Former Global Express owner gets trial delay

Connie Farris, the former owner of private lender Global Express, has won a delay on her criminal trial for 63 counts of mail fraud, based in part on arguments that her case is “novel.”

Chief District Judge Roger Hunt postponed the September trial date he had set until March 24.

Global Express solicited money from investors and used the money to make loans secured by real estate. Investors, many of them older individuals, were attracted by double-digit yields on short-term loans.

In December 2003, however, the Securities and Exchange Commission obtained a court order freezing the assets at Global Express. The SEC persuaded U.S. District Judge Kent Dawson to appoint a receiver for the benefit of investors and creditors.

Global Express remains in receivership and has about $44 million claims outstanding, but receiver James Donell said the company only had about $15 million in assets. Donell has recovered $13 million and hopes to increase that to $15 million through a possible judgment and sale of three properties.

Donell counted 600 investors in the Global Express loan fund, but he said other investors bought fractional interests in loans. Three hundred additional investors made claims in the receivership.

In the July 2 order to postpone the trial a second time, Hunt concluded that “the prosecution involves novel questions of fact and law.”

The prosecution argues that Global Express used some investors’ money to make loans on “nonexistent” projects. Then, Farris transferred investors interests in these loans on fictional projects to a mortgage loan fund, according to the prosecution.

“The novel questions,” the judge said, include whether transferring investors interest from a project that allegedly had no value to a real estate loan fund with some value “defrauded the investors in the nonexistent loans.”

Those transactions increased the number of shareholders in the fund but did not increase the value of the fund, Hunt said. Those complications require the use of expert witnesses in real estate investment and forensic accounting, the judge said.

Hunt’s order says the receiver has 250 boxes of documents available for trial attorneys to inspect and copy.

Defense attorney Richard Schonfeld agreed with the judge’s conclusion that the case was complex.

The defense attorney declined to comment on the novel aspects of the criminal case because he did not want to discuss the facts of the case.