Topeka Former Westar Energy Inc. chief David Wittig risks being thrown back in prison, a federal judge said Friday, unless Wittig's attorneys show how he and his wife have managed their finances for the past 1 1/2 years.
U.S. District Judge Julie Robinson gave the lawyers until Jan. 13 to provide the information.
Robinson has scheduled a Jan. 17 hearing to consider a motion from prosecutors to revoke bond agreements that have let Wittig avoid prison while he appeals convictions for bank fraud and looting Westar.
But she was clearly unhappy with evidence presented during a hearing Friday showing Wittig and his wife, Beth, transferring hundreds of thousands of dollars between a series of bank accounts, including one account that jurors in September decided was being used for money laundering.
"What else does it look like to the uninformed eye except a sham and a shell game?" Robinson said to Wittig's defense attorney, Jeff Morris. "It troubles the court because these transactions make no sense to me."
Wittig was convicted in July 2003 of helping former Capital City Bank president Clinton Odell Weidner II hide a $1.5 million loan made between the two men from bank officials and federal regulators. He was sentenced to 51 months in prison.
He was convicted again in September, along with former Westar chief strategy officer Douglas Lake, of wire fraud, conspiracy, money laundering and circumventing internal controls in a scheme to surreptitiously increase his compensation at Westar. Sentencing is scheduled for April 3.
Robinson allowed Wittig to remain free on appeal, provided he didn't do anything that could diminish the value of or hide his assets - which he might have to turn over to the government or use to pay fines or restitution.
Prosecutors claim he and his wife did just that when, in early 2004, they began transferring more than $4 million from a bank account maintained by Solomon Smith Barney to an account in Beth Wittig's name at Silver Lake Bank in Topeka.
Jurors in September said the Smith Barney account was used by David Wittig for money laundering because it included proceeds from his sale of fraudulently gained Westar stock.
David Wittig later began depositing large chunks of money from his wife's Silver Lake account to a joint account at the bank, turning part of it into cash for himself.
His wife also transferred money to a Rydex Funds account, which then was forwarded to an account maintained by Merrill Lynch.
In August 2004, David Wittig also sold $1.2 million in shares of Topeka-based QuVIS Inc. to his wife, even though the two at one time jointly owned the shares.
Meanwhile, defense attorneys received permission from Robinson for David Wittig to make some transactions to cover legal fees after Westar stopped covering those costs.
The lawyers said they were paid with money coming from the Merrill Lynch account as well as from the QuVIS sale.
Assistant U.S. Atty. Richard Hathaway said the many transactions were meant to hide where the money was coming from and part of a larger plan to eventually put all of David Wittig's assets under Beth Wittig's name, keeping them out of the reach of authorities.
"There aren't conditions of release that Mr. Wittig couldn't find his way around," Hathaway said in arguing for David Wittig to be imprisoned.
Morris disagreed, saying the original $4 million came from the couple selling a New York apartment and then splitting the proceeds, not the use of any assets protected by the bond requirements. Morris said Beth Wittig, who once worked on Wall Street like her husband, had her own money and was allowed to pay her husband's fees.
If anything, Morris argued, the problem was that David Wittig didn't account for where the money came from or where it went - a requirement Morris said he didn't realize was in place but could fix if directed to by the court.
"The government has questions and they are reasonable questions," he said. "But they haven't asked me for information. They've just asked you to revoke my client's bond conditions."
Robinson agreed to give Morris a chance to provide that information, but said she was pessimistic that Morris could get a full accounting of the Wittigs' finances.
"It's like rats running on a treadmill, because you seem to be two steps behind your clients," she said. "I have no measure of confidence that he's not continuing to do this kind of thing."
Robinson ended the hearing by banning Wittig and his wife from making any further financial transactions other than to cover household expenses until she rules on the issue.