More fireworks in Patrick Kiley's Ponzi conviction?

  • Article by: DAN BROWNING , Star Tribune
  • Updated: January 13, 2013 - 9:30 PM

Ponzi convict got his sentencing postponed when he complained about his lawyer. He was given a new attorney - and a new hearing.

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Pat Kiley, left, with Trevor Cook.

The strange case of Patrick Kiley, a Christian radio host-turned-convicted swindler, heads back to Minneapolis federal court this week with his third attorney and the potential for even more courtroom drama.

It's anyone's guess what will take place at Friday's hearing. Kiley was supposed to be sentenced Jan. 3 along with three other men convicted in the state's second-largest Ponzi scheme. But when it came time to hear the penalty, the 74-year-old huckster forced a surprise postponement by accusing his longtime friend and attorney of mishandling his defense.

This is the latest twist in the ongoing saga of a worldwide currency investment scam based in the Twin Cities that parted more than 700 investors, mostly retirees, from about $194 million in savings. The case has involved thousands of financial documents, allegations of boozy sex parties at a Minneapolis mansion and an offer by one of Kiley's co-conspirators to write a $19 million check to the court in exchange for a lighter sentence.

Kiley's "Follow the Money" program, which aired on more than 200 Christian and conservative radio stations at its peak, drew in two-thirds of the investors. The scam was concocted by Apple Valley money manager Trevor Cook, who pleaded guilty and is serving a 25-year sentence. Kiley and two other central figures were convicted in June on fraud and money-laundering charges.

Co-conspirator Jason "Bo" Beckman was sentenced this month to 30 years in prison. Gerald Durand got 20. And Christopher Pettengill, who pleaded guilty and testified against the others, got 7 1/2 years.

'Loner, frugal, goofy, weird'

When it was Kiley's turn, his attorney, H. Nasif Mahmoud, asked the judge not to impose the 20-year prison term sought by prosecutors, saying it would constitute a life sentence for a man of Kiley's age and condition. In addition, he said, Kiley was kept in the dark by the others and was seen as a stooge.

"Mr. Kiley has been referred to as unusual, eccentric, a loner, frugal, off to himself, goofy, weird," Mahmoud said. "He wasn't part of that pack."

Chief U.S. District Judge Michael Davis asked Kiley whether he wanted to say anything before he imposed the sentence.

Kiley, without his toupee and wearing blaze orange jail clothing, climbed slowly into the witness stand. Investors who'd come to watch the sentencings said it was difficult to believe he was the same man who favored crisp shirts, dark suits and a replica Lucius Malfoy cane topped with a silver snake head.

Kiley has prostate cancer and a condition that keeps him from using his dominant left hand. His attorney said the condition has spread to the right hand as well.

"I'm not here to discuss or to ask for consideration for my physical health. I'm here for something much more important than that," Kiley said.

He gave a rambling apology for his role in the scheme but claimed that he was a true believer who never took a dime of investors' cash.

"I'm here to tell the truth," he said. "I've never gone through so much mental anxiety, depression."

Kiley shocked the packed courtroom by admitting he had met with Pettengill in the spring of 2008 -- a key fact in the case against him and an allegation that Mahmoud tried to refute on his behalf.

'Attorney misrepresented me'

As he gathered his notes, Kiley turned to Davis and said he had one more distasteful but important thing to say. Then he turned on his attorney.

He announced that he wanted to appeal his conviction based on ineffective assistance. Kiley claimed that Mahmoud had not sent him a copy of the probation department's final pre-sentence investigation, and that he filed an appeal without his approval.

"Mr. Mahmoud and I have been angry, back and forth, for the longest time," he said.

His hands trembling, Kiley handed Davis a sheet of paper. It was a copy of a page from a website that evaluates lawyers. It was supposedly posted by someone named "Patrick" and raved about Mahmoud's handling of his defense. It included unmistakable details of Kiley's case, but he said it was posted without his approval.

"My attorney has misrepresented me for his benefit," Kiley said.

Davis glared at Mahmoud, who leaped to his feet in his own defense.

"This is a time that I wish the jailhouse phones were tapped!" Mahmoud said.

Davis assured him the calls are recorded. He told Mahmoud to be quiet, under threat of jail, and said that his representation of Kiley was over.

It was the second time Kiley has turned on his lawyer in this case.

He said he never trusted his first lawyer, Minneapolis criminal defense attorney Peter Wold, because he was chosen and paid by Cook. Kiley rejected a prospective deal Wold negotiated with federal regulators that might have resolved his case without criminal charges. When he fired Wold, he told Davis that he hoped to hire Mahmoud, with whom he'd worked before. Kiley described the Harvard Law graduate from Stone Mountain, Ga., as a loyal friend and an honorable man.

Attorney defends himself

In a telephone interview last week, Mahmoud said that Kiley had authorized him to post the endorsement on the Internet. It gushes about Mahmoud's representation, using the word "brilliant" five times.

Mahmoud said that he isn't worried about Kiley's allegations. He said he has ample evidence to defend himself.

"Maybe someone in the jailhouse told him that if he throws his attorney under the bus he might get a delay in sentencing and a mistrial," Mahmoud said. "Desperate and scared men sometimes do desperate and stupid things."

Mahmoud said he ruined his law practice by taking Kiley's case, "because I felt he was an innocent man being railroaded."

He said Cook bullied Kiley into pitching his investment scheme. "Kiley was weak, cowardly and stupid," he said. "But that doesn't make him a criminal."

Davis directed the Federal Public Defender to appoint an attorney for Kiley and to consider whether a mental health evaluation is warranted.

Minneapolis attorney John Lundquist, who has been representing white-collar defendants for more than 30 years, got the case. He declined to comment last week, saying he needs time to get up to speed. A hearing Davis scheduled for Friday afternoon will likely be a status conference to assess the fallout from Kiley's aborted sentencing.

Dan Browning • 612-673-4493

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