United States District Judge Robert Merhige said today he is "ashamed" and "embarassed" that the stock manipulation case of R.J. Reynolds tobacco heir Smith Bagley and four condefendants is in his court.
"I don't want to use the word 'witch-hunt,' but from what I've seen so far, I'm ashamed this case is in court," Merhige told Assistant United States Attorney Patricia Lemley out of the presence of the jury.
"So far, I'm slightly embarrased. I'd better see it (their case) soon," he warned.
You've indicated your case is almost over, and I'm inclined to agree with you," he said referring to predictions the government would plead its case this week.
Merhige made the comments after Lemley attempted to offer evidence about Bagley's financial assets. She said the evidence would show Bagley's loan obligations, through loan gurantees and direct loans, were greater than his assets.
Throughout the past eight days, Merhige has been critical of the prosecution's progress in establishing its conspiracy case. But today's comments went farther. They were more than just side comments, and his language was stronger and broader, not limited to the conspiracy case alone.
Bagley, who was a strong political supporter of President Carter in his 1976 campaign, also is charged with misapplying bank funds, mail fraud and wire fraud while he was president of Washington Group Inc. of Winston-Salem, N. C. Washington Group Inc. is a food and textile conglomerate that Bagley and codefendant Jim Gilley, vice president, formed in early 1973.
Lemley's efforts to show the financial worth of Bagley related to the charges that he helped misapply the funds of Northwestern Bank in trying to manipulate the company's stock illegally. In cosigning loan notes for stock purchases by Washington Group employes, Bagley was committing himself financially beyond his wealth, federal prosecutors argued.
In answer to her questions, Frank L. Hammond Jr., an investment officer for Merchantile Safe Deposit and Trust Co. of Baltimore, who handled trust accounts established for Bagley by his mother, said Bagley had access to $665,000 in the trust.
But the amount of Bagley's loans and of the loans he co-signed exceeded that $665,000, Lemley argued.
Defense lawyer N. Carlton Tilley said the assets that Lemley cited did not include all of Bagley's financial means.