Man in OSU fraud suit faces federal trial
Keogh accused of bank fraud conspiracy, false statements
The decade-long case of a former research executive previously accused by Oklahoma State University of hatching a multi-million dollar fraud scheme will go before a jury after claims of prosecutorial misconduct were dismissed by a federal judge.
Daniel Webster Keogh, 52, the former contract operator of university-owned OSU-Multispectral Laboratories, is accused of bank fraud conspiracy and making false statements to obtain a $3.2 million federally backed loan from First Pryority Bank.
Keogh and his wife, Danielle Keogh, 40, face 22 felony charges in federal court, with up to 30 years in prison on some charges, if convicted.
Prosecutors say Keogh told loan officers at the Tulsa area bank the money would be used to buy machinery and equipment but instead he used the proceeds to fund research and the development of a utility-scale electromechanical battery.
Keogh and his company, Triton Scientific LLC, defaulted on the loan in December 2012, according to court documents.
Prosecutors also allege that in one scheme, a company owned by Danielle Keogh billed Triton, which in turn billed UML, for financial services that were actually costs associated with inventory for Liberte — an upscale women’s clothing shop she opened in Oklahoma City.
OSU sued Keogh, his wife and several companies linked to them, alleging they utilized complex fraud schemes to divert money from the OSU-owned company that was engaged in sensitive national security research. The lawsuit was settled in Kay County District Court, with several Keogh-linked companies agreeing to have an $8 million judgment entered against them. Keogh and the Keogh Group LLC agreed to be responsible for an $875,000 judgment.
In 2017, Keogh was charged with making false statements to secure a federally guaranteed bank loan. He made a plea agreement with the federal government, but later breached the agreement by failing to enter a guilty plea, according to court documents. A superseding indictment was filed in June 2020. On the eve of his trial, Keogh’s lawyers asked a federal judge to dismiss the case.
His defense team argued that prosecutors engaged in illegal tactics to shape a case against Keogh and leave him without any hope of a fair trial.
‘Word games’
On Dec. 30, Keogh’s lawyers filed a 27-page motion to dismiss the case, alleging federal prosecutors changed witness statements, hid evidence favorable to Keogh and threatened his wife with arrest.
“From the outset, government prosecutors have approached this case like aggressive civil litigators trying to win a case rather than to do justice,” defense lawyers wrote in a motion to dismiss the case.
“The win-at-all-costs tactics began when the prosecutors tried to coerce Dr. Keogh into a plea by threatening the liberty of his wife.”
While prosecutors claim Keogh misled First Pryority Bank about the nature of the battery project to get a loan, his defense attorneys say the bank president’s statements to federal investigators show the executive understood the project.
In their motion to dismiss the case, Keogh’s lawyers claimed prosecutors were under pressure from OSU to file charges against Keogh, to gain leverage in the school’s civil lawsuit.
Under such pressure, prosecutors instructed government investigators to revise interview notes and statements from various key witnesses, including officials at the Lawrence Livermore National Laboratory in northern California, where the battery development was to occur, Keogh’s defense team asserted in court filings.
Defense attorneys accused prosecutors of urging prior Livermore officials’ statements to be changed from building a battery “prototype” to the construction of “risk reduction hardware.”
“All of these improper word games are clearly designed to drive a wedge between their stories and call it ‘fraud,’” defense attorneys argued in court filings.
While prosecutors allege that research and development loans weren’t eligible for loan guarantees through a USDA Rural Development program, Keogh’s defense team argued that prosecutors were feeding USDA witnesses their own view of the regulations, which, according to the defense, “came into existence nearly a halfdecade after the loan was taken out, and the regulations in place at the time contained no prohibition on research and development.”
Keogh’s defense team went further in seeking a dismissal, saying that in July 2017, prosecutors sent Keogh’s lawyers paperwork requesting Keogh enter a guilty plea.
In the letter transmitting that paperwork, the prosecution team stated it would “likely seek charges” against Keogh’s wife, to whom a target letter never had been sent, if Keogh did not accept the proposed plea, defense lawyers wrote in their motion for dismissal.
“The prosecutors demand was clear: Plead now, or your wife will be arrested,” defense attorneys wrote.
The prosecutors “retaliated against” Keogh’s decision not to move forward with any plea by adding new charges against him and also piling charges on his wife, defense attorneys claimed.
‘Nothing remarkable’
On Jan. 10, Chief Judge Timothy D. DeGiusti of the United States District Court for the Western District of Oklahoma denied Keogh’s motion for dismissal.
In an 8-page order, DeGiusti wrote that Keogh’s claims were raised in an untimely manner, did not appear to be well-grounded in fact and did not warrant further investigation.
DeGiusti found the claims of Keogh’s attorneys were not “truly alarming,” and the motion for dismissal was filed more than two years after the deadline for dismissal motions expired and “six business days before the start of their jury trial.”
The judge went on to write that the vast majority of the witness statements under scrutiny are ones Keogh’s lawyers have had for years, with a handful of re-interviews done last year.
“Any contention that the recent interviews were inherently suspect is specious,” DeGuisti wrote. “There is nothing remarkable about lawyers re-interviewing witnesses in preparation for trial.”
DeGuisti added: “Testing inconsistencies in witness statements and probing credibility issues are matters for development during trial and the proper function of cross-examination of witnesses or, if defendants so choose, the presentation of contradicting evidence.”
COVID-19 impacts court
Last-minute filings weren’t the only challenge for the court. The start of January saw record high numbers of new COVID-19 cases in Oklahoma, driven by the omicron variant.
In an order delaying the trial, DeGuisti cited the latest pandemic surge and noted that five federal court security officers tested positive for the virus, and a number of jurors summoned to appear for jury selection were either exposed to COVID-19 or tested positive.
“This sudden, extreme surge in cases and its direct impact on judicial resources create serious concern about the ability to safely complete a complex, threeweek jury trial amid significant community spread related to the highly contagious omicron variant,” DeGuisti wrote.
He moved the trial from Jan. 11 to a possible Jan. 24 date. A pre-trial conference will be held before then to determine whether the trial should be further delayed to Feb. 8.