FBI accountant: Ex-City Council members spent funds on personal expenses

Agent shows chart of how SBA loan money was dispensed, how it was spent

By Jim Piggott - Reporter, Ashley Harding - Reporter, Eric Wallace - Senior Producer, I-TEAM

JACKSONVILLE, Fla. - An FBI forensic accountant who testified Thursday at the fraud trial of two former Jacksonville City Council members showed how business accounts funded by nearly $3 million in government grants and loans were 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Another $45,000 was withdrawn in cash at the bank's counter, and there were also 74 cash withdrawals from ATMs, the FBI agent said.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.

Katrina Brown, who is representing herself, did not comment on the case as she entered the courthouse Thursday. Reggie Brown said he wasn't concerned about testimony Wednesday regarding bank transactions possibly pointing to him.

"I really thought we were doing legitimate business, so I have no concerns about those transactions at all," he said.

Firing back at government's case

After Thursday's proceedings, Richard Landes, who is Katrina Brown's attorney but is not representing her in court, said the government's case is complex and difficult to understand.

WATCH: Brown & standby attorney fire back at government's case

"The government's exhibits are so complex they are incomprehensible, and yesterday we heard from two admitted liars that said at the end of their testimony that they would say anything on the witness stand, the government would let them off the hook as long as they put everything on Katrina Brown" Landes said.

Reporter Jim Piggott questioned Landes about the financial records that were presented in court.

"Today we got a complex of financial statements that no one can understand," Landes said.

The government could wrap up its case Friday. Katrina Brown could start calling witnesses by the afternoon. It's expected the case could go to the jury by Wednesday of next week.

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