Opinion ID: 174534
Heading Depth: 3
Heading Rank: 1

Heading: Count I: Corrupt Solicitation

Text: Lupton was indicted for violating 18 U.S.C. § 666(a)(1)(B), which prohibits an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof from corruptly solicit[ing] or demand[ing] for the benefit of any person, or accept[ing] or agree[ing] to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government or agency involving any thing of value of $5,000 or more. Section 666(d)(1) defines an agent as a person authorized to act on behalf of another person or a government and, in the case of an organization or government, includes a servant or employee, and a partner, director, officer, manager, and representative. Lupton argues that he should not have been found guilty under 18 U.S.C. § 666 because he was not an agent as defined in subsection (d)(1). He contends that he does not meet the definition of agent because there is a provision in the contract between the State of Wisconsin and Equis that explicitly denies Equis any authority to act on behalf of the State. He also contends, apparently in the alternative, that the record was devoid of evidence that he was authorized to act on behalf of the State of Wisconsin. We find both these arguments wanting. Lupton's first contention starts out accurately enough: the 2004 master contract between Equis and the State of Wisconsin included the State's supplemental standard terms and conditions for procurements, one of which stated that Equis shall act in the capacity of an independent contractor and not as an officer, employee, or agent of the state. This contractual requirement extended recursively to each subcontractor of the contractor, [who] will be deemed to be an independent contractor and will not be considered or permitted to be an agent ... of the state. Therefore, Lupton asserts, neither he nor Equis could possibly be considered an agent under § 666(d)(1). That is where his argument falls off the rails. Whether Lupton is considered an agent for purposes of 18 U.S.C. § 666 is determined by that statute, not by the terms of a private contract. Parties cannot contract around definitions provided in criminal statutes; even if Lupton could not be considered a common law agent under Equis's contract, it is nonetheless possible for him to be an agent under the terms of 18 U.S.C. § 666(d)(1). Cf. United States v. Ortiz-Santiago, 211 F.3d 146, 152 (1st Cir.2000) (noting that the sentencing safety valve is a congressional directive that the government cannot use plea agreements to circumvent). The statutory definition of agent is an expansive one. See United States v. Sotomayor-Vázquez, 249 F.3d 1, 8 (1st Cir.2001). As the Sixth Circuit put it, privately agreed upon employment labels, like the independent contractor one Lupton purportedly wore here, may bring some employment relationships within the sphere of agency status but they do not necessarily squeeze all other employment relationships out of that sphere. United States v. Hudson, 491 F.3d 590, 595 (6th Cir.2007); see also United States v. Vitillo, 490 F.3d 314, 323 (3d Cir.2007) (noting that § 666(d)(1) is, by its own plain language, not exhaustive and concluding that independent contractors may well fall within its ambit). The question we must answer, then, is the one implicated by Lupton's second argument: did the government provide enough evidence at trial to support the factfinder's conclusion that Lupton was the State's agent as defined in 18 U.S.C. § 666(d)(1)? See Hudson, 491 F.3d at 595. We start off our exploration of this question by noting that Lupton faces a steep uphill climb here. See, e.g., United States v. Woods, 556 F.3d 616, 621 (7th Cir.2009) (A defendant faces a `nearly insurmountable hurdle' in challenging the sufficiency of the evidence to sustain a conviction.). For Lupton to prevail, we must be convinced, after viewing the evidence in the light most favorable to the government, that no rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Id. In making our inquiry, we do not reweigh the evidence or second-guess the factfinder's credibility determinations. United States v. Arthur, 582 F.3d 713, 717 (7th Cir.2009). The factfinder concluded that Lupton was authorized to act on behalf of the State in connection with the sale of the building and was therefore an agent for purposes of 18 U.S.C. § 666. Ample evidence supports that conclusion. Lupton sent out an offering memorandum soliciting proposals from prospective buyers. His name was on the cover page, right along with the State of Wisconsin's. The memorandum provided that [a]ll requests for additional information were to be directed to Lupton or another Equis vice president and warned potential buyers that contacting the State through other channels could result in the termination of any agreement. Lupton was responsible for further communications with potential buyers, he knew the State's expectations, and he kept the State apprised of his efforts to get the bidders to make better offers. Like the defendant in Hudson, Lupton was authorized to perform all duties, responsibilities, and necessary actions required to market the building, Hudson, 491 F.3d at 594, and served as prospective buyers' primary contact for negotiations with the State, id. Perhaps most tellingly, Lupton told Silverstein that he was obligated to do technically the right thing for the State. On this record, a rational factfinder could readily conclude that Lupton had authority to act on behalf of the State and was thus an agent as defined in 18 U.S.C. § 666(d)(1).
Lupton also argues that even if he is considered an agent, his conviction under 18 U.S.C. § 666 is invalid for another reason: the discussions he had with Silverstein were in his view proposals for a bona fide business transaction. He rests this contention on 18 U.S.C. § 666(c), which states that § 666 does not apply to bona fide salary, wages, fees, or other compensation paid, or expense paid or reimbursed, in the usual course of business. Lupton maintains that what he wanted to engage in with Silverstein was legitimate commission splitting permitted by Wisconsin law, and, moreover, that he and Silverstein only discussed the split hypothetically. The district court rejected this contention and found that Lupton's unusual maneuvering with Silverstein reveals that this was not to be a payment in the ordinary course of business. Lupton, 2009 WL 679649, at . The evidence was sufficient to support the factfinder's conclusion. See United States v. Williams, 507 F.3d 905, 909 (5th Cir.2007) (Whether wages are bona fide and earned in the usual course of business is a question of fact for the jury to decide.). Regardless of whether commission splitting is permissible under Wisconsin law, the record here is replete with evidence supporting the finding that this particular split was neither bona fide nor sought in the ordinary course of business. Foremost, when discussing the payment with Silverstein, Lupton never referred to the hypothetical payment as a split, and always emphasized that it was for him alone. For instance, he told Silverstein, I just want to make assurance . . . that if I could put you into that situation . . . that you guys can get me a quarter point. He also stated that a couple of parties . . . already agreed to pay me between a quarter and a half point. Likewise, when Silverstein asked Lupton how he envisioned the commission split happening, Lupton did not say that he would get consent from Equis or the State in writing (which is required by Wis. Stat. § 452.133(3)). To the contrary, he explicitly told Silverstein that he didn't want it leaked back to the State or you know, to Equis. He also assured Silverstein that he would be close lipped about the whole thing. He proposed that Silverstein could take the taxes out and . . . just give me cash or check. Lupton suggested that Silverstein could alternatively allocate it as a consultant fee to a different company I have which is NACO. North American Commercial Opportunities. As the government points out in its brief, [c]ash payments, payments to sham companies, and mischaracterization of payments are hallmarks of concealment and fraud. Appellee's Br. 18; cf. United States v. Boscarino, 437 F.3d 634, 636 (7th Cir.2006) (Corporate insiders don't keep half of bona fide referral fees, nor are such fees paid from an insider's personal account after such a roundabout transaction.). To be sure, Terry Sparacino, the FBI agent who interviewed Lupton, testified that Lupton acknowledged that the receipt of cash (or payment to a defunct corporation) would not generally be part of a legitimate commission split. Tr. 139, Mar. 2, 2009. Silverstein, whose testimony the district court credited over Lupton's, testified that commission splits between brokers were common, but [t]his situation was one where it was made very clear to me from the onset that commissions were not being shared, and I've never in my career been approached that way. Id. at 68-69. Additionally, according to Sparacino, Lupton never indicated that he was engaging in a commission split with any buyer, nor did he inform Sparacino of his supposed belief that what he had proposed was legal under Wisconsin law. See id. at 136-40.