Opinion ID: 66289
Heading Depth: 2
Heading Rank: 2

Heading: The Disbursement Process

Text: The Jefferson County budget is approved by law each year on 1 October, the beginning of the fiscal year. Each preceding summer, the five county commissioners meet for a budget hearing, during which budgets for various county departments are set and certain funds are set aside for recurring annual appropriations. At the same time, a nondepartmental budget and a park fund are set. Each of the five districts receives an equal share of both the nondepartmental budget and the park fund. A district’s share of the nondepartmental budget is often referred to as the district commissioner’s “discretionary funds” or simply as “district funds.” These funds are to be used to assist with projects within a commissioner’s district. The district funds available to a commissioner in any 4 given year usually amount to several hundreds of thousands of dollars. In addition, each commissioner has access to about $95,000 in park funds. Jefferson County uses a contract approval process for the disbursement of district funds. Generally, a commissioner’s office makes a request to the county finance department for funds to be allocated to a particular organization.1 The finance department then gathers information about the recipient organization’s 501(c)(3) status, its financial statements and its most recent fiscal year budget. If all is in order, the finance department then draws up the contract and sends it to the county attorney’s office for legal review. After the legal review, the recipient organization signs the contract, agreeing to its terms. The contract is then presented to the commission for a vote. If approved, the finance department then generates a check for the recipient organization. Generally, all contracts concerning the disbursement of district funds contain the same boilerplate language – the contracts differ only in the amount to be disbursed and specifications governing how the funds are to be spent. Other, unwritten, county policies bound the district fund disbursement process.2 As previously noted, funds can only be disbursed to not-for-profit, 501(c)(3) 1 The only entities eligible to receive such funds are not-for-profit, 501(c)(3) organizations or certain organizations affiliated with the state, like municipalities or school boards. 2 These policies also govern the disbursement of park funds. 5 organizations. Funds cannot be directed to for-profit corporations nor can any funds be spent on county employees, elected officials, their friends or family members. In addition, funds cannot be routed through a qualifying non-profit organization to other organizations. The unusual demand voucher (“UDV”) procedure is an alternative means occasionally employed to disburse district funds but more often used with park funds. UDVs expedite the disbursement process. The UDV process requires a commissioner, or a member of his staff, to request disbursement of park funds from the park administrator, a county official who administers the park funds for all five county commissioners. Each request must be accompanied by receipts or invoices, documenting the labor or materials for which the park funds are to be spent. After receipt of the UDV request and the accompanying documentation, the park administrator prepares the UDV, has it signed by the requesting commissioner, and has it placed on the agenda for the next county commission meeting. In lieu of placing the UDV on the commission agenda for approval, a majority of three commissioners can approve the UDV with their signatures. With this overview of the disbursement process in mind, we now discuss how Germany disbursed his district and park funds during the period covered in 6 the indictment. C. Germany’s Disbursement of District and Park Funds 1. District Funds to Jefferson County Committee of Economic Opportunity In October 2000, Germany’s office submitted a request to the county finance department for $217,500 of funding for the Jefferson County Committee of Economic Opportunity (“JCCEO”). The $217,500 was to come out of Germany’s district funds. JCCEO is a non-profit, 501(c)(3) organization that provides services for low-income people and was well-known to the county commission. Although JCCEO occasionally requests funding from the commission for particular services, it made no such request to Germany or any other commissioner in October of 2000. Nevertheless, Germany’s request went through the county’s contract approval process and was approved by the commission.3 On 24 October 2000, the contract was signed by the president of the county commission and the executive director of JCCEO, Gail Cunningham. A day after the contract was signed, Germany sent Cunningham a check for $217,500, along with a letter written on county commission letterhead. In the 3 The contract named JCCEO as the sole recipient of the funds and specified that the JCCEO would “[p]rovide for continuation and implementation of youth services, programs, and activities through JCCEO (child development services, summer youth employment programs in conjunction with the City of Birmingham Division of Youth Services, alcoholism, outreach and aftercare program, day treatment program, youth gang prevention programs, etc.”). R6-47; Govt. Exh. 2 at 3. 7 letter, Germany instructed Cunningham to disburse $180,000 of the $217,500 to eleven organizations not affiliated with JCCEO. Although Germany’s administrative assistant at the time, Charles Cockrom, testified that he provided the county finance department with information concerning these eleven organizations, there is no evidence that the finance department ever received any such notice, in the form of a letter or otherwise. Cunningham testified that she did not know whether any of the eleven organizations named in Germany’s letter were non-profit, 501(c)(3) entities or whether they all had youth programs. According to Cunningham, her only role regarding the county funds was to write checks “[b]ecause this was a project that Commissioner Germany made choices about and managed, as far as I knew. My only role, our only role, was to write the payment checks. The payees were selected and provided to us in letters from him [Germany] and we were not asked to do anything further.” R7 at 101-02. Three of the organizations that received funds from JCCEO at the direction of Germany were MedHealth Management (“MedHealth”), American Charities Foundation, Inc. (“American Charities”), and the East Thomas Baseball Association (“ETBA”). Because these entities are named in the indictment against Germany, we detail Germany’s connection with each of them in turn. 8
In his 25 October 2000 letter, Germany directed JCCEO to disburse $19,000 to MedHealth. MedHealth was a for-profit corporation founded, owned, and operated by Horace Miller from 1996-2001.4 Mindful of Germany’s position as commissioner for public health for the county, Miller frequently petitioned Germany for funding for his healthcare business. Ultimately, Miller received several checks totaling about $38,000 from Germany. On each occasion, JCCEO was the drawer of the check. Miller either picked up the check directly from the secretary of JCCEO or received the check from Germany himself in the lounge of the Tutwiler Hotel in downtown Birmingham. In October of 2005, Miller and Germany met once again in the Tutwiler lounge. At this point, Miller had a request for funding pending through Germany. At the meeting, Germany asked Miller to help Germany’s wife, Lois Germany, buy a car, claiming that she was having difficulty securing financing.5 Miller complied and helped Lois Germany find a 1997 Mercedes E320 with a purchase price of $33,950. Lois Germany took possession of the car on 3 October 2000 with no down payment. On 16 October 2000, Miller made an $8000 down payment on the 4 Miller also worked as an automobile salesman at MedCenter Mazda during the same period. 5 A representative from the bank that ultimately financed the car claimed that Lois Germany had excellent credit. 9 Mercedes. On 31 October 2000, Miller received a check from JCCEO made out to MedHealth for $19,000. The next day, Miller deposited the check into his MedHealth account and made a second down payment on Lois Germany’s Mercedes, this time for $9000.6 Nine days later, on 10 November 2000, Miller received an unsolicited check for $2000 from American Charities as a scholarship for his son.
In late October 2000, JCCEO wrote a check to American Charities for $20,500 pursuant to Germany’s instructions in his 25 October 2000 letter. On 3 November 2000, Germany wrote another letter to JCCEO, requesting that it disburse an additional $2000 to American Charities. JCCEO complied the same day. American Charities was a non-profit, 501(c)(3) organization founded and directed by Joseph Turnes.7 Although it received support from other sources, over 90% of American Charities’ funding came through Germany’s office via JCCEO. In order to secure funding, Turnes would correspond directly with Germany by letter. He never applied for funding through either JCCEO or any other county 6 Miller testified that there was no quid pro quo arrangement with Germany. He stated that he took it upon himself to make the $17,000 down payment on Lois Germany’s Mercedes. 7 American Charities was founded, according to Turnes, to “raise[] money and ... distribute[] it in the community.” R8 at 183. Turnes was the organization’s sole employee. 10 body. Once funds were received by American Charities, Turnes disbursed the money in accordance with instructions from Germany. After depositing both the $20,500 and $2000 checks from JCCEO, Turnes drew a $3000 check on the American Charities account for Angela Allen, an exgirlfriend of Germany’s. Turnes wrote in the memo line of the check: “JCCEO/Germany/Financial Asst Charity-Medical Illness.” R8 at 632; Govt. Exh. 24. Allen testified that she did not request any specific amount of assistance from American Charities and stated that she was not ill at the time that she received the check. As of the beginning of the trial, Turnes had never met Allen and did not know her. On 6 November 2000, Turnes drew another check ($4500) on the American Charities account, this time made out to Yvonne Stakey.8 Starks testified that she was a very good friend of Germany’s and had approached him about securing some funds in order to defray certain living expenses. According to Starks, Germany referred her to American Charities. Starks claimed that she submitted some paperwork to American Charities and then received a check for $4500. Once again, Turnes did not know Starks as of the date of the trial and had never met her. 8 Although the check was made out to Yvonne Stakey, the correct spelling of her last name is Starks. 11 Finally, as previously discussed, on 10 November 2000, Turnes wrote a check to Horace Miller for $2000, ostensibly as a scholarship for Miller’s son. Turnes wrote the check at Germany’s behest. Turnes did not know Miller and, as of the date of the trial, had never met Miller and Miller had never applied to American Charities for a scholarship for his son. c. JCCEO Check to East Thomas Baseball Association (ETBA) In his 25 October 2000 letter to Cunningham, Germany also directed that $17,000 of the original $217,500 “grant” to JCCEO be disbursed to the ETBA, care of Larry Combs. Larry Combs was Germany’s best friend. Combs worked for the Birmingham-Jefferson Transit Authority and as a manager for an apartment complex.9 In April 1997, he opened an account at Citizens Federal Savings Bank under the name of East Thomas Baseball Association.10 Combs was the sole signatory on the account. The listed address for the ETBA was Combs’s home address. 9 Combs had no other source of income apart from what he earned with the Transit Authority and as an apartment complex manager. 10 In 1997, another East Thomas Baseball Association was founded by Ozelle Henderson, Don Pugh, Max Mills and Lonny Miles. This organization was a legitimate little league baseball association based in East Thomas Park. It had a checking account at SouthTrust Bank. Combs did not have access to this account, he did not coach at East Thomas Park and he did not serve on this organization’s board of directors. Combs did contribute a combined total of about $4000 to this organization over several years but was otherwise not associated with it in any way. At no point did this organization receive any funding from JCCEO or from Jefferson County. 12 On 3 November 2000, JCCEO wrote a $17,000 check to the ETBA that was subsequently deposited into Combs’s ETBA account at Citizens Federal Savings Bank. Within a month, Combs had withdrawn over $11,000 from the account, mostly in the form of checks made to cash. Combs gave part of the money ($4000) to Clifton McElroy. McElroy, Combs and Germany had been friends since high school and both Combs and Germany occasionally borrowed money from McElroy. During this same time frame, Combs wrote numerous checks to Germany drawn on his personal checking account at SouthTrust Bank. From late October to December 2000, Combs gave Germany $8200 in the form of checks drawn on Combs’ SouthTrust Bank account made payable to Germany or checks made to cash and later endorsed by Germany.11 As noted earlier, Combs had no source of income other than what he earned at the Transit Authority or as manager of an apartment complex. 2. Park Funds to the ETBA As county commissioner, Germany had access to about $95,000 of park funds each year. Generally, requests for park funds were made through the UDV 11 Germany also wrote checks to Combs during this same period. Although funds were frequently exchanged between Combs and Germany, Germany ultimately ended up over $26,000 ahead. 13 process previously discussed. In October 2001, Germany’s office requested $14,990 of park funds to be directed to Combs’s ETBA via the UDV process. Although the accompanying documentation was in the form of a price quote instead of the required invoice, the UDV request worked its way through normal channels and was ultimately approved by the county commission. On 8 November 2001, Jefferson County issued a check for $14,990 to Combs’s ETBA. The check was deposited into Combs’s ETBA account on 9 November 2001. Between 9 November 2001 and 15 January 2002, Combs withdrew about $12,500 from the account. A check for $4000 went to Germany’s friend, McElroy.12 Combs also wrote several checks to cash totaling about $8500 and wrote a $1500 check to the Birmingham Business Resource Center in partial repayment of a $6000 loan. 3. Disbursement of District and Park Funds Outside Period of Indictment Germany directed his district and park funds to Combs’s ETBA on several occasions outside the period specified in the indictment. Combs, in turn, distributed much of these funds to Germany’s friends and associates. He also wrote several checks to cash out of the ETBA account, made several large deposits into his personal account at SouthTrust Bank and wrote several checks to Germany 12 As of the date of the trial, Germany owed McElroy about $15,000. 14 drawn on his personal account. Much of this activity occurred between 1998 and 2000. The government relies on this pattern of activity to support its conspiracy charge in Count Five. By and large, Germany employed the same modus operandi from 1998 through 2000 as he did during the time frame covered by Counts One through Four. On two occasions – once in October 1998 and then again in December 1999 – Germany directed a portion of his district funds to JCCEO. As with the 2000 “contract” with JCCEO, Germany presented the JCCEO with a check and a letter directing Cunningham to disburse funds to particular organizations. As a result, the ETBA received a $6000 check from the JCCEO in January 1999. It also received a $15,000 check in December 1999, this time from American Charities.13 During roughly the same time frame – 1998 through 2000 – Germany also directed park funds to the ETBA via the UDV process. In November 1998, $15,000 was sent to the ETBA in the form of a UDV initiated by Germany. No invoices or other required supporting documentation accompanied the request.14 Again, in June 1999, Germany made an $18,000 UDV request to Combs’s ETBA for park 13 In December 1999, Germany directed $85,500 of his district funds to JCCEO. He then directed Cunningham to disburse $43,000 to American Charities. Germany then instructed Turnes (of American Charities) to disburse $15,000 to ETBA. 14 The UDV request did not go before the commission as an agenda item but was approved by the truncated approval process (requiring only the signatures of three commissioners). Germany was one of the signatories. 15 work and uniforms. The supporting documentation included a price quote for uniforms and a price quote for landscaping from Omega Landscaping. Although the UDV request was approved and Combs’s ETBA received the $18,000, no landscaping work was ever provided. Over the course of several years, Combs disbursed funds from his ETBA account to a number of Germany’s friends and associates. Allen, Germany’s exgirlfriend, received a $2500 check from Combs’s ETBA, ostensibly for clerical work. McElroy, Germany’s high school friend and sometime moneylender, received about $13,000 in checks out of the ETBA account. Combs also wrote an $8000 check to the Platinum Club, to cover costs for a fund-raiser held for the ETBA,15 and a $1500 check to Renee Dismuke, Cunningham’s secretary at the EECO. From November 1998 to November 2002, Combs also wrote about $46,000 worth of checks made out to cash on his ETBA account. He then deposited a significant amount of cash into his personal account at SouthTrust Bank.16 As previously discussed, Combs and Germany exchanged a good deal of money over 15 There was no evidence that any funds were actually raised at the fund-raiser and the owner of the Platinum testified that he could not recall how he and Combs were to split the proceeds or cover any losses. 16 The evidence indicated that Combs deposited about $70,000 into his personal account during this time period. 16 the years. Combs either wrote checks payable to Germany directly or wrote them to cash and Germany subsequently endorsed them. Germany did the same for Combs. In the end, however, a defense witness calculated the total amount of money sent from Combs to Germany at about $75,734 and the total amount sent from Germany to Combs at about $48,780 – a difference of around $26,000 in favor of Germany. Germany argues that (1) the evidence was insufficient to support his convictions; (2) the indictment charged overt acts which occurred outside of the statute of limitations; (3) the indictment was constitutionally and procedurally defective; and (4) his sentence was unreasonable. We now address each argument in turn.