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Daniel was accused of fraud in connection with the massive multi-purpose facility.
After four years of lawsuits, millions of documents, thousands of hours spent by investigators, the bank fraud trail of Kenwood Towne Place developer Matt Daniels ended with a not guilty verdict.
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CINCINNATI -- Kenwood Towne Place developer Matt Daniels says he's going to get up tomorrow and go back to his real estate career now that a federal court jury has acquitted him on all charges.
Daniels faced 23 counts of fraud and conspiracy in connection with the collapse of Kenwood Towne Place, a $175 million mixed-use project that led to one of the most complicated foreclosure cases in Hamilton County's history.
"I am totally relieved," said a tearful Daniels after the verdict Friday. He thanked the jury, his family and his defense attorney, Ben Dusing. "I want to thank our government actually because the process worked. It shows that innocence can be had if it's true."
The case went to the jury Thursday afternoon after two days of testimony in which Daniels denied any direct involvement in the diversion of loan proceeds to himself and false communications to the Bank of America, which financed construction. The decision to testify was a surprise to many courtroom observers but Dusing said it was decided early on. Daniels wanted to testify and Dusing thought it was important for the jury to hear from him.
The testimony was emotional, with Daniels breaking down on the stand as he talked about deteriorating relationships with his business partners and his attempts to settle the case to no avail.
"People are stupid," he told the jury, before walking off the witness stand to regain his composure. U.S. District Judge Michael Barrett asked jurors to disregard the remark, but attorneys who witnessed the testimony called it a defining moment in the case.
"Everybody deserves their day in court," Dusing said. "This guy, for five years has been taking it on the chin. That is not a guy who takes it on the chin easily."
In her opening statement, Assistant U.S. Attorney Jessica Knight said Daniels lied to secure a $96 million loan for the project, directed proceeds of the first loan draw to be used to cover his personal expenses, then lied again to hide the misuse of funds. Knight declined to comment after the verdict was returned.
The government's key witness was Tina Schmidt, former chief financial officer for Kenwood Towne Place, who said Daniels was aware of financial problems at Kenwood long before his partners and the bank knew about them. Experts told WCPO the case would come down to whether the jury believed Schmidt's testimony.
But Dusing said Schmidt helped his case with "two critical moments of truth:" She told the jury that she conducted an audit in early 2009 and found no money missing at Kenwood Towne Place. She also testified that she never intended to defraud the Bank of America.
"That's not the testimony they bargained for," Dusing said. "Our best witness was their star witness."
Schmidt was the first to be indicted in the Kenwood Towne Place case, but she struck a plea agreement with prosecutors and agreed to testify against Daniels. Government attorneys corroborated Schmidt's testimony with two accountants who worked for Daniels and Schmidt at Bear Creek Capital LLC. An IRS agent explained where the money went.
"It's plain that Tina Schmidt committed a crime, but it's not the one that the government had her sign up for," Dusing said. "She committed the crime of knowingly making a false statement to the Bank of America. She admitted that. Her testimony was consistent with that. That is the only crime that was committed here."