Prescott eNews

Lots of attorneys and media representatives descended upon the Camp Verde Courthouse yesterday at the commencement of the James Ray hearing for reduced bail. Article includes photo gallery, audio.

James Arthur Ray, left, listens intently as Forensic Auditor Richard Lee Echols testifies. All photos by Jack Kurtz from the Arizona Republic.

Waiting to enter the courtroom, one member of the media looked at the men and women filing in and out through the swinging double doors. "Is there any attorney left in Yavapai County not at this proceeding?" he muttered, shaking his head.

It certainly seemed as if there were just about as many members of the Arizona State Bar Association as there were journalists in attendance at the Request for Reduction in Bail Hearing for James Arthur Ray. That hearing was held Tuesday afternoon (February 23) in Judge Warren R. Darrow's Camp Verde courtroom.

Hoping that he could convince Judge Darrow to lower the amount of his bail, when James Arthur Ray arrived in court today, he was dressed in a suit and without shackles, represented by Attorney Luis Li and local defense attorney Tom Kelly. His attire was different from previous hearings due to an agreement amongst both defense and state attorneys that it would be less prejudicial to the public for his to be in civilian clothing.

At the table on the other side of the aisle, representing the State, sat Assistant County Attorney Bill Hughes and County Attorney Sheila Polk.

 Also on hand, either sitting in the audience or telephonically, were attorneys representing the victims and their families; Brett Neuman, son of victim Liz Neuman; and Attorney Chris Moeser, representing media outlets KPNX and the Arizona Republic.

Regarding Cameras and Sealed Documents

Before the actual bail hearing could commence, however, there was the matter to decide of whether or not cameras would be allowed in the courtroom. Quickly that issue became entangled with the question of whether or not documents pertaining to Ray's private financial matters could be sealed from public scrutiny. In fact, the State seemed resigned to the idea that camera coverage would be allowed, but they still requested a hearing-by-hearing decision.For the defense, Li also seemed less than concerned with the idea of cameras in the court room, so long as the documents which were placed under seal remained under seal.

According to Li, there was, "...no connection between the financial documents and the case. No probative value, but a lot of prejudicial."

But continuing to keep these documents under seal was the rub - because County Attorney Polk stood up to say that she had researched the law, and it was her opinion that these documents, even the financial ones, could not be kept under seal.

Polk noted that the Supreme Court has ruled that the public rights apply to pre-trial proceedings, such as this one, also. "Attorneys cannot simply agree to keep something under seal," Polk stated furmly. "The law absolutely favors public access."

Moeser had pointed out earlier that cameras in the courtroom fosters 1st Amendment value;, that opening up the courtroom to public scrutiny "Serves as a check for all proceedigns."

But after Polk's statement, he stood up and reiterated, that he, "...believes all aspects of proceedings should be open to the public."

At that, Li stood up, sounding as if he were dumbfounded and noted that the State was stipulating something new, advocating a completely different position than what they had expressed before. Polk responded that the State never stipulated that the documents should be under seal, the State simply said they had no objection to the defense motion to put this information under seal.

Darrow then brought the subject back to the topic of cameras and said that although it goes against his perference, "...the law appears to be to the contrary," and therefore he would allow cameras with a few limitations.

As far as video is concerned, he wanted the video camera set up in a specific place in the back where it would not be a distraction. And for still photos, there was to be no photos showing the defendant, James Arthur Ray, to be in restraints or shackles, and he must be dressed in civilian attire.

Audio recorders were allowed. 

At that point, this reporter turned on her recorder.

The State Calls Richard Lee Echols

The first witness called by the state was Richard Lee Echols, a fraud examiner and forensic acccountant for the Rocky Mountain Information Network, a US Department of Justice governmental agency. It is one of six regional centers that make up the Regional Information Sharing Systems. Echols testified that he was "on loan" to the County Attorney's office to assist in this case. When questioned by County Attorney Bill Hughes, Echols describes his qualifications:

Echols described the documents he received and reviewed:

Included in the documents he received were declarations from Alec Smith, Ray's accountant, and tax returns attached to a declaration from Blitz. In addition, Echols reviewed a net worth statement with the name of James A. Ray at the top of the document, and stated that in his opinion the net worth statement provided to him was not accurate:

Here are the entities Echols lists in addition to Ray's personal assets.

James Ray International, a Sub C corporation

Global Harmony Integration, LLC C-corporation

White Wolf International, LLC, a Sub S corporation

Later, he would introduce Quantum Shift, another Sub S corporation, created to purchase a property in Beverly Hills.

Echols discusses these accounts, and where he believes the money may have been deposited:

Next, Echols addressed funds and assets associated with the James Ray, International Corporation:

Finally, when asked what he believes Ray's true net worth is, Echols responded:

Echols detailed that this amount did not include assets such as vehicles, jewelry, furnishings or other personal property, concluding that the net worth opinion of $2.4 million that he offered of Ray's assets was a "very conservative" figure. Echols also noted that Ray's adjusted gross income from 2008 was $4,961,104. Echols stated that to his knowledge, no 2009 tax return has been prepared yet.

The Defense Cross-Examines Echols

Attorney Li handled the cross-examination of Echols for the defense, and began by bringing out the fact that all the documents were provided to the County Attorney's office voluntarily by Ray. Li then asked whether Echols was aware of any attempt to conceal information:

Li also asked for information regarding the reasoning for setting the bond of $5 million, and the date when Echols was asked to review the documents he had been given:

Li then asked if it were possible to raise a $5 million bond on a net worth of $2.4 million:

Li then turned to the subject of Ray's tax returns that were reviewed by Echols:

Li continued on, reviewing a bank statement from James Ray International from 2008, that showed gross income of over $9 million.

Despite Li's questions regarding differences between the valuation provided by Echols and bail bondsmen, Echols remained steadfast in that he had no knowledge of how bail bondsmen came to their own conclusions.

At the very end of the day, Li pointedly asked Echols, "This is a bond hearing,correct?"

"I believe it is," Echols responded.

"This is not an audit," Li stated.

"No, it's not an audit," Echols agreed.

The hearing will resume today in Prescott, Division 4 court, at 1:30 pm.

Audio of the Full Hearing

If you prefer, you may listen to the entire audio of the hearing, edited only for scheduling, silences and sidebar discussion. Please note, it was not turned on for the arguments regarding whether or not to allow cameras in the courtroom:

Photo Gallery