SHREVEPORT, La. - The trial of David deBerardinis, the Shreveport businessman accused of defrauding banks and investors out of tens of millions of dollars in an alleged Ponzi scheme, has been delayed after deBerardinis claimed he was mentally unfit to stand trial.
A federal magistrate in Shreveport has ordered deBerardinis to report to an unspecified federal detention facility where he will be evaluated by a mental health expert. He will be held there up to 45 days, Magistrate Mark Hornsby said in his order.
deBerardinis’ trial, scheduled to begin Sept. 16 in U.S. District Court in Shreveport, has been postponed.
deBerardinis, 57, is accused of scamming $96 million from investors and banks. Federal prosecutors and investors who have filed civil suits say he diverted investor money to himself to fund a lavish lifestyle that included a sailboat, private airplane, trips to the Caribbean, wining and dining, and a two-story house.
deBerardinis, who has been free on bond pending trial, has pleaded not guilty to charges of money laundering and fraud charges.
In a motion filed under seal in March, deBerardinis’ lawyers said a preliminary report from a doctor determined deBerardinis might not be mentally competent to assist in his defense or to stand trial. In ordering deBerardinis to be evaluated by a government psychiatrist or psychologist, the magistrate refused deBerardinis’ request to be evaluated locally or to keep his order sealed from public view.
Victims said they suspect the latest development is a delay tactic to avoid trial and conviction.
“If he’s using it (mental condition) now, why didn’t he profess it earlier,” said Michael Long, whose late brother, Patrick, was among those who lost money. “At the end of the day, there might be something wrong -- but to not understand the implications of what’s he’s done, I don’t believe that. I think he’s doing anything possible to delay or avoid the real consequences of his actions.
“Part of me has felt there has been something wrong from day one,” Long added. “He was in complete denial of the magnitude of what he did. I find it very interesting he is now using this as a defense.”
Defense attorneys have tried to keep all discussion of deBerardinis’ mental state – including their specific reasons for a mental-health evaluation -- under seal. The magistrate ordered some of that made public. He also allowed deBerardinis to self-report to an as-yet undisclosed Bureau of Prisons facility.
Prosecutors said deBerardinis received more than tens of millions from investors, many of them in Shreveport, as well as a $29.5 million loan from a Dallas bank that was guaranteed by some investors, most from Shreveport. Those investors loaned deBerardinis money -- often at rates up to 17 percent with guaranteed returns on their principal -- for him to be a middleman in fossil fuel trades between energy companies.
But the grand jury and the plaintiffs in the civil suits said it was an eight-year-long con where he scammed $96 million from investors and banks: There were no trades; documents and emails confirming trades were fakes; bank statements showing cash on hand were bogus; and actual company executives were impersonated in emails to investors.
deBerardinis’ lawyers have refused public comment on the allegations. He is fighting the allegations in the civil suits that he defrauded investors.
Prosecutors did not say what happened to the money deBerardinis is accused of taking, but half a dozen civil suits filed by 22 investors say he operated a Peter-to-Paul ploy of fraud and deception. The investors allege deBerardinis used their money to pay early investors and diverted other investor money to himself.
Most investors are from Shreveport. Some lost their investments, some made money, others reinvested their profits and others are responsible for millions in bank loans to deBerardinis that they guaranteed, attorneys involved in the case said.
Prosecutors said one of the lengths deBerardinis went to get money was to hire a professional makeup artist and disguise himself as an Orthodox Jewish businessman before he met with a New York-based private equity group about investing with him.