A decision on whether Atlanta lawyer Nathan Hardwick IV knowingly embezzled $26 million from his now bankrupt residential real estate firm, Morris Hardwick Schneider—or took the funds thinking they were legitimately due to him as the firm’s majority owner—is now in the hands of a 12-person federal jury.
Hardwick is charged with 23 counts of wire fraud, conspiracy to commit wire fraud and making false statements to lenders. Judge Eleanor Ross of U.S. District Court for the Northern District of Georgia is hearing the case.
Prosecutor Doug Gilfillan told the jury in his closing statement Thursday that the case is about what Hardwick told his fellow equity partners he was doing—and what he actually did instead. Hardwick is “telling you a different story now that is not supported by the evidence,” Gilfillan said, and “knowingly lied to his law partners” to cheat them.
Hardwick, MHS’s 55-percent owner, ran the home closing side from Atlanta while brothers Mark and Gerard Wittstadt, with a 22.2 percent stake each, ran the foreclosure side from Baltimore.
Gilfillan addressed the defense’s claim that Hardwick thought he was receiving the money from available cash in the firm’s operating accounts and said that, to the contrary, MHS’s equity partners were only supposed to get payouts from net income. “You guys did not check your common sense at the door,” he told the jury. “You can’t run a business if you take 55 cents out of every dollar.”
Kristen Novay and Ed Garland of Garland, Samuel & Loeb do not dispute that Hardwick received $26 million from his law firm to fuel his lavish spending on gambling, expensive charter jet trips and women–but MHS’s former controller, alleged co-conspirator Asha Maurya, is the one who stole from MHS, they told the jury, not their client. Maurya has admitted stealing $900,000 from the firm and has pleaded guilty to one charge of wire fraud conspiracy.
The government has extensively documented Hardwick’s expenditures from MHS operating and escrow funds from 2011 to mid-2014, when millions in escrow shortfalls came to light. The firm’s title insurer, Fidelity National Finance, in August 2014 stepped in and spent almost $30 million plugging the hole.
But Hardwick’s lawyers have told the jury over 12 days of testimony that Maurya told him the firm could afford it and that she was disbursing it from available cash in the operating accounts.
“Nat Hardwick did not intend to cheat or steal from anybody,” Novay said in her closing statement, reminding the jury that Maurya has stolen from two other companies. “Asha Maurya was doing her own thing.”
The government did not call Maurya as a witness, and Novay spotlighted her absence. Hardwick’s liberty hangs in the balance, she told the jury, and the government “did not produce its best piece of evidence.”
Hardwick “spent money that he thought was his own money,” Garland said in closing, and he didn’t know it came from the escrow accounts. In fact, there actually weren’t even any escrow shortfalls, Garland said, because MHS’s 2014 tax return doesn’t list a loss anywhere close to $30 million.
There is zero evidence of a conspiracy between Hardwick and Maurya, Garland said, just a few emails from Hardwick asking Maurya to disburse him funds. This case, he concluded, “is just some partners arguing over who got what,” adding that these arguments should be adjudicated in a civil court, not criminal.
The judge has restricted the lawyers from telling the jury about the numerous civil cases swirling in the background of the criminal one, including his ex-partners’ suits against him and his counter-suits.
Casting the case as “just a dispute between partners,” Gilfillan retorted, “is disrespectful to the victims.” Saying Hardwick is Maurya’s victim, the prosecutor said, when he took $26 million from the firm and she took $900,000, is not reasonable.