Mistrial declared in Hartman case

District Judge Matthew Cuffe has declared a mistrial in the case of the Bonners Ferry man accused of financial and elder exploitation crimes.

Over the past two weeks, Kip Hartman, 35, stood trial for a series of alleged crimes related to the sale of insurance to Libby and Troy residents. On Feb. 5, the final day of the trial, the date the jury was expected to begin its deliberations, Cuffe ruled the proceedings had infringed on Hartman’s rights by not affording him enough time to testify.

“[Hartman] should testify for as long as he feels is appropriate and necessary, we don’t have the time to get this done within the allotted period of time,” said Cuffe after Hartman’s defense attorney asked to put the embattled tax advisor on the stand.

“I have no choice but to declare a mistrial,” he said. “I have to. Because he has those rights.”

As part of the order, Cuffe ruled that Hartman’s defense attorney, Shandor Badaruddin, mismanaged his allotted time and bore responsibility for the mistrial. The order requires Badaruddin to foot the bill for all costs associated with the mistrial.

The expenses include jury costs, costs of the required live court reporter, witness costs for the prosecution, expenses for out of town counsel and the cost to rent the Libby Memorial Events Center, where the trial was held due to coronavirus restrictions.

On Jan. 13, Cuffe met with county commissioners to discuss how district court could continue holding jury trials during the pandemic. Limited space in the county courthouse meant the judge had to turn to larger venues, such as the Events Center. Renting out a building for long trials would put a significant dent in the county's budget. County Commissioner Mark Peck (D-1), doing back of the envelope calculations, estimated that the tab for the trials could reach several thousand dollars.

During a pretrial conference for the Hartman case, prosecuting and defense attorneys agreed the trial would last nine days and both sides would get equal time. After the jury was dismissed on the evening of Feb. 4, Cuffe told defense attorney Shandor Badaruddin he had only 15 minutes left to call witnesses.

Badaruddin said Hartman had decided to testify and that he would need roughly three hours for his direct examination. Special Assistant Attorney General William Duerk, one of the prosecuting attorneys, asked that the state receive equal time to cross-examine Hartman.

If Hartman were to take the stand, it would mean adding potentially six hours to the agreed-upon timeframe. The proceedings almost certainly would have bled into next week.

But Badaruddin made the argument that it was Hartman’s right to take the stand. He placed the blame on himself for not having properly scheduled time.

“I have failed but I cannot mismanage [Hartman’s] right to testify away,” he said. “I submit that the court must intervene to protect his right to testify. In other words, … you’re going to have to order him off the stand and I submit you cannot do that consistent with the Sixth Amendment of the [U.S.] Constitution and Article Two of the State Constitution.”

As precedent, Badaruddin cited McCoy v. Louisiana, in which the Supreme Court of Louisiana ruled the defendant has the right to choose the objective of his defense under the Sixth Amendment.

By ruling a mistrial, Cuffe indicated he agreed with Badaruddin’s argument but was against extending the trial as the defense attorney had hoped. After hearing Cuffe’s order on Feb. 5, Badaruddin tried to make the case that he could fit Hartman’s testimony in the previously agreed upon timeframe.

“We still have six hours to work with,” he said. “I don’t see why we couldn’t try to make the best use of it or a use of it.”

Cuffe disagreed, saying it would not do Hartman justice to try and squeeze his testimony into the remaining time.

“We might be able to get it done,” he said, “But should we? That’s where I’m at now. There’s being right and there’s doing right.”

In his mistrial order, Cuffe wrote that he found Badaruddin’s behavior throughout the trial concerning. The judge noted that the attorney repeatedly misidentified exhibits to witnesses, had trouble finding exhibits, spent excessive amounts of time on topics that were not in dispute with witnesses and often only had electronic versions of exhibits which required him to walk around the courtroom to show them to prosecutors and witnesses. Combined, these flaws in delivery drew out testimony and caused delays.

When Badaruddin began to make his case, Cuffe said the inefficiencies only became more pronounced. The judge wrote that witnesses called by the defense took longer to get into the building and could often be heard conversing and laughing outside the courtroom. Badaruddin remained unprepared and often did not have hard copies of exhibits for others. When calling witnesses via videoconference, Badaruddin failed to use breaks to set up the calls, waiting instead until the jury was brought in and the proceedings were back on the record.

Badaruddin maintained that he had not intended to stall the trial. While he acknowledged there were instances when he could have presented more efficiently, he said he was always mindful of the court’s time.

“I respectfully submit it was not as the court has indicated, that this was some plot of mine all along to gain or game the additional time that was not allotted,” he said on Feb. 5. “It just happened the way it did.”

The defense attorney noted that the state had taken almost six days to make their case. While both the prosecution and the defense were given equal time to question witnesses, Badaruddin said he had not had enough time to call in the witnesses he needed to make his case.

“The hours were even but the days were not,” said Badaruddin. “It affected my ability to schedule the case.”

The defense attorney also said that Hartman had only finalized his decision to testify on Feb. 3. Badaruddin told Cuffe that Hartman was looking forward to a resolution and wanted to receive a verdict from the jury.

Cuffe pointed out that Badaruddin had taken as long or longer in his cross examinations of witnesses called by the state than the prosecuting attorneys had taken in their direct examinations. Had Badaruddin made the strategic decision to spend less time questioning the state’s witnesses, he would have had more time to call his own.

The judge said he could not allow the trial to continue into the following week because of other cases that required his attention.

State Commissioner of Securities and Insurance Troy Downing said prosecutors performed professionally and diligently throughout the case.

“We believe the order speaks for itself,” Downing said in a statement, referencing Cuffe’s decision.

Prosecutors alleged that Hartman sold annuities, a form of insurance, without an insurance license. In assisting clients with their finances, Hartman also allegedly told Montana residents to sell some of the securities products they owned. Hartman was not registered to advise on the sale of securities at the time of the alleged crimes. When Hartman suspected state investigators were looking into his business, he allegedly asked a client to tell anyone who should ask her that she purchased her annuities from his wife and not him.

In total, Hartman faces nine felony charges including conducting insurance transactions without a license, transacting business as an investment advisor without a license, securities fraud, four counts of exploitation of an elderly person, tampering with witnesses and informants, and deceptive practices.

Throughout the trial, some of Hartman’s former clients testified that they had not known Hartman lacked an active license to sell insurance in Montana and was not registered to advise on securities transactions.

Badaruddin constructed his defense around transaction documents that showed Hartman’s wife, and not Hartman, had sold annuities to clients in Montana. This evidence was countered by testimony from many clients who said they had worked directly with Hartman. One client said they did not know Hartman’s wife from the man on the moon.

On Feb. 4, Hartman’s wife took the stand and claimed that all these former clients were either misled, lying or coerced by the state into giving false testimony. County Attorney Marcia Boris noted that Hartman’s wife had been present throughout the trial, which would have allowed her to tailor her testimony to contradict that of other witnesses.

When making his case, Badaruddin called some of Hartman’s former clients to the stand who claimed state investigators attempted to badger them into changing their testimony. Some said investigators promised compensation for providing testimony that would find Hartman guilty.

Duerk indicated that investigators were doing their duty as members of law enforcement to inform former clients about potential restitution.

Convictions for conducting insurance transactions without a license, deceptive practices and tampering with witnesses and informants carry penalties of 10 years in state prison, a fine not to exceed $50,000 or both. Counts of exploitation of an older person are punishable by imprisonment for a term not to exceed 10 years, a fine not to exceed $10,000 or both. Securities fraud and transacting business as an investment advisor without a license is punishable by 10 years in prison a fine not to exceed $5,000 or both.