SHREVEPORT, La. -- The decision on whether Shreveport businessman David deBerardinis is mentally fit to stand trial on federal charges he swindled investors out of tens of millions of dollars is now in the hands of a federal magistrate.
deBerardinis is accused of defrauding banks and investors out of more than $100 million in an alleged Ponzi scheme. His attorneys claim his mental condition has deteriorated to the point he cannot assist in his defense and therefore should not stand trial. Federal prosecutors say deBerardinis’ condition is being exaggerated, and while the 58-year-old has some cognitive decline he is fit to stand trial.
U.S. Magistrate Mark Hornsby heard two days of testimony from mental-health experts last week in U.S. District Court in Shreveport. He is expected to make a ruling on competency early next year.
A psychiatrist whose opinion is supported by federal prosecutors said deBerardinis is in an early state of dementia that prosecutors describe as mild. Doctors who testified on behalf of deBerardinis said his condition is more severe, defense attorneys said in court filings.
Indicative of deBerardinis’ condition, the attorneys said, was his insistence that he had a 10-year business relationship with a principle of an energy company deBerardinis’ clients believed they were investing in. That person does not exist.
“David deBerardinis is unable because of a mental condition to separate delusions from realities and consequently is unable to assist counsel in the defense,” lead defense attorney Jim Boren said in the filing.
Federal prosecutors, who said deBerardinis has a history of alcohol and drug abuse dating back to his college days, suffered two head injuries in sailboating accidents but is nonetheless is competent to stand trial. They noted that earlier this year he asked federal authorities to travel of Arkansas to assist with the development of a hemp farm.
“Even assuming deBerardinis does suffer from some mental defect, it is not such that it renders him unable to understand the nature and consequences of the proceedings against him or to assist properly in his defense,” Assistant U.S. Attorney Cytheria Jernigan said in a court filing.
deBerardinis is charged with scamming just over $100 million from investors and banks, who believed they were investing in lucrative energy trades. 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 large personal residence. deBerardinis, who is free on bond, has pleaded not guilty to money laundering and fraud charges.
Prosecutors said deBerardinis received 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 money from investors and banks: There were no trades, they allege
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.
If the magistrate finds deBerardinis competent, a trial date will be set. If deBerardinis is found not competent to stand trial, he would be placed in a psychiatric hospital with a goal of improving his condition to the point he could stand trial.
Some of deBerardinis’ alleged victims said they suspect the claim of mental problems is a delay tactic to avoid trial and conviction.