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Banker convicted of hampering college probe

HUNTSVILLE (AP) — A Jasper banker was found guilty of a felony obstruction charge Thursday but was acquitted on a charge of making false statements to agents investigating the state's two-year college system.

Phillip Grace also was convicted on a misdemeanor obstruction charge in the three-count indictment accusing him of telling Winston Hayes, a target of the two-year probe, about the existence and contents of federal grand jury subpoenas that were sent to First National Bank of Jasper.

Grace is a loan officer at the bank who handled accounts for Hayes. He faces a sentence of up to five years in prison, a $250,000 fine or both on the felony, and up to a year in prison and a fine on the misdemeanor conviction.

The two-day trial was the first connected to the ongoing investigation into corruption within the two-year college system. Sentencing has been set for May 16.

Main witness

Hayes, who owns The Access Group software company, has been cooperating with prosecutors and was a main witness in the trial, producing audio and videotapes of Grace discussing the subpoenas.

He testified Wednesday that bid-rigging, fraudulent contracts and payments in exchange for business were common occurrences with Alabama two-year college system officials and said he received contracts from Bevill State Community College after agreeing to deposit $35,000 into one of the school's private foundations.

He said he often wrote the contract details that college presidents used to seek competitive bids for software business, with the understanding that his company would win the contracts.

"It's a common practice throughout the whole state," Hayes said.

Prosecutors said Grace lied to FBI agents when asked about giving Hayes one of the subpoenas that had been sent to the bank. Jurors listened to audio tapes and watched a video in which Hayes and Grace discussed the subpoenas in early 2005.

Assistant U.S. Attorney George Martin said Grace tipped off Hayes about the subpoenas because the businessman owed the bank more than $3 million in loans and, as his loan officer, Grace would get in trouble if Hayes defaulted. The men were also friends, and Hayes gave Grace repeated use of his condominium in Gulf Shores.

With the tip from Grace, Martin said, Hayes was able to destroy documents that would allegedly show he had bribed state officials and bilked Alabama's two-year college system out of millions of dollars in software contracts.

Started cooperating

Hayes began cooperating with prosecutors in December 2004 after destroying documents and computer files relating to deals he made with two-year college presidents and with fired Chancellor Roy Johnson. Hayes acknowledged he got rid of the material after Grace told him about the first subpoena in November 2004.

When asked by Grace's lawyer, Ronald Brunson, Hayes said he agreed to create a fake contract for computer services with Alabama Fire College officials and used the money to pay kickbacks to former Deputy Director Robert Nix.

Hayes said he considered the $35,000 he gave Bevill State's foundation "a donation," but admitted that making the payment was a condition of his receiving a contract with the college. Bevill State President Harold Wade issued a statement Wednesday calling Hayes' payment "a charitable contribution" to the Walker College Foundation that was used for the men's basketball program.

Bevill State has another foundation, the Bevill State Community College Foundation Inc.

The Birmingham News reported that Hayes is listed as an officer of the foundation on its latest tax return. His company also received $12,000 from the foundation in 2001, records show.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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