Category: Corruption

Round Two of the Scrushy Prosecution

April 12th, 2006

The second criminal prosecution of former HealthSouth CEO Richard Scrushy is getting ready to launch, unless he can succeed in having the indictment thrown out because the pool of potential grand jurors did not include a sufficient number of African-Americans. Scrushy was indicted in 2005 along with former Alabama Governor Don Siegelman and two former Siegelman aides on corruption charges. The case is set to go to trial in Montgomery, the state capital which is in the Middle District of Alabama, at the end of April. Scrushy and the other defendants have filed a motion to dismiss the indictment because the District has a 30% African-American population but the jury pool is less than that figure, although a government witness testified that African-Americans made up 21% of the pool, which meets the requirements of federal law. Even if Scrushy does not win this motion — and it is very difficult to establish such a violation for grand jury selection — he can still challenge the pool of jurors available for selection to the petit jury, although a Sixth Amendment claim would also be very difficult to win because Supreme Court precedent does not require that the actual jury reflect the racial or ethnic composition of the District. An AP story (here) discusses the hearing on Scrushy’s challenge to the indictment.

On an related topic, Scrushy recently began running his television program Viewpoint in Montgomery. The program features a number of local ministers, and began running in Birmingham in 2004 around the time he was indicted there on fraud charges related to HealthSouth. Scrushy denies that there is any connection between the location of the next prosecution, assuming it survives the motion to dismiss, and the decision to run the show in Montgomery. Instead, it is part of a plan to roll out the program on a national basis, as noted in a Birmingham News story (here). Surely it is just a coincidence, although I doubt American Idol is particularly worried about its ratings. (ph)
A Very Strange Election

April 12th, 2006

It is hard to imagine a successful electoral challenge to incumbents in a company town, particularly when the city owns the houses in which the voters live. But that’s what three candidates tried to do in Vernon, California, a small "city" southeast of downtown Los Angeles, and the election has had its share of bizarre turns. Vernon is almost completely industrial, with a work force of over 40,000 within its five square miles, but a population of only 91 residents. The city’s website (here) notes that it has a police department of over sixty officers who provide "high level security and a quick response time." The city owns all the housing within its borders, and subsidizes the rent for city employees who live there. An AP story (here) discusses how three candidates set up residence in a warehouse to run for office, only to have the city condemn the property and evict them. The city then called off the election, only to have it put back on again when a judge ordered voting. After the election on March 11 for its 86 registered voters, the city clerk brought the locked ballot box to the city council chambers and refused to count the votes because of challenges to the election. The challengers claim, not surprisingly, that the election is rigged because city workers are beholden to the Mayor and council for their jobs. Vernon did not have an election since 1980. This mess will have to be sorted out somehow, amidst accusations of corruption and intimidation. (ph)
Monitor Report on New Jersey Med School Identifies Demands for Jobs from Politicians

April 5th, 2006

As part of the deferred prosecution agreement with the Department of Justice, the University of Medicine and Dentistry of New Jersey (UMDNJ) appointed former federal judge Herbert Stern as its outside monitor to investigate corruption and financial fraud at the school. Stern’s first report (here) to the U.S. Attorney’s Office identifies significant problems, ranging from inappropriate expenses to hiring practices tainted by political influence. According to the report, "Our investigation revealed that UMDNJ, for several decades, was besieged by politicians looking to use UMDNJ, and in particular, its large workforce, as a vehicle for patronage and favor peddling. In short, politicians exerted significant pressure and used their offices to influence hiring practices and decisions at UMDNJ." Another issue raised in the report concerns whether a state Senator who chaired the appropriations committee steered millions of dollars worth of appropriations to the school after it retained him as a part-time consultant. A Newark Star-Ledger story (here) discusses the report. If Stern’s investigation uncovers significant instances of corruption, federal prosecutors are likely to commence a grand jury investigation of the individuals involved, if it has not started already. (ph)
Six Aides to Rep. Jefferson Subpoenaed in Corruption Probe

March 31st, 2006

Six aides to Louisiana Rep. William Jefferson have been subpoenaed to testify before a grand jury in the Eastern District of Virginia investigating corruption charges. A former aide to the Congressman, Brett Pfeffer, entered a guilty plea to conspiracy and corruption charges in January in which he detailed kickback demands by Rep. Jefferson related to two transactions involving companies seeking contracts in African countries. Five of the aides work in Jefferson’s New Orleans district offices and the sixth is a legislative assistant in his Capitol Hill office. The subpoenas were not issued recently, but came to light because, as required by House rules, the recipients contacted the House Office of the General Counsel, which disclosed them and found that the aides can testify. A New Orleans Times-Picayune story (here) notes that Jefferson’s spokeswoman stated that the subpoenas were not "new news," but that certainly does not make them into good news. (ph)
Former DeLay Aide to Plead Guilty to Corruption Charge

March 31st, 2006

The AP reports (here) that Tony Rudy, former Deputy Chief of Staff to Rep. Tom DeLay when he was House Majority Leader, will plead guilty to taking $50,000 from superlobbyist Jack Abramoff to assist in blocking legislation on internet gambling and a postal rate increase that Abramoff’s clients opposed. In the Abramoff plea in Washington D.C. to corruption charges, Rudy was identified as "Staffer A" and Abramoff admitted to disguising the corrupt payment by having the money paid in ten monthly installments to Rudy’s wife. While this aspect of the corruption investigation does not involve a new player, because Rudy had been easily identified from the court papers, the interesting question now is whether he will provide new information to federal prosecutors about DeLay and other elected officials. (ph)

UPDATE: A copy of Rudy’s plea agreement and factual stipulation is available below. Rep. DeLay is identified as "Representative #2," with Ohio Rep. Bob Ney resuming his role as "Representative #1" from the Abramoff et al. pleas. The government and Rudy agreed to a Sentencing Guideline calculation with an offense level of 17 after the acceptance of responsibility, which would give him a range of 24 to 30 months. He is eligible for a 5K1.1 downward departure based on his cooperation. (ph)

Download rudy_filed_information_and_plea_agreement.pdf

Download rudy_factual_basis.pdf
Abramoff Sentencing: Round One

March 28th, 2006

Former superlobbyist Jack Abramoff will receive his first criminal sentence under his plea agreement on bank fraud charges in U.S. District Court for the Southern District of Florida. Abramoff and co-defendant Adam Kidan pled guilty to charges related to their purchase of SunCruz Casinos in 2000 in which they lied to banks in connection with obtaining $60 million in loans for the transaction. U.S. District Judge Paul Huck refused requests by the government and Abramoff to postpone the sentencing until after he completed his cooperation in the Congressional corruption investigation in Washington, D.C., where Abramoff entered a guilty plea to a second set of charges related to corruption involving a Congressman and staffers.

A Miami Herald article (here) discusses the many letters submitted to the court on Abramoff’s behalf that paint him as a sympathetic figure deserving of the reduced sentence. The sentencing memorandum submitted by defense counsel (here) goes to great lengths (62 pages) to put Abramoff in the most positive light, although his plea agreement does not permit him to seek a downward departure and there is a stipulated Sentencing Guidelines range of seven to ten years, so his initial prison term will fall somewhere in there. His lawyers argue for a sentence at the bottom of that range, and acknowledge that his cooperation in the continuing investigation likely will result in a Rule 35 motion by prosecutors down the road for a sentence reduction.

One sentence in the defense brief, which does a very good job of presenting Abramoff as deserving of a minimum sentence, caught my eye. The brief states, "There also is no chance the crime will be repeated." I certainly hope not, because Abramoff misused his clients’ money for himself and to corrupt officeholders and their staff. I hope he does not have the opportunity to commit crimes like this again, although American politics is full of second-chances. (ph)
Two Jurors Dropped From Ryan Jury

March 27th, 2006

The RICO corruption trial of former Illinois Governor George Ryan and a co-defendant remained on hold as U.S. District Judge Rebecca Pallmeyer dismissed two jurors because they failed to disclose criminal convictions on their juror questionnaire. The judge said she would meet with the jury to determine whether to seat two alternates and have them restart their deliberations from the beginning. The defense attorneys have objected to the judge’s decision and likely have requested a mistrial. Under Federal Rule of Criminal Procedure 24(c)(3) (here), "The court may retain alternate jurors after the jury retires to deliberate. The court must ensure that a retained alternate does not discuss the case with anyone until that alternate replaces a juror or is discharged. If an alternate replaces a juror after deliberations have begun, the court must instruct the jury to begin its deliberations anew." The trial judge has fairly broad discretion to remove a juror and seat an alternate, so this is a difficult issue to win on appeal if the jury were to return a guilty verdict.

A recent example in which the judge removed a juror well into the deliberations was the corruption prosecution of former Philadelphia City Treasurer Corey Kemp and other defendants in 2005. In that case, the judge removed a juror who was refusing to deliberate, and after seating the alternate, the jury returned a guilty verdict on many of the counts. That situation may present a stronger basis for an appeal rather than removing a juror for misconduct unrelated to the case. In Ryan’s case, however, if the removed jurors were the holdouts for an acquittal, then a substantial constitutional claim can be raised if there is a guilty verdict. This is an area in which the broad discretion of the district court, and the lack of information about the jury deliberations and the reasons for the removal, make it difficult to predict what will happen next, or even down the line. An AP story (here) discusses Judge Pallmeyer’s decision to remove two jurors. (ph)
Ryan Jury Bogging Down

March 23rd, 2006

The jury considering the RICO corruption charges against former Illinois Governor George Ryan and co-defendant Lawrence Warner has finished its eighth day of deliberations, and sent two notes to the judge about having "personal difficulties" in reaching a verdict. To make matters even more complicated, U.S. District Judge Rebecca Pallmeyer dismissed the jury early and said she is conducting an investigation of a "personal matter" involving a juror. A Chicago Tribune story (here) notes that the paper raised questions about whether one of the jurors answered a questionnaire truthfully during voir dire, although there are no further details and the court has sealed the records of its meetings with counsel for now. If one of the jurors has to be dismissed, then an alternate can be brought in, assuming one is available. That would require the jury to begin its deliberations all over, which will drag out the process even further. Deliberations will resume on Monday, when Judge Pallmeyer will most likely have completed her investigation of the juror issue and the question of whether an alternate will be used should be answered. Don’t anyone hold their breath waiting for a verdict, at least not yet. (ph)
City Council Member Will Retain Seat Until Sentencing on Corruption Charges

March 22nd, 2006

Philadelphia city councilman Rick Mariano was convicted of 18 of the 22 counts related to accepting over $30,000 from businesses and helping them win city contracts and other favors — he was acquitted of two counts each of mail and wire fraud. The judge ordered Mariano taken into custody immediately for a mental health examination, due to his behavior right before his indictment when he went to the observation deck of the Philadelphia City Hall in what some feared might be a suicide attempt. Mariano remains in custody, and also remains on the city council. Under state law, he is not required to resign until sentence is imposed, which will be at least three months from now, and possibly longer if the mental health exam takes a significant amount of time. Mariano’s attorney did inform the city council president that he resigned from his positions a chair of the Licenses and Inspections Committee and vice-chair of the Appropriations Committee, but will retain his position on the council and, more importantly, the $102,000 annual salary that comes with it. Mariano’s defense at trial was that the payments he received were loans due to financial difficulties, so he likely needs the salary, although that is not much justification for continuing on the city’s payroll; Mayor Street, a long-time friend, called for his resignation. Having an elected official who has been convicted of corruption for misuse of that office retain his position just to draw a salary certainly presents an odd picture. A Philadelphia Inquirer article (here) discusses Mariano’s conviction and position on the council. (ph)
Cunningham’s Boodle Goes on the Block

March 22nd, 2006

Former Congressman Randy "Duke" Cunningham pled guilty to accepting approximately $2.4 million in bribes that included a wide array of antiques, rugs, and home furnishings from defense contractors. Those items will go on the auction block on March 23 in Los Angeles as the government seeks to recover some of the $1.8 million he was ordered to forfeit, which comes on top of $1.8 million in back taxes owed to the IRS. Among the items to be sold are silver candelabra, marble-top bedroom furniture, and a cherry sleigh bed (I’d pass on that one); he sold the Rolls-Royce before being charged. Cunningham received a ten-year sentence for accepting the bribes and arranging no-bid contracts for defense companies through his position on the House Defense Appropriations Subcommittee, and the auction closes out a sad chapter in the history of public corruption. An AP story (here) discusses the auction. (ph)