Testimony: Agents spurred judge to act

Phillips deposited $516K, moved money day after investigators appeared in office

Staff

Published Wednesday, October 29, 2008

The day after special agents with the Alabama Attorney General’s office subpoenaed probate documents in the estate of Cary Douglas Piper, then-Probate Judge Sherrie Phillips was at the front door of a local investment firm when it opened, deposited $516,000, moved the monies from an individual account to a public trust account and made a mid-morning appointment with the same special agents, according to testimony presented Tuesday.

Jurors in the felony ethics and theft case of more than $1.8 million heard from a parade of 14 witnesses for the prosecution Tuesday, including the administrator of the approximately $3 million estate, investment representatives, bankers and an agent who investigated the case.

The administrator, Mary Drew Sullivan, said she and her attorney, John Brock of Evergreen, met on several occasions with Phillips, both for lunch and in her office. Sullivan testified Tuesday that she brought the estate to Covington County to settle at the advice of her attorney, who carpooled to law school with Phillips. She said she opened a bank account for the estate in Andalusia so that Phillips could have jurisdiction over the case.

Sullivan, who spent about an hour on the stand, said that on Jan. 4, 2008, she authorized five official checks from Piper’s estate, including:

• Checks for herself and for her attorney, Brock, each of who was awarded 15 percent fees for administration and legal work on the account. The fees were approximately $450,000 for each.

• A check for $148,000 to the IRS.

• A check for $3,650 to Covington County Probate Court.

• A check for $1.8 million payable to Sherrie Phillips.

Sullivan said at the time the checks were written, she believed the $3,650 was going to the probate court for fees associated with the estate, and the $1.8 million would be escheated to the state. Escheat is the process of turning unclaimed property from an estate over to the state in case heirs appear.

At the time, Sullivan testified, she did not believe Piper had any heirs; since that time, a claim against the estate has been filed on behalf of six first cousins.

Financial adviser Bill Greenwald testified that on Jan. 4, 2008, Phillips opened a new account with his firm, Edward Jones, with the $1.8 million check. Submitted into evidence was the new account form, which includes Phillips’ home address, Social Security number and signature.

Greenwald testified that any time someone opens an account, he has to ask about the account’s purpose.

He said that, to the best of his recollection, Phillips mentioned she was going to use part of it and wanted the rest to supplement her retirement. Consequently, he said, he opened a money market account and ordered her some checks.

He testified that when he asked Phillips where the money came from, she said from the settlement of an estate.

Greenwald said that while this account was established as a personal account, he previously had dealt with Philips in managing public fund accounts, in which she invested money for conservatorships, guardian or trust accounts. In the other accounts, he said, she used the federal tax identification number of the probate judge’s office.

With Greenwald on the stand, assistant attorney general William Lisenby, who heads the office’s public corruption and white collar crime division, took jurors through copies of 10 checks totaling $516,917. The checks also were corroborated by other witnesses. The checks included:

• $25,000 to Alan and Donna Phillips, her son and daughter-in-law;

• $100,545 to First Farm South Credit. The check was used to pay off three loans, according to testimony by Russell Walters of that institution;

• $74,454.32 to herself; Jurors heard testimony that this check was deposited into her personal checking account on the day after she purchased a new Cadillac Escalade from J.M. Jackson in Opp. Witnesses also heard from Johnny Jackson, who described meeting with Phillips in her office at the courthouse when she described the features and the color vehicle she wanted. A bill of sale admitted into evidence showed that the vehicle cost $60,166. Also admitted was a photograph of the vehicle parked near the courthouse with a personalized car tag that read “23JUDGE.”

• $25,000 to Buddy Phillips, her husband;

• $35,843.80 to Regions Bank. The check was used to pay off a loan to Erik Bryan of Opp, according to testimony from Nancy Cole;

• $6,597 to D&S Fence. Phillips hired D&S to replace porch railings and columns at her house, according to testimony from the company’s owner, Delmar Wiggins;

• $25,822.61 to Superior Bank; Jay Kelly of that institution testified that the check was to pay off a loan to Donna R. Spiers, Tim Reid and Sherrie R. Phillips for a home located at 217 Anderson St. in Kinston;

• $100,000 to Tim Reid, her brother;

• $100,000 to Sherrie Phillips;

• $23,654 to Andalusia Ford; Jurors heard testimony from Hunter Owen of Andalusia Ford that the check was used to purchase a F350 truck.

Probate office employees Karen Lawson and Jackie Watt both testified that agents with the attorney general’s office appeared in the probate office on April 30, 2008, with a subpoena for all documents in the Piper estate.

Lawson said she called Phillips’ cell phone, told her about the subpoena, and read her the contents of the file before Phillips instructed her to provide the information to the investigators. Arrangements were made for Phillips to meet with the investigators at 10:30 a.m. on the following day, May 1, 2008.

Greenwald’s administrative assistant Nichole Adkison testified that on May 1, 2008, Phillips was at the office when she opened the doors at 8:30 a.m.

“She was coming in to make a deposit,” Adkison said.

Adkison said Phillips questioned her about how the account was listed, then said she needed to get it “corrected.”

Adkison said that she is not authorized to open new accounts, but assisted Phillips in working with the firm’s home office in St. Louis to transfer funds from her personal account to a public funds account using the tax identification number of the probate office. She deposited $516,000 that day, Adkison said. The deposit included checks for $49,000 and $23,000 from her brothers; $12,000 from her husband; and a $32,000 check from her personal account.

“She said she had auditors coming that day and she wanted to make sure everything was right,” Adkison testified.

Special agent Chris McRae of the attorney general’s office testified that when he and another agent met with Phillips later that morning, she provided them with an account statement from Edward Jones, including her own handwritten notes showing the $516,000 deposit she had made that day, and told them the account had been listed in her name and with her personal Social Security number by mistake. She also told the investigators that she had planned to hold the money in the Edward Jones account until she turned it over to the state as unclaimed property to see if heirs appeared. The judge acknowledged that after 90 days she was supposed to send the funds to the state, McRae testified.

McRae said Phillips also told the investigators that neither she nor any member of her family had benefited from the money.

McRae said he met with Phillips again on May 2, 2008, and she presented him with a copy of the official check for $1.8 million.

“She told me after the interview on May 1 she had located it in a safe under her desk,” McRae said.

On cross examination of both Greenwald and McRae, defense attorney Riley Powell established that deposits totaling the amounts of the checks written from the Edward Jones account had been repaid to the account.

Powell pushed McRae to state who the rightful owner of the $1.8 million was after the check was written.

“All I can tell you is that Judge Phillips did not own it,” McRae said.

Other testimony included:

• Watt, the probate secretary, testified that she had worked as a secretary in the probate office since 1992 and typically assigned case numbers and set up files for actions that came before the judge. This case was different, she said, in that she did not set up a file. Instead, she said, the file is in Phillips’ handwriting. She only became aware of the case, she said, after the investigation began.

She also testified that she typically records monies received in probate cases, but did not have any documentation of the $1.8 million or $3,650.

• Cynthia Powell, who manages operations in the probate office related to vehicles, testified that Phillips asked her to cash the $3,650 check so that she could pay the probate fees and “give the difference to the lady.”

Presented as evidence was the deposit recap on which it was noted that $3,640 in cash was given to Phillips and the check was deposited.