Costner Trial Judge Applies ‘the Smell Test’

NEW ORLEANS (CN) - Before the jury in Kevin Costner's $21 million trial returned from lunch Tuesday, U.S. District Judge Martin Feldman told attorneys that if the case were his to decide he had no idea which way he would rule, but that some elements of it "don't pass the smell test."

Stephen Baldwin and Spyridon Contogouris sued Costner and his business partner Patrick Smith for $21 million, claiming the men tricked them into selling their shares in Ocean Therapy Solutions just before the company sold BP 32 oil-separating centrifuges for $52 million.

Baldwin got $500,000 for his shares. He testified Monday that he would have held out for more had he known the company had agreed to the multimillion-dollar deal with BP.

After Baldwin testified on Tuesday, Judge Feldman told attorneys that was not persuaded that Baldwin and Contogouris has been taken for their shares. "Contogouris did testify that as of May 13 he was the managing member" of Ocean Therapy Solutions, Feldman said, without the jury present.

Although testimony made it fairly clear that Baldwin was not particularly involved with Ocean Therapy Solutions, he did help open at least one door.

"Mr. Baldwin helped somebody meet (Plaquemines Parish President) Billy Nungesser, but he was off on the side trying to work on his film that was never really pursued," the judge said.

Baldwin testified that at the time he was busy at work on a feature-length documentary about the oil spill.

The test for evidence in a trial is "whether reasonable people would differ," Feldman said. "As it is now, a lot of reasonable people could differ" about the facts presented to the eight-person jury.

Feldman said he was stumped by the "peculiar way" the money BP put up for the centrifuges "is woven" throughout this trial.

A bank account that Patrick Smith opened in California, to which Smith asked BP to wire the $18 million initial payment for the centrifuges, "doesn't pass the smell test" Feldman said. He wondered if it will pass the test for the jury.

Ocean Therapy Solutions had a Louisiana bank account at First NBC Bank. On June 19, 2010, Smith opened a bank account in California in the name WestPac Development, a similar but different name from the company he jointly owned with Costner, which was called WestPac Resources.

Smith testified under questioning by Costner's attorney Wayne Lee that when the account was opened, Costner was not a signatory.

In the middle of June 2010, Smith sold some of Baldwin's and Contogouris' shares to Ted Skokos, a millionaire developer he knew from Aspen, Colo.

Skokos put up $3 million; $1.9 million went toward the purchase of 17 percent of Baldwin's and Contogouris' shares in OTS. The other $2.1 million was a loan to OTS.

Smith told Skokos to transfer the money into the California bank account.

Smith told BP to wire the $18 million for the centrifuges to the same bank, according to trial testimony.

When in December 2010 Skokos learned that the money he put up for Ocean Therapy Solutions went into a California bank account and that part of it was used to repay Baldwin and Contogouris for their shares in OTS, Skokos told Smith the arrangement was "outright theft," according to Baldwin's attorney, James Cobb.

Smith repaid Skokos everything, plus $1.85 million in interest, on Jan. 10, 2011. Their contract would have enforced a penalty if the money were repaid sooner.

During his testimony last week, Skokos said he never met Baldwin, a born-again Christian, but that Baldwin "showed up" at his church once a couple years ago.

"I never met him," Skokos said. "But I sat on the second row pew and listened while he talked all about his personal life."

Skokos said he was "misled" by Smith and his investment in OTS, and that "apparently" he was the "only dummy" in the company who was actually putting up money after Contogouris, the other paying member, sold his interest.

Baldwin testified that he never was asked to invest in the company, and that if he had been he could have found the money, though that he was in the midst of filing bankruptcy. He said he would have asked his older brother, the actor Alec Baldwin, for the money.

Skokos called Smith's actions "theft, pure and simple."

Beginning in May 2010 and continuing for some time, Baldwin's attorney James Cobb said, Smith, Costner and the CEO of Ocean Therapy Solutions, John Houghtaling, submitted invoices for work performed 24 hours a day, seven days a week. They billed at $600 an hour.

Costner testified last week that that was not how he would have done things if he had been in charge.

"It wasn't what I would have done, to be honest," Costner said. "But I wasn't the one driving the car." But he said he understood the logic behind Smith and Houghtaling's decision.

"Listen, I have five companies. I've never paid myself a salary," Costner said.

At the height of the 87-day oil spill that began on April 20, 2010, BP ordered 32 centrifuges from OTS. It sent a few of them to the Gulf in June 2010.

The well was capped at the end of July 2010.

Costner's oldest daughter Annie attends the trial daily.

During taped testimony Tuesday, Richard Morrison, BP America's vice president of global deepwater response, recalled the June 7, 2010, dinner at John Houghtaling's house where BP officials met with Costner, Smith and others to discuss a contract.

Morrison remembered that Annie was at the dinner.

"Before the dinner was a reception upstairs," Morrison said, "Lots of small talk." He recalled that Annie "wasn't the oil company advocate." She was "very challenging, and she bent my ear for about an hour."

Costner and Smith have countersued Baldwin and Contogouris for damages.

The trial is expected to last through the end of the week.

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