10: The Verdict
At 4 p.m., after five days of deliberations, the jury files into Judge Harmon's courtroom with a partial verdict. They're not making eye contact with anyone. Soon it's apparent why: they have found Russo and Ronald A. Piperi guilty on three counts each of bribery and one of misapplication of funds; they have deadlocked on the three bank-fraud charges and the umbrella count of conspiracy. David Berg shakes his head as the first Russo "guilty" finding is read out, but the Russo tribe remains stoic; there is not a red-rimmed eye among them. One of the jurors -- a wiry man who dresses in carefully pressed Western shirts -- tries to hold back tears. Nine straight "not guilties" ring out in the case of Ronald Drew. At number eight, his wife's shoulders start shaking; by number nine, she is weeping loudly, folded in Modie Piperi's protective arms.

When the jury assures Judge Harmon further deliberations are useless, she declares a mistrial on the remaining counts and sets sentencing for February 17. Russo and the elder Piperi each face a possible 20 years in federal prison and a $1 million fine. Judge Harmon has a reputation as a tough sentencer, and should mandatory federal guidelines kick in, there is a very real prospect that they will go to jail -- the latest in a procession of '80s figures that includes O. Dean Couch, Charles Phillips, John Ballis and Harvin C. Moore.

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