Opinion ID: 2974278
Heading Depth: 4
Heading Rank: 1

Heading: Count One – Hobbs Act Conspiracy

Text: Count one of the third superseding indictment charged that the Kelleys conspired to extort money and property from Vallecorsa and his companies in exchange for millions of dollars in Wayne County 1airport contracts under color of official right, in violation of the Hobbs Act, 18 U.S.C. § 1951. To establish an insufficiency of the evidence claim on this Hobbs Act conspiracy charge, the Kelleys must show that the government failed to prove beyond a reasonable doubt the elements of the crime. The evidence adduced at trial, however, amply supports the Kelleys’ conviction of Hobbs Act conspiracy. 1 The Hobbs Act provides in pertinent part: (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. (b) As used in this section— .... (2) The term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. Nos. 05-1361/1435 United States v. Kelley, et al. Page 7 The government proved that there was an agreement to commit extortion, under either the “color of official right” or “fear of economic harm” theory. Under the “color of official right” theory, a public official like Kelley obtains a “payment to which he was not entitled, knowing that the payment was made in return for official acts.” Evans v. United States, 504 U.S. 255, 268, 112 S. Ct. 1881, 1889 (1992). Barbara Kelley, as a private citizen, can be convicted of aiding and abetting a public official in the official’s extortion, and for conspiring with a public official to commit extortion, under this theory as well. See United States v. Collins, 78 F.3d 1021, 1031-33 (6th Cir. 1996). Here, there was extensive evidence showing that the Kelleys received cash, parties, home renovations, auto repairs, and a new car from Vallecorsa in exchange for favorable treatment in granting or renewing his company’s airport contracts. Under the “fear of economic harm” theory, the defendant receives payment from the victim because the victim believes that the defendant can exercise his or her power to the victim’s economic detriment. “The fear need not be the product of the defendant’s actions. ‘It is enough if the fear exists and the defendant intentionally exploits it.’” Id. at 1030 (quoting United States v. Williams, 952 F.2d 1504, 1513-14 (6th Cir. 1991)). Private citizens can also be convicted under the “fear of economic harm” theory. See id. Vallecorsa had good reason to fear that the Kelleys would use their influence over his company’s multi-million dollar airport contracts to cause him harm. Kelley held authority over all of American International’s Detroit Metro Airport contracts. In fact, when Vallecorsa fired Kelley in 2002, he lost his largest airport contract within a month. Finally, the government also showed that there was a de minimis connection to interstate commerce; that the defendants knew of the conspiracy and intended to join it; and that they participated in it. At trial, the evidence demonstrated that the Kelleys worked together in their efforts to extort American International, including a lavish birthday party for Barbara Kelley, automobile repairs, cash, various charitable donations, and employment for both Kelley and his son. The Kelleys took turns asking Vallecorsa for money and services. For example, Kelley first raised the idea to Vallecorsa to pay for Barbara Kelley’s birthday party. Barbara Kelley followed through on the plan by working out the billing details and providing false invoices for consulting work that she did not perform. The Kelleys were able to fleece Vallecorsa so readily because of the power Kelley held over American International’s multi-million dollar airport contracts. As described above, there was an implicit quid pro quo between Vallecorsa and Kelley. The more money Vallecorsa gave Kelley, the better things got for his companies. American International continued to have its existing airport contracts renewed and larger new contracts were being issued. Therefore, we conclude that a reasonable juror could have found Kelley guilty beyond a reasonable doubt of Hobbs Act conspiracy. 2. Count Two – Extortion for Barbara Kelley’s 50th Birthday Party Barbara Kelley first argues that she is not and has never been employed by Wayne County and therefore could not act under “color of official right.” It is well settled in this Circuit that “a private citizen who is not in the process of becoming a public official may be convicted of Hobbs Act extortion under the ‘color of official right’ theory only if that private citizen either conspires with, or aids and abets, a public official in the act of extortion.” United States v. Saadey, 393 F.3d 669, 675 (6th Cir. 2005). Barbara Kelley’s position that Kelley, as the only government actor, did not participate in the agreement between Barbara Kelley and Vallecorsa to pay for her 50th birthday party is without merit. At trial the prosecution presented sufficient evidence that Kelley initiated the conversation with Vallecorsa regarding Barbara Kelley’s 50th birthday party. (J.A. 1071.) Since we must view the facts in the light most favorable to the prosecution, Barbara Kelley’s argument fails. For the same reason, Kelley’s assertion that he was not involved in securing $23,125 for his wife’s birthday party fails. Accordingly, we hold that there was sufficient evidence for the jury to find the Kelleys guilty of count two of the third superseding indictment. Nos. 05-1361/1435 United States v. Kelley, et al. Page 8 3. Count Four – Extortion for Employment of Butch Kelley & Count Five – Extortion for Employment of Kelley Vallecorsa employed both Kelley and his son, Butch Kelley. Kelley contends that there were no specific acts that could be attributed to him relative to his son’s employment. He appears to concede, however, that he told his son to call Vallecorsa about employment. See Kelley’s Br. 42. The government argues and we agree that there is sufficient evidence for the jury to convict Kelley of extorting his son’s employment. First, Kelley told his son to talk to Vallecorsa about a job. It is fair to say that Butch Kelley was not “cold-calling” Vallecorsa. By July 1998, the Kelleys had received thousands of dollars cash, house renovations, car repairs, and donations to their favorite charities, and Butch Kelley was already the recipient of a $15,000 gift to satisfy a debt. A reasonable jury could have easily determined that when Butch Kelley showed up to talk to Vallecorsa about a job, Vallecorsa acted under threat of economic harm, as Butch Kelley’s father controlled millions of dollars of airport contracts that benefitted his business. Likewise, a reasonable jury could have determined that Kelley extorted his own job with American International. He negotiated his position while he was still an employee of Wayne County. Additionally, when he was an employee for the Detroit Public Schools, the job he held right before he took a position with Vallecorsa, Kelley was responsible for giving hundred thousand dollar contracts to American International. Kelly has failed to meet his burden of showing that no reasonable jury could find him guilty. There is sufficient evidence to support a jury finding of guilty on this count. 4. Count Ten – Cash Payment of $3,200, Count Eleven – Cash Payment of $2,200, & Count Nineteen – Cash Payment of $3,600 Kelley was convicted of extorting cash payments of $3,200, $2,200, and $3,600. The events leading to the charges in counts 10 and 11of the third superseding indictment took place in March 1999, when Kelley was still employed at Wayne County. The events leading to the charges in count nineteen of the third superseding indictment occurred during Kelley’s tenure at the Detroit Public Schools. Kelley contends that these cash payments were never established because Vallecorsa could not say exactly when he gave the money to Kelley. Additionally, Kelley argues that there was no association between the money given to him and the favors rendered to Vallecorsa’s companies. Kelley’s argument is without merit. Viewing the evidence in a manner most favorable to the government, we conclude that a reasonable jury could have found that these cash payments were extorted from Vallecorsa under either of the government’s theories. Under the “color of official right” theory, the money was extorted in exchange for favorable treatment in granting or renewing both airport and public school contracts, respectively. Under the “fear of economic harm,” the money was extorted from Vallecorsa because he feared that the Kelleys would use their influence over the company’s contracts to cause his company financial harm. Finally, Kelley’s argument that the government could not say exactly when Vallecorsa gave the money to Kelley is without merit. The government presented credible evidence of a distinct pattern of large checks written to Vallecorsa and then cashed. Within days, a similarly large cash deposit would be deposited in the Kelleys’ joint checking account. The Kelleys had their employment checks directly deposited to their joint checking account on a regular basis and had no other reason to have such large cash sums deposited in an otherwise erratic fashion. Additionally, the prosecution called five witnesses to testify about this pattern of cash payments. Since circumstantial evidence alone is sufficient to sustain a conviction, Spearman, 186 F.3d at 746, we therefore find that a reasonable trier of fact could have found Kelley guilty on these counts. Nos. 05-1361/1435 United States v. Kelley, et al. Page 9 5. Count Seven – Bribery in Federal Programs There is sufficient evidence to find the Kelleys guilty of soliciting, demanding, or accepting items of value, which are intended to reward or influence them in the business of local government when such government entity received more than $10,000 in federal benefits. The jury could have found that Kelley participated in a federal program bribe when he solicited and accepted a $23,125 birthday party for his wife at the Ritz-Carlton Hotel, as a government official. Likewise, there is sufficient evidence to convict Barbara Kelley of aiding and abetting Kelley’s crime. Saadey, 393 F.3d at 675. We therefore affirm the Kelleys’ conviction on this count. 6. Counts Twenty-Four & Twenty-Five – False Statements to the FBI Count twenty-four alleges that Kelley made false statements to FBI agents. In particular, the government claims that Kelley lied to FBI agents when he told them that he conducted his job negotiations with American International after he left his employment with Wayne County; and that he was unaware that American International paid $15,000 to settle a debt for his son Butch Kelley. Kelley argues that the government cannot rely on the “abstract” testimony of Jeffrey Fanto, Vallecorsa’s lawyer. The jury, however, is free to credit the testimony of Vallecorsa and Fanto that they conducted job negotiations with Kelley before he left Wayne County and before he started working for American International. This evidence is buttressed by the fact that Kelley was provided a new car paid for by American International before he left Wayne County employment. He drove this car throughout his employment with American International. Kelley also argues that his son on both direct and cross-examinations denied that he disclosed to his father that he went to Vallecorsa to repay a debt. Butch Kelley’s testimony, however, was impeached at trial as inconsistent with his earlier statements to the FBI. Accordingly, the jury can consider as substantive evidence that Kelley told his son to talk to Vallecorsa. Thus, taking the evidence in the light most favorable to the government, there is sufficient evidence to sustain the jury’s decision to find Kelley guilty on count twenty-four of the third superseding indictment. Barbara Kelley also argues that there was insufficient evidence to sustain her conviction for making false statements to the FBI. She told FBI agents that she paid for the subject birthday party out of her own funds. There was sufficient evidence to disprove this assertion as she received a check from Vallecorsa to cover the expense for the party. She also told FBI agents that neither Vallecorsa nor any of his companies paid for the party, but that the $23,125 check from Vallecorsa was for consulting services that she performed for his company and did not involve the birthday party. Finally, the indictment charged that Barbara Kelley made a false statement when she told FBI agents that the check made payable to her for $2,050 and written eleven days before President Clinton’s second inauguration was not to buy a gown for the President’s inauguration party. There was sufficient evidence, as detailed above, for the jury to find that Barbara Kelley lied in these instances and, accordingly, we affirm her conviction on this count. 7. Count Six – Money Laundering Barbara Kelley argues that there was insufficient evidence to convict her on charges of money laundering. To establish her claim, she must show that the government failed to prove beyond a reasonable doubt that she conducted or attempted to conduct a financial transaction with money that she extorted from Vallecorsa; that she knew the money was proceeds from her extortion; and that she knew that the transaction was designed to conceal or disguise the nature of the proceeds she gained by her extortion. See United States v. McGahee, 257 F.3d 520, 526 (6th Cir. 2001). We find that the jury was clearly able to assess the great lengths Barbara Kelley took to conceal the true nature of the payment of the Ritz-Carlton Hotel bill. She had the hotel reissue the bill in her name to remove any mention of American International or Vallecorsa. She developed a scheme with Vallecorsa to Nos. 05-1361/1435 United States v. Kelley, et al. Page 10 generate a fake invoice for consulting services that were never performed. Amazingly, she was not even willing to suffer the tax consequences of the additional income that she would have to report under her grand plan. The check written out to “Barbara J. Kelley Health Care Consultant” was written for more than the cost of the party in order to cover the Kelleys’ increased tax liability. We cannot say that the jury was irrational in finding that Barbara Kelley committed all the elements of the money laundering crime for which she was charged. Thus, there is sufficient evidence to sustain the jury’s finding of guilty on this count, as well as all counts of the third superseding indictment on which the Kelleys were convicted.