Copyright 2003 St. Louis Post-Dispatch, Inc.

St. Louis Post-Dispatch (Missouri)

October 4, 2003 Saturday Five Star Late Lift Edition

An indicted former executive of Charter Communications Inc. testified Friday that federal prosecutors backed out of a promise to give him immunity.

James H. "Trey" Smith III, a former senior vice president at Charter, said at a hearing in U.S. District Court in St. Louis that he agreed last year to give prosecutors information only after receiving a promise of immunity.

However, the U.S. attorney's office, which in July filed the indictment against Smith and three other Charter executives, denied making any promise of immunity to Smith.

Smith, 55, a cable executive from La Quinta, Calif., wants a judge to throw out the indictment against him on the basis that prosecutors used a false promise.

It is one of a series of challenges filed by former Charter executives indicted on charges they defrauded investors by inflating the cable company's customer counts and other actions. Charter is the nation's third-largest cable operator.

Neil Peck, a former federal prosecutor who is defending Smith, said that after an FBI agent contacted Smith on Aug. 2, 2002, he spoke with James Martin, an assistant U.S. attorney in St. Louis, and found Martin was eager to get information from Smith.

Peck said Martin wanted to know, for instance, whether Smith had information about any wrongdoing by Paul G. Allen, a co-founder of Microsoft Corp. who's chairman of Charter, or other Charter officials.

Five days later, Martin and an FBI agent flew to Denver to meet Smith at Peck's law office. But Peck said he agreed to let Smith talk only after Martin made a verbal promise to give Smith immunity from prosecution if the information Smith provided could prove a case against Charter.

Peck filed in court a copy of what he identified as his notes from the meeting, which say, "If we get sufficient info from you to prove a case we will give you the immunity requested."

Peck said he was stunned when Martin told him that Smith would be charged with fraud. "It shocked me," Peck said. "It outraged me."

But prosecutors contended that no promise of immunity was made, and that the terms of Smith's cooperation with the government were set out in a letter from Martin on Aug. 6, 2002, the day before the meeting in Denver.

That letter said the government wanted Smith to provide information before prosecutors would consider giving him immunity. The letter promised that any information provided by Smith could not be used against him at a trial.

Under questioning by Jeff Jensen, an assistant U.S. attorney, Smith acknowledged that in the months after he provided information to Martin in Denver, his lawyer made no mention of the alleged promise of immunity in letters written to Martin.

"I knew Mr. Martin would remember the commitment," Smith testified. Smith has pleaded not guilty to eight counts of fraud and conspiracy.

Smith, who worked for Charter from September 2000 to December 2001, resigned from the company in protest over how the company counted its customers, Peck told Martin in a letter in June.

U.S. Magistrate Judge David D. Noce will continue the hearing Friday on Smith's effort to have the charges against him dropped.

In another challenge heard in Noce's court, a lawyer for Kent Kalkwarf, Charter's former chief financial officer, urged that statements Kalkwarf made when an FBI agent went to his home in Clayton at 6:45 a.m. on Aug. 15, 2002, be thrown out.

The defense claims that Kalkwarf's statements were made without a lawyer, even after he had suggested to the FBI agent that he might want a lawyer. Prosecutors denied that Kalkwarf's rights were violated.

Kalkwarf and David Barford, Charter's former chief operating officer, each face 14 counts of fraud and conspiracy.