Government rests in fraud trial of ex-City Council members

Katrina Brown to begin calling defense witnesses Friday afternoon

JACKSONVILLE, Fla. – Federal prosecutors wrapped up their case Friday morning in the trial of Katrina Brown and Reggie Brown on fraud and conspiracy charges.

The two former Jacksonville City Council members, who are not related, are accused of skimming money for personal use from nearly $3 million in government grants and loans awarded to the barbecue sauce manufacturing plant started by Katrina Brown's family.

Entering the courthouse Monday, Katrina Brown said she would not discuss her defense strategy.

"You'll just have to wait and see," she said.

Reggie Brown said the government has exhausted its case, and he is eager for the defense phase.

"I'm looking to Katrina Brown ... with her evidence, and then (defense attorney) Tom Bell to follow up," Reggie Brown said.

Government wraps case

Now that the government has rested its case and is done presenting evidence, Katrina Brown, representing herself, and Reggie Brown's attorney both asked the court to throw out the charges because they believe the government has not proved its case. The judge is taking it under advisement.

The first witnesses Friday was Joe Whitaker who works with the city of Jacksonville and helps small startup businesses that are looking for funding. He talked about how he met Katrina Brown and her family and saw how they made the sauce.

Whitaker admitted the expansion plan was more than the family was equipped to handle at the time. He admitted Katrina Brown and Reggie Brown working on City Council may have diverted her attention from the family business.

Katrina Brown also questioned a representative from Winn Dixie stores that distributed the sauce. Both witnesses never contradicted the financial evidence from the government that led to the fraud and conspiracy charges.

The final prosecution witness Friday testified that Reggie Brown never filed taxes in 2014, even though he was paid by the city and by one the companies he owned, which took in thousands of dollars from a Small Business Administration-backed loan that was supposed to go to the barbecue sauce plant. The core business, KB Specialties, also did not file taxes that year.

On Thursday, an FBI forensic accountant testified that money from the grants and loans was used for what appear to be personal expenses, including purchases at restaurants, department stores, movie theaters and a Best Buy, and for paying the rent on Katrina Brown’s apartment.

The accountant, Kyle Stevens, summarized deposits, debits and checks written by the businesses involved in the barbecue business and related companies. He testified that $141,500 of $272,000 that went into the bank account of RB Packaging -- a business owned Reggie Brown -- was dispensed in checks to Basic Products LLC, a barbecue sauce business owned by fellow council member Katrina Brown's family.

Another $45,000 was withdrawn in cash at the bank's counter, and there were also 74 cash withdrawals from ATMs, the FBI agent said.

Stevens displayed charts showing the flow of money from the bank that dispensed $2.65 million in funds from a Small Business Administration loan into the primary business account and how that was disbursed to businesses owned or controlled by the two defendants.

Timeline of grant/loan and Katrina Brown and Reggie Brown's business connections

Reggie Brown's attorney pointed out during cross-examination that several of the checks had “For Deposit Only” or “RB Packaging LLC” on the back rather than Reggie Brown's signature.

Another witness, Mark Miller, from Packaging Corporation of America, testified that Basic Products and its sister company, Cowealth LLC, ordered 4,000 boxes to display the barbecue sauce at Sam's Club stores, but it took a year for them to pay the bill. An invoice prosecutors entered into evidence reflected payment in advance and looked almost identical to an RB Packaging invoice for boxes.

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