Contentious verbal exchanges between a defense attorney and a prosecution witness prompted U.S. District Judge Karen Caldwell to order a cooling-off period Wednesday afternoon during a trial concerning an alleged oil and gas well drilling scam.
When the jury returned to the courtroom in the federal courthouse in Lexington a half-hour later, two deputy U.S. marshals, who had not been in the courtroom previously, were present.
"Now, the two of you are going to stop it," Caldwell told attorney Steve Romines and witness Eric Taylor after jurors filed out of the courtroom for the break.
Caldwell told Romines he had asked Taylor the same question repeatedly and had not given him a sufficient chance to answer, forcing Taylor to make a false statement.
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She told Taylor to answer Romines' questions and not to make unsolicited comments in court.
She had previously admonished both several times.
"I'm trying to protect the integrity of this proceeding," the judge said.
She told Taylor he was running the risk of having his testimony stricken and a mistrial being declared at "great expense" to the United States government.
After the break, but before jurors returned to their seats, the judge sent Taylor out of the courtroom, then told attorneys involved in the case she was not going to declare a mistrial because of the witness's disrespectful behavior toward the court. She suggested one remedy for the situation would be to hold the witness in contempt of court, but Taylor was not cited for contempt.
"You're a smart lawyer, Mr. Romines, and you know how to get under a witness' skin, and you've done it successfully," Caldwell said.
Taylor, an entrepreneur who lives in Florida, is one of about 500 investors whom federal prosecutors say lost a total of more than $33 million in fraudulent oil and gas well drilling programs offered by two companies — Mid-America Energy Inc. and Global Energy Group — between 2004 and 2009. Three people said to have been affiliated with those companies — Lexington lawyer Bryan Coffman and his wife, Megan Coffman, and Campbellsville-area resident Gary Milby — are on trial in connection with the alleged scam. They are being tried on numerous criminal charges, including mail fraud, wire fraud and money laundering.
Prosecutors say the companies' officials lied to the investors about the drilling programs; the track records of the companies; and legal problems, including sanctions Milby faced in several states.
The defendants are accused of using the investors' money for cars, yachts, jewelry and lavish parties, among other things.
In addition to Taylor, Shiping Chen, an electrical engineer from Dallas, took the witness stand on Wednesday.
Both Chen, who said he is a millionaire, and Taylor, who said his net worth is just under $1 million, said they knew investing in oil and gas drilling programs was risky. They said they did research and talked to Mid-America Energy Inc. representatives before investing in the company's drilling programs in south-central Kentucky. The two said they even visited well sites.
But the witnesses said Milby misrepresented the drilling programs. They said they talked with Bryan Coffman, who handled legal matters for Mid-America, and Coffman did not tell them about the sanctions against Milby or that Milby had filed for bankruptcy.
Chen said that in 2005, after reading an advertisement in the Dallas Morning News, he invested $25,000 in a Mid-America drilling program called Fort Knox No. 8. Although he received only two or three royalty checks, each for less than $100, he later invested an additional $18,000 in a Mid-America program called Fort Knox No. 11, he said.
Mid-America told him the reason for the small royalty checks from the first investment was electrical problems at the well site, he said. Chen said he decided to make the second investment after Milby told him Fort Knox No. 11 was already producing oil.
"That's a sure investment," he said.
Chen said he found out later that Fort Knox No. 11 never produced a single drop of oil.
Taylor, who said he invested $111,000 in Mid-America's Fort Knox No. 12 oil field at the end of 2005, said that when he visited the oil field, the third well in the field was about to be completed. He said Milby, who was with him, was excited because he expected it to be the mother lode.
"We saw it spew oil for 20 minutes. ... It looked like a small geyser," he said.
Taylor said he later received letters and emails from Mid-America saying there had been a myriad of problems at the well site. None of his investment was returned to him, he said.
Taylor said he asked Milby to return his money and to send him copies of well permits and royalty checks sent to investors.
Milby's responses to those requests included curse words and references to guys who would put a shotgun inside Taylor's body or who would break his kneecaps with a baseball bat, Taylor said.
After his testimony ended, Taylor told Caldwell: "My apologies to the court, by the way."
Caldwell said apologies weren't necessary.
The marshals left the courtroom, and the judge dismissed court for the day.
"Judge, were the marshals there for me or him?" Romines asked after the jury left.
"Both of you, or me," Caldwell said.
Wednesday was the second day of the trial, which is expected to last four or five weeks.