Opinion ID: 78313
Heading Depth: 1
Heading Rank: 3

Heading: 1. Bribery, Conspiracy and Honest Services Mail Fraud Counts.

Text: The bribery statute under which defendants were convicted makes it a crime for a state official to corruptly agree to accept anything of value from another person intending to be influenced in that person's favor in an official action. 18 U.S.C. § 666(a)(1)(B). The honest services mail fraud statute criminalizes the use of the mails to execute a scheme to defraud another of the right to a public official's honest services. 18 U.S.C. §§ 1341, 1346. The conspiracy statute prohibits two or more persons from conspiring to commit a federal offense. 18 U.S.C. § 371. The bribery, conspiracy and honest services mail fraud convictions in this case are based upon the donation Scrushy gave to Siegelman's education lottery campaign. [12] As such, they impact the First Amendment's core valuesprotection of free political speech and the right to support issues of great public importance. It would be a particularly dangerous legal error from a civic point of view to instruct a jury that they may convict a defendant for his exercise of either of these constitutionally protected activities. [13] In a political system that is based upon raising private contributions for campaigns for public office and for issue referenda, there is ample opportunity for that error to be committed. The Supreme Court has sought to protect against this possibility by requiring more for conviction than merely proof of a campaign donation followed by an act favorable toward the donor. McCormick v. United States, 500 U.S. 257, 111 S.Ct. 1807, 114 L.Ed.2d 307 (1991). In reviewing a Hobbs Act prosecution, the federal crime of extortion under color of official rightdemanding a campaign donation in return for taking some favorable official actionthe Court said: Serving constituents and supporting legislation that will benefit the district and individuals and groups therein is the everyday business of a legislator. It is also true that campaigns must be run and financed. Money is constantly being solicited on behalf of candidates, who run on platforms and who claim support on the basis of their views and what they intend to do or have done. Whatever ethical considerations and appearances may indicate, to hold that legislators commit the federal crime of extortion when they act for the benefit of constituents or support legislation furthering the interests of some of their constituents, shortly before or after campaign contributions are solicited and received from those beneficiaries, is an unrealistic assessment of what Congress could have meant by making it a crime to obtain property from another, with his consent, under color of official right. To hold otherwise would open to prosecution not only conduct that has long been thought to be well within the law but also conduct that in a very real sense is unavoidable so long as election campaigns are financed by private contributions or expenditures, as they have been from the beginning of the Nation. Id. at 272, 111 S.Ct. 1807. To avoid this result, the Court made clear that only if payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act, are they criminal. Id. at 273, 111 S.Ct. 1807 (emphasis added). The Court quoted the Court of Appeals for the Fifth Circuit, which had said that: A moment's reflection should enable one to distinguish, at least in the abstract, a legitimate solicitation from the exaction of a fee for a benefit conferred or an injury withheld. Whether described familiarly as a payoff or with the Latinate precision of quid pro quo, the prohibited exchange is the same: a public official may not demand payment as inducement for the promise to perform (or not to perform) an official act. Id. (quoting United States v. Dozier, 672 F.2d 531, 537 (5th Cir.1982)). While the Court has not yet considered whether the federal funds bribery, conspiracy or honest services mail fraud statutes require a similar explicit promise, the Seventh Circuit Court of Appeals has observed that extortion and bribery are but different sides of the same coin. United States v. Allen, 10 F.3d 405, 411 (7th Cir. 1993). [14] The district court agreed to instruct the jury that they could not convict the defendants of bribery in this case unless the defendant and the official agree that the official will take specific action in exchange for the thing of value. (emphasis added). This instruction was fashioned by the court in direct response to defendants' request for a quid pro quo instruction, and was given in addition to the Eleventh Circuit's pattern jury instruction for federal funds bribery cases. So, whether or not a quid pro quo instruction was legally required, such an instruction was given. Defendants, however, assert that the instruction was inadequate under McCormick. Defendants assert that the instruction failed to tell the jury that not only must they find that Siegelman and Scrushy agreed to a quid pro quo, the CON Board seat for the donation, but that this agreement had to be express. We disagree that McCormick requires such an instruction. McCormick does use the word explicit when describing the sort of agreement that is required to convict a defendant for extorting campaign contributions. It does not, however, mean express. Defendants argue that only proof of actual conversations by defendants, will do, suggesting in their brief that only express words of promise overheard by third parties or by means of electronic surveillance will do. But McCormick does not impose such a stringent standard. One year after McCormick, the Supreme Court approved the following jury instruction: However, if a public official demands or accepts money in exchange for [a] specific requested exercise of his or her official power, such a demand or acceptance does constitute a violation of the [federal extortion statute] regardless of whether the payment is made in the form of a campaign contribution. Evans v. United States, 504 U.S. 255, 258, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992). The Court held that the instruction satisfies the quid pro quo requirement of McCormick v. United States.  Id. at 268, 111 S.Ct. 1807. The Court said that the Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Id. The instruction approved in Evans required that the acceptance of the campaign donation be in return for a specific official actiona quid pro quo. [15] No generalized expectation of some future favorable action will do. The official must agree to take or forego some specific action in order for the doing of it to be criminal under Section 666. In the absence of such an agreement on a specific action, even a close-in-time relationship between the donation and the act will not suffice. But there is no requirement that this agreement be memorialized in a writing, or even, as defendants suggest, be overheard by a third party. Since the agreement is for some specific action or inaction, the agreement must be explicit, but there is no requirement that it be express. To hold otherwise, as Justice Kennedy noted in Evans, would allow defendants to escape criminal liability through knowing winks and nods. 504 U.S. at 274, 112 S.Ct. 1881 (Kennedy, J. concurring). See also United States v. Blandford, 33 F.3d 685, 696 (6th Cir.1994) ( Evans instructed that by `explicit' McCormick did not mean express); United States v. Giles, 246 F.3d 966, 972 (7th Cir.2001); United States v. Tucker, 133 F.3d 1208, 1215 (9th Cir.1998); United States v. Hairston, 46 F.3d 361, 365 (4th Cir.1995). [16] Furthermore, an explicit agreement may be implied from [the official's] words and actions. Evans, 504 U.S. at 274, 112 S.Ct. 1881 (Kennedy, J., concurring). As Justice Kennedy explained: The criminal law in the usual course concerns itself with motives and consequences, not formalities. And the [jury] is quite capable of deciding the intent with which words were spoken or actions taken as well as the reasonable construction given to them by the official and the payor. Id. See also United States v. Massey, 89 F.3d 1433, 1439 (11th Cir.1996) (holding that bribery conviction under general federal bribery statute, 18 U.S.C. § 201, may be supported by inferences drawn from relevant and competent circumstantial evidence). In this case, the jury was instructed that they could not convict the defendants of bribery unless the Defendant and official agree that the official will take specific action in exchange for the thing of value. This instruction required the jury to find an agreement to exchange a specific official action for a campaign contribution. Finding these facts would satisfy McCormick's, requirement for an explicit agreement involving a quid pro quo. Therefore, assuming a quid pro quo instruction was required in this case, we find no reversible error. [17]

Defendants argue that the sole evidence of any explicit quid pro quo in connection with Siegelman's appointment of Scrushy to the CON Board was Bailey's testimony regarding the conversation he had with Siegelman following the meeting at which Scrushy delivered the first $250,000 check to Siegelman, and that this evidence was legally insufficient to support the jury's finding of a quid pro quo. We disagree. Bailey testified that after the meeting, Siegelman showed him the check, said that it was from Scrushy and that Scrushy was halfway there. Bailey asked what in the world is he going to want for that? Siegelman replied, the CON Board. Bailey then asked, I wouldn't think that would be a problem, would it? Siegelman responded, I wouldn't think so. Defendants assert that this conversation shows that there was not an explicit or express agreement at this time between Siegelman and Scrushy. They argue that the conversation on its face indicates that, at best, there was only some vague expectation about the future. Defendants assert that Bailey's testimony shows at most that: Governor Siegelman knew, or at least thought, that Scrushy wanted a C.O.N. Board appointment in recognition of the contributionand that Governor Siegelman didn't think that making such an appointment would present a problem. According to defendants, even if the conversation between Bailey and Siegelman took place exactly as Bailey recounts, no one can `infer' from the alleged conversation recounted by Bailey that a true explicit promise or agreement had happened behind closed doors. What is missing in this record, according to defendants, is any evidence of a discussion between Governor Siegelman and Scrushy to the effect of I will make this contribution, and in exchange for this contribution you will appoint me. Are we agreed on that? Yes we are. [19] In the absence of such evidence, according to the defendants, no reasonable juror could infer an explicit agreement between Siegelman and Scrushy. We disagree. Inferring actors' states of mind from the circumstances surrounding their conversation, from their actions, and from their words spoken at the time is precisely the province of the jury. As we noted above, the [jury] is quite capable of deciding the intent with which words were spoken or actions taken as well as the reasonable construction given to them by the official and the payor. See Evans, 504 U.S. at 274, 112 S.Ct. 1881 (Kennedy, J., concurring). In making these judgments, jurors are presumed to use their common sense and are free to choose among reasonable constructions of the evidence. See United States v. Mosquera, 779 F.2d 628, 630 (11th Cir.1986). Bailey's testimony was competent evidence that Siegelman and Scrushy had agreed to a deal in which Scrushy's donation would be rewarded with a seat on the CON Board. The jurors were free to give it a different construction, but they did not. Furthermore, this was not the sole evidence that Scrushy bribed Siegelman. The jury was entitled to construe this conversation in the context of the substantial additional testimony they had heard regarding Scrushy's donation to the lottery campaign fund. For example, Bailey repeatedly testified, without qualification, that Siegelman and Scrushy had an explicit agreement to exchange money for a seat on the CON Board. [20] . Bailey also testified that Siegelman met with Eric Hanson, an outside lobbyist for HealthSouth, and told him that because Scrushy had contributed at least $350,000 to Siegelman's opponent in the general election that Scrushy needed to do at least $500,000 in order to make it right with the Siegelman campaign. Bailey testified that Siegelman was referring to the campaign for the lottery initiative, and that Hanson was to relay this conversation to Scrushy. Bailey also testified that, in another conversation, Hanson told Bailey that Scrushy wanted control of the CON Board. Martin corroborated Bailey's testimony when he stated that [h]e [Scrushy] told me that if we raised that money, then we would have a spot on the CON Board, and We were making a contribution . . . in exchange for a spot on the CON Board. Martin also testified that Hanson bragged about getting HealthSouth a seat on the CON Board with the help of the IHS check. Cline testified that Siegelman told him that Scrushy was responsible for the first $250,000 check and that there was another $250,000 that would be coming. Cline also testified that the receipt of the checks by the Foundation was not reported until after newspaper articles questioning the Foundation's finances. [21] McGahan's testimony regarding Scrushy's solicitation of him to make the donation also supported an inference that the donation was illicit. Loretta Skeleton, HealthSouth's lawyer, testified that, although she was responsible for Health-South political contributions, she was told nothing about the $500,000 donations. Finally, the close relationship in time between the first check and Siegelman's appointment of Scrushy was also some evidence of quid pro quo. In sum, the evidence was sufficient such that a reasonable juror could have concluded that Siegelman and Scrushy explicitly agreed to a corrupt quid pro quo, thereby proving the bribery, conspiracy and the two related mail fraud counts (Counts 6 and 7).
Siegelman separately challenges his mail fraud convictions on Counts 8 and 9 of the indictment, each of which charged that he caused a mailing that helped to execute a scheme between himself and Scrushy to deprive the State of Alabama of its right to their honest services as the Governor and as a member of the CON Board. Counts 8 and 9 alleged that the scheme included not only the exchange of the seat on the CON Board for the $500,000 lottery campaign, but also that Scrushy would and did use his seat on the CON Board to attempt to affect the interests of HealthSouth and its competitors, and that Scrushy would and did offer things of value to another Board member to attempt to affect the interests of HealthSouth and its competitors. Although Scrushy was not on the Board when the alleged self-dealing occurred, the indictment charged that it was part of the scheme that Siegelman and Scrushy orchestrated Scrushy's replacement on the Board by another person employed by HealthSouth. The mailings charged in connection with these allegations were letters sent by the Board to HealthSouth, notifying it that it had been awarded Certificates of Need in connection with the rehabilitation hospital (Count 8) and the PET scanner (Count 9). Siegelman claims that the evidence at trial was insufficient to support his knowing participation in this alleged scheme. [22] The evidence at trial was that Scrushy resigned from his seat on the Board in January of 2001 and that, the next day, Siegelman appointed Thom Carman, HealthSouth vice-president, to the remainder of the term. When Scrushy's term expired in July, Siegelman reappointed Carman. While on the Board, Carman employed another member of the Board, Tim Adams, to prepare the application for the PET scanner, paying him $8000 to do so. [23] There was also testimony that Adams was paid another $3000 for additional work he apparently had done on the PET scanner application in return for his agreement to attend the CON Board meeting at which HealthSouth's application for a rehabilitation hospital in Phoenix City was considered. At the meeting, Carman recused himself from voting on the application. Adams attended, and although he abstained from voting, under the Board's rules, his abstention did not affect the quorum his presence established, thus permitting a vote to be taken. There was no opposition to the application and the Board unanimously approved the application. Six months later, the PET scanner application was also approved. At this meeting, Adams' presence was not necessary to the quorum. Carman recused himself, and Adams abstained from voting. The application was unopposed and passed unanimously. Alva Lambert, the Executive Director of the Board, testified that unopposed applications were routinely approved, and that both these applications were consistent with prior Board actions. There was no evidence that Siegelman knew of Carman's actions in hiring Adams to prepare the application. There was no evidence that he knew of any of these Board actions. Siegelman challenges the sufficiency of this evidence to establish that he caused the Board letters to be mailed to Health-South, informing it of the award of Certificates of Need in connection with the PET scanner or the rehabilitation hospital. Since there was no evidence that Siegelman participated in the events forming the basis for the charges in Counts 8 and 9, nor even that he had any knowledge of these events, Siegelman argues he cannot be held liable for this conduct on a theory of respondeat superior or vicarious liability. In view of our holding that the jury's finding of an explicit agreement between Siegelman and Scrushy to exchange money for a seat on the CON Board is supported by the evidence, we shall address whether the law permits Siegelman to be held liable for Scrushy's subsequent conduct on the Board. It is the law of this circuit, as well as others, that all who with criminal intent join themselves to the principal scheme may be guilty of a violation of the mail fraud statute. United States v. Toney, 598 F.2d 1349, 1355 (5th Cir.1979). See also United States v. Stapleton, 293 F.3d 1111, 1117 (9th Cir.2002) (Like co-conspirators, `knowing participants in the scheme are legally liable' for their co-schemers use of the mails or wires); United States v. Leahy, 445 F.3d 634, 656 (3d Cir.2006); United States v. Stull, 743 F.2d 439 (6th Cir. 1984); United States v. Sedovic, 679 F.2d 1233 (8th Cir.1982); United States v. Read, 658 F.2d 1225 (7th Cir.1981). Each person who is knowingly a party to the principal scheme is liable for the acts of other schemers in pursuance of that scheme. Toney, 598 F.2d at 1355. Recently, in United States v. Ward, 486 F.3d 1212 (11th Cir.2007), we reiterated this long-standing principle that, if one participant in a fraudulent scheme causes a use of the mails in execution of the fraud, all other knowing participants in the scheme are legally liable for that use of the mails: For nearly as long as mail fraud has been a federal crime, it has been the law in this Circuit, and in the former Fifth Circuit, that a defendant may be convicted of mail fraud without personally committing each and every element of mail fraud, so long as the defendant knowingly and willfully joined the criminal scheme, and a co-schemer used the mails for the purpose of executing the scheme. Id. at 1222. It may be assumed, then, that Siegelman did not sign or cause to be mailed either of the letters set out in Counts 8 and 9, or even that he participated in the events generating those letters. He may, nevertheless, be held criminally liable for Scrushy's conduct on the Board if he was a knowing party to a scheme that included that conduct. The question regarding these counts is whether the criminal scheme charged in the indictment was broader than the initial pay-to-play agreement between Siegelman and Scrushy, but also included agreement on the broader objective of permitting or promoting Scrushy's self-dealing while on the Board. If so, it is immaterial that Siegelman may not have known about each particular success in that scheme or caused to be mailed the CON Board letters that furthered that scheme. A partnership in crime being established against both appellants, the acts of [Scrushy] in furtherance of the common criminal enterprise were in law the acts of [Siegelman] also. See Belt v. United States, 73 F.2d 888, 889 (5th Cir.1934). Just as in Ward, where the defendant denied knowledge of both the mailing and the circumstances prompting it, Siegelman's lack of involvement in causing a specific mailing and the circumstances prompting it are immaterial so long as there is sufficient evidence to show that he was a knowing participant in the broader fraudulent scheme, which involved the use of the mails. See Ward, 486 F.3d at 1223 (citing United State v. Bright, 588 F.2d 504 (5th Cir.1979)). Counts 8 and 9 charge a scheme broader than the initial pay-for-play agreement. These counts alleged that Siegelman and Scrushy agreed not only to exchange money for a seat on the Board, but also that Scrushy would and did use his seat on the CON Board to attempt to affect the interests of HealthSouth and its competitors, and that Scrushy would and did offer things of value to another Board member to attempt to affect the interests of HealthSouth and its competitors. The government argues in its brief that not only did Siegelman know that Scrushy wanted the seat in order to self-deal on the CON Board, but that it was certainly foreseeable to Siegelman that Scrushy would bribe another Board member to further HealthSouth's interests since [a]fter all, Scrushy paid Siegelman $500,000 to get HealthSouth a seat on the Board in the first place. Thus, the indictment charges a broader scheme that would subject Siegelman to criminal liability for Scrushy's actions on the Board so long as Siegelman was a knowing participant in that broader scheme. The final question, then, is whether the government proved that scheme. In order to uphold Siegelman's convictions on Counts 8 and 9, the evidence must have been sufficient for the jury to conclude both that Siegelman knew that Scrushy intended to defraud Alabama of his honest services while on the Board and that Siegelman personally intended to participate in this fraud. We hold that it was not. The testimony in support of the government's allegation of a pay-to-play scheme whereby Scrushy paid Siegelman for a seat on the CON Board came principally from Bailey, Martin, Young, McGahan, and Skelton. Of these witnesses, only Skeleton, HealthSouth's lawyer in charge of certificates of need, had any knowledge about Scrushy's subsequent alleged self-dealing while on the CON Board. Her testimony, however, did not mention Siegelman. Alva Lambert, the Executive Director of the CON Board during the relevant time and the other primary government witness in support of the allegations of Scrushy self-dealing, testified that the Siegelman CON Board was an extremely well-balanced Board, that CON Boards had never to his knowledge turned down an application for a PET scanner, and that he never saw Siegelman exert any influence or try to exert any influence whatsoever over a Board decision. Neither in its brief nor at oral argument did the government point to any testimony in support of its allegation that Siegelman and Scrushy agreed to a broader scheme in which Scrushy would self-deal on the Board. Nor has our independent and careful review of record revealed any. Rather, the government's brief argues that Siegelman's knowing participation in the broader self-dealing scheme may be inferred from three facts proven at trial: first, that Siegelman and Scrushy agreed to exchange the CON Board seat for money; second, that the amended Foundation financial statements that disclosed the Scrushy donations, which were filed around the time of the mailings, did not list Scrushy as the ultimate source of the IHS check; and third, that Siegelman was still governor when the Pet scanner and Phenix City projects were approved and could have removed Scrushy or Carman from the Board at any time. The first two of these facts relate primarily to the initial pay-to-play scheme, and the final fact is not sufficient to show participation in a broader scheme, much less knowing participation. None is remotely sufficient to permit a jury to infer that Siegelman agreed to a broader self-dealing scheme. In view of this absolute lack of any evidence whatsoever from which the jury could infer that Siegelman knowingly agreed to or participated in a broader scheme that included Scrushy's alleged subsequent self-dealing while on the Board, we shall reverse Siegelman's convictions on these counts.