July 17, 2008

CPA's theories assailed in Porter case

After a lengthy delay, the cross-examination of a certified public accountant hired to help defend former Hickman pastor Howard "Doug" Porter began Wednesday in Stanislaus County Superior Court.

Gerald Deller faced a barrage of questions from a prosecutor who doubted the underlying assumptions the accountant relied upon when he determined that Porter received $167,285 from his friendship with rancher Frank Craig, far less than the $1.1 million Porter is suspected of embezzling.

Most of the disagreement revolved around offsets Deller attributed to four accounts that were funded with Craig's money but controlled by Porter.

Deputy District Attorney John R. Mayne asked repeated questions about money that was drawn on one account but used to pay the debts of another account, suggesting that the practice should have raised a red flag.

"That is one clue that something could be fraudulent," he said.

Deller said he talked to members of Porter's family to determine if transactions were legitimate expenses incurred by a museum Craig wanted to build with Porter's help. He said he also relied on explanations from Porter that were forwarded from an attorney who represents Porter in a lawsuit.

Reviewing the accounts was difficult, he said, because Porter mingled his money with Craig's, withdrew cash when he made deposits, wrote checks to cash and also wrote checks to cover the business and personal expenses of himself and Craig.

"I think he was doing something beyond his expertise," Deller said.

A forensic accountant hired by authorities previously told the jury that he traced $820,000 that directly benefited Porter and members of his family, and found an additional $300,000 that likely benefited the family but was left out of the tally because the nature of the expenses was harder to pinpoint.

Craig gave Porter control of his finances after he inherited millions from a brother, because he thought Porter would help him build a museum to showcase farm equipment Craig had collected over decades.

Porter is suspected of stealing much of the museum money, then staging two truck crashes to cover his tracks.

Craig was 83 in 2002, when a truck driven by Porter veered off Lake Road and slammed into a tree. Craig was 85 in 2004, when a truck driven by Porter veered off an embankment and landed in the Ceres Main Canal.

Craig was crippled in the first crash and drowned in the second.

Porter walked away both times, but now is charged with Craig's murder.

The museum was never more than a plan on paper.

Mayne questioned the legitimacy of some transactions and the validity of Deller's accounting methods. Here are a few examples:

CASH: Doug Porter's son, Kyle, told the court he received $50,000 in cash from the Eastside Youth Fund from November 1999 to April 2006. The fund, set up by Porter with Craig's money, paid expenses related to a wrestling team Doug Porter coached at Hughson High School. Kyle Porter continued to receive money from the fund for two years after Craig died.

ACCURACY OF DELLER'S LEDGER: Craig stayed at a nursing home in Turlock for a short time after the first wreck and receipts suggest that Porter paid the $11,000 bill with cash. Deller put the expense in a "cash" category, but Mayne confronted him with four checks written to the nursing home. Deller said the transaction may be mischaracterized in his ledger.

LAND VALUE: Hickman Community Church purchased 14 acres adjacent to its parish with $415,000 from Craig, under the assumption that the land would be home to Craig's agricultural museum. The church later sold nearly 6 acres of the land to the Hickman school district for $245,000, but Deller continued to list the land as an asset worth $415,000.

PORTER AS A FINANCIAL CARETAKER: Porter used Craig's money to purchase homes at 859 I St. and 13049 Davis St. in Hickman, then sold the homes to his brother and a niece. Porter used the profit to pay off a credit line he used to make improvements to a four-home complex in La Grange, where Porter lived with his wife and several relatives. Deller said Porter's mother characterized the transactions as an investment strategy, saying Porter wanted to put money in real property because the stock market was volatile after the terrorist attacks of Sept. 11, 2001.

SOME FISHY CHECKS: When Craig received a larger-than- usual monthly check from an annuity fund, Porter gave Craig the $1,200 he was accustomed to receiving, took $1,000 in cash and depleted the rest of the money within two weeks by writing a series of small checks to members of his family. Deller said the checks did not raise suspicions as he reconciled the Porter-Craig accounts because he did not notice them.

Deller returns to the witness stand Friday.

The trial was delayed for several hours when Judge Thomas Zeff met with attorneys behind closed doors and determined that three boxes of materials Deller relied upon to form his opinion should have been turned over to the district attorney's office 30 days before trial, or by mid-April.

The trial will take a day off today so prosecutors can pore over that paperwork.

Bee staff writer Susan Herendeen can be reached at sherendeen@modbee.com or 578-2338.

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