More than two years after he was driven from office as President Carter's budget director by controversy over his activities as a Georgia banker, T. Bertram Lance is scheduled to go on trial in Atlanta Jan. 14 on federal charges of banking law violations.
The indictment against Mr. Lance covers actions allegedly taken by him while he was president of the Calhoun (Ga.) First National Bank, later as president of the National Bank of Georgia, and even while serving President Carter in the White House.
The trial is expected to last two or three months and will likely be in full swing during much of February and March, aperiod in which 10 states and Puerto Rico hold Democratic presidential primaries. Thus, while the man Mr. Carter said he was "proud of" even as he reluctantly removed him from the administration is on trial, the President will be facing critical tests in the battle with Sen. Edward M. Kennedy for the nomination.
Mr. Lance's attorneys have been unsuccessful in their attempts to have the case dismissed. He is charged with misapplying bank funds, making false statements to bank officials, and making false entries in bank records in conspiracy with three other defendants. The Justice Department, which is prosecuting the case, alleges that $20 million in loans are involved in these actions and that more than $500,000 in losses and potential losses resulted to the institutions involved.
But, as serious as these alleged actions may be, the trial is expected to focus on the intent behind them. It is the alleged intent to deceive that distinguishes this criminal-law case from the more common civil-law violations of bank regulations.
"The defense will concentrate not only on the question of intent, but also on the accuracy of certain factual allegations that have been made," says Robert Altman, a defense attorney for Mr. Lance.
Presumably, the defense will attempt to show that although Mr. Lance may have violated some banking regulations, he did not do so with the intent to mislead anyone.
The prosecution will seek to establish that Mr. Lance's actions were taken "knowingly," "willfully," "with intent to injure and defraud the banks," and with intent to "hamper" and "impede" federal banking examiners and other federal agencies, as the indictment reads.
The prosecutors will allege, for example, that Mr. Lance transferred loans from his banks to other banks just before the arrival of federal inspectors, then took back the loans shortly after the inspectors left. This made his banks look more financially sound than they actually were, it will be argued.
In what one attorney here thinks may become a key point in the case, prosecutors will allege that Mr. Lance and his wife formed a partnership (Lancelot) and transferred $570,000 of their personal loans to it. Mr. Lance then allegedly submitted to an Atlanta bank a liability statement for himself and his wife that did not reflect their true liability because it did not mention the $570,000 in loans transferred to Lancelot.
The prosecution also will try to show that Mr. Lance intentionally understated his liabilities when applying for personal loans in Georgia and out of state. But it must be proved that the allegedly false statements were relied on in making the loans, which may be difficult, says an attorney here.
"It is not unusual for banks to make a loan without a financial statement in file," from a borrower well known to the bank, says this attorney, a banking-law specialist. Such statements are more likely to be used, however, for out-of-state loans, the attorney says.
Mr. Lance's alleged extention of credit in the form of overdrafts has been a fairly common practice in banking circles. "In country banks in the South, it has been a historical sort of practice that one of the perks of bank officers was free overdraft privileges," continues this banking attorney, who asked not to be named.
Traditionally, overdraft violations have been treated as a civil violation.
But last year, in a case now on appeal, John Christo Jr., former chairman of the Bay National Banking & Trust Co. of Panama City, Fla., was convicted on charges of criminal misapplication of funds, one of the main charges against Mr. Lance. As in the Lance case, the Florida case focuses on the alleged intent to defraud by frequent use of overdrafts.
The defense attorney pleaded for leniency because of the defendant's community service and acts of charity. But Mr. Cristo was sentenced to five years of prison and fined $95,000.
Some Republicans reacted to the indictment of Mr. Lance last May by saying it reflected poorly on President Carter for having appointed him.