Saturday, September 18, 2010

Judge denies delay request for Wextrust fraud trial 

A federal prosecutor told the U.S. District Court in Manhattan last week that the upcoming trial of a Norfolk resident on fraud charges would likely last three to four weeks.

The court, which had set a trial date of Oct. 18, rejected a request by lawyers for the defendant, Joseph Shereshevsky, to delay his trial.

Michael O. Hueston, Shereshevsky's lead attorney, said during a Sept. 13 hearing that he and another defense attorney had especially heavy caseloads and needed more time to prepare for the trial. The defense, he said, is reviewing more than 2 million documents, including e-mails and financial records, as part of its preparation, according to a transcript of the hearing.

Shereshevsky, the former chief operating officer of WexTrust Capital and head of its brokerage affiliate, and WexTrust CEO and founder Steven W. Byers were arrested in August 2008 on charges of bilking investors by diverting $100 million to unauthorized uses. Both were indicted on seven counts of securities fraud, mail fraud, wire fraud and conspiracy. Both pleaded not guilty.

Chicago-based WexTrust, which encountered severe cash-flow problems in early 2008, put together investment units for apartments, warehouses, hotels and other properties. It also promoted investments in commodity funds, high-yield debt funds and South African diamond mines.

Shereshevsky raised a significant amount of money for WexTrust investments from Hampton Roads residents, including some within the Orthodox Jewish community.

In April, Byers pleaded guilty to reduced charges - securities fraud and conspiracy to commit securities fraud, wire fraud or mail fraud - as part of an agreement with prosecutors. The Oak Brook, Ill., resident also agreed to forfeit $9.2 million in restitution. He is scheduled to be sentenced on Oct. 27.

During the hearing last week, another of Shereshevsky's lawyers raised the possibility of a government conflict because the husband of a prosecutor in the case and the court-appointed trustee for WexTrust Capital have joined the same law firm. The prosecutor, Virginia Romano, told the court that she brought this matter to the attention of Shereshevsky's lawyers in July and had been cleared by her office to continue with the case.

Romano told the court that the government didn't expect to call the trustee, Timothy Coleman, as a witness. Coleman moved in March from the firm of Dewey & Le-Boeuf to Freshfields Bruckhaus Deringer, where the prosecutor's husband also is a partner. Judge Denny Chin told Shereshevsky's lawyers that they have the opportunity to submit a motion for having Romano disqualified and he would consider it.

Shereshevsky, who hasn't met the court's requirements for bail, is being held at a detention facility in Queens.


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