I suppose the prosecutors have versions of this from Patterson and now Scruggs. The ham-handedness of the grand jury threats against State Farm, along with the games played over Rigsby documents all add up to a very un-pretty picture. Is this part of what is up next for the grand jury? No telling, but Brian Perry and other Republicans sure hope so.

h/t YallPolitics.

The indictment alleges that the Scruggs folks corruptly offered to give and “Judge BOBBY B. DELAUGHTER to accept and to agree to accept for himself and others” a thing of value worth more than $5,000 to “corruptly influence and reward[ him] in connection with his handling of the Wilson case…”

The phrase “agree to accept for himself and others” caught my eye for a couple of reasons. Look at the statutory language of §666– it makes it a crime where an agent of state government “accepts or agrees to accept, anything of value from any person… .”  The language “for himself or others” isn’t statutory. The “himself” is certainly implied in the statute. “Accept for… others” is the interesting part. It is clear that a quid pro quo (the judge gets this consideration, and gives that order) violates the statute. But the “or others” goes a step further, and raises the possibility of an exchange benefiting a third party– “don’t give the money to me, give it to my friend”? That is a part of what the Government seems to be alleging here.

So that’s legal issue #1 on this count: Can the Government show a bribe in the form of a third-party beneficiary contract– “If you rule for us, we will give your friend $1M.”

Also, the government is alleging they will show DeLaughter “agreed.” That’s statutory language and may just be boilerplate. By all reports, the only witness with direct access to DeLaughter will be Ed Peters. So will Peters testify that he had an agreement with DeLaughter about how this was all to go down? (I’m not suggesting that the Government has to prove a handshake moment– if they just prove the sequence of events, they’ll have what they need).

Was it a case-by-case agreement or did they have an across-the-board arrangement? (I’m reminded again of the idea that Peters said to DeLaughter, “I’ll keep all the cash and then I’ll take care of you in the end”).

I’m reading the indictment to allege alternative bribes– that DeLaughter got for himself the consideration for a federal judge slot and for others the cash Peters took. Both of course can be true. The thing of value has to be worth $5,000 or more, and the $1M Peters got certainly is that. But what about what DeLaughter got? A federal judge’s slot is certainly worth more than $5K, but DeLaughter didn’t get that– he got consideration for a slot. What’s that worth? Will that become an issue in the trial? Could it become important for the government to make the “for others” part stick because of this issue? (I am sure there will be an argument in a directed-verdict motion about this but don’t think the argument that consideration for a judgeship isn’t worth $5K will derail this case).

That’s legal issue #2:  Does “consideration” for a federal judge’s slot, in the form of a call from a Senator that one is on the list, satisfy the requirement that one get $5K in value?

Next we get a description of what DeLaughter would do in return for the thing of value and the feeding of his “aspirations to become a federal judge”– the agreement was “to secretly and corruptly obtain rulings from the court that while not plainly unlawful, would ultimately minimize Scruggs’ financial liability….”

Secretly (ex parte contact) and corruptly and not plainly unlawful are key phrases here. I’m reading “not plainly unlawful” to mean that the Government is effectively conceding that the rulings are not (on their face– just reading them) illegal. That is, they are within the range of possible judge-like responses to the issues before the judge. So if they aren’t “unlawful,” how are they “corrupt”? (corrupt being, of course, statutory language).

Here, we are back into issues very similar to those I discussed on the mail fraud count, where I talked about the issue of whether the rulings were “honest.” Are they “honest” if, even though proper, they were obtained by a dishonest process? On the bribery charge, instead of the question being about the “honesty” of the rulings, it is about whether they are “corrupt.”

That’s Legal Issue #3:  Will it suffice to show that the rulings were “corrupt” if the Government shows that the rulings (even if arguably proper) were obtained through improper means such as ex parte contact?

Which doubles us back to that first word, “secretly.” Is it enough for the Government to show that the rulings were obtained through a secret and improper process?

The overt acts alleged in the indictment mostly are straightforward descriptions of what widespread coverage said happened: Scruggs asked Langston and his firm to take the lead in the case. Langston and Balducci in August of 2005 flew to Jackson and gave Peters $50,000 in cash. On January 19, 2006, Langston and Balducci entered appearances in the case. DeLaughter gave the Scruggs team an advance copy of his court order on February 27th. In August, Peters and DeLaughter had a series of ex parte meetings “designed and intended to secretly influence the judge to shade his rulings in favor of Scruggs. On March 29, Scruggs caused Senator Lott “to offer Judge DeLaughter consideration for appointment to a federal judgeship then open in the Southern District of Mississippi.” From October 2006 until October 2007, Langston wired $950,000 from his law office to Ed Peters to corruptly influence Judge DeLaughter.

I find one passage in the overt-acts section confusing. The indictment alleges that in January, 2006, DeLaughter “accepted a secret, ex parte communication from the Scruggs legal team, essentially reversing his earlier ruling and accepting, almost verbatim, a scheduling order favorable to Scruggs.” This passage seems to be missing a linkage between what DeLaughter accepted from Scruggs and the ruling he made, but I’m not sure.

In 1988, in specific response to a US Supreme Court case, McNally v. United States, that held the mail fraud statutes did not cover denial of honest services of public officials, Congress added a section to the mail fraud statutes that says: “For the purposes of this chapter, the term ‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right of honest services.” That statute, codified as 18 USC § 1346, is the engine that is driving Counts Two through Four of the indictment brought against Bobby DeLaughter.

The basic mail fraud statute, 18 USC § 1341, seems addressed to what we normally think of as fraud:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises … places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service … shall be fined under this title or imprisoned not more than 20 years, or both.

As noted, §1346 defines that phrase “defraud” as to include “depriv[ing] another of the intangible right of honest services.” Judge DeLaughter is charged with conspiring to do this– that is, he was part of a scheme that used the mails in a “scheme or artifice to defraud” that is, a scheme “to deprive another of the intangible right of honest services.”

The statute has been applied to include schemes involving judges and cases before them. In U.S. v. Long, 95 Fed. Appx. 483 (4th Cir. 2004), a municipal judge who was also mayor was fixing DUI cases by reducing the charges to reckless driving (with a fine substantially higher than that usual for reckless driving) and telling the drivers to contest their license spending before the DMV hearing, then ordering police officers on pain of firing not to show up at the DMV hearing so the defendants would get their drivers licenses back. In U.S. v. Frega, 933 F.Supp. 1536 (S.D. Cal. 1996), the indictment alleged that a pair of lawyers had lavished gifts on a judge (my favorite of the alleged gifts was $1,200 to pay someone to ghost write a novel for the judge). In U.S. v. Brumley, 116 F.3d 728 (5th Cir. 1997), the statute was applied to a Texas workers comp director who was taking “loans” (never repaid) from lawyers who were appearing before him. Brumley argued that the statute did not reach either ethical lapses or conduct that involved purely state concerns; the court rejected both arguments.

Note that in Long, the mayor wasn’t getting the money generated by the scheme– it was going to the town for which he was mayor.

I think it pretty clear that the 1988 amendment was designed to reach the sort of conduct alleged here.

With that, I’m going to comment on some possible defenses now that I’ve looked at some cases under the statute. There are some key words here:

Honest

Can Judge DeLaughter say that he wasn’t denying anyone “honest services” because he ruled correctly and how he should have ruled in any event, and therefore there’s no fraud?

If that’s a defense, that means that a trial would involve a trial-within-the-trial about the correctness of the rulings DeLaughter made, and possibly some expert testimony. If his rulings were even arguably correct, does he walk on mail fraud?

There’s a possible major flaw in this argument, though, noted below under the heading “concealment.”

Scienter

By definition, a fraud scheme involves knowing you’re committing fraud– that’s what is known as the scienter requirement for fraud. The 7th circuit case I mentioned states that this element requires the public official have notice of the illegality of their act. There’s a split among the courts as to whether there has to be a violation of free-standing legal obligations (the argument is made that mere ethical lapses don’t suffice, for instance, and that there has to be some violation of a stated duty), while other courts have ruled that there’s no such requirement.

It seems clear that the reason the DeLaughter indictment specifically cites Miss. Code Ann. § 97-11-53, which makes it a state crime to illegally influence a public official, is to cover this possible requirement and to make clear that DeLaughter was on notice he was acting illegality. Can the prosecutors also cite anti-earwigging rules for that purpose?

This is a place that the “honest” part recurs– if DeLaughter still meant to rule correctly, did he have the mental state (scienter) required for fraud? There are cases that support, and other cases that reject, these arguments DeLaughter could make about whether he was going to be “honest” and whether there was a denial of anything tangible if it didn’t effect his rulings.

Concealment

The off-the-record contact by Peters is critical. There are cases that hold that concealment of a conflict of interest will suffice to violate this statute. If the Government wants to push the envelope a little, it could argue that Peters’ off-the-record contact with DeLaughter funneling defense information to the judge all by itself denied the public of DeLaughter’s honest services, even if it did not affect his rulings.

It seems to me that allowing one side back-room against-the-rules-and-law access to the judge (in an information flow that was a two-way circuit, to boot) certainly denies the public of the honest services of a judge…

Proof

So what kind of proof issues does all this imply? If I were defending DeLaughter and worried about the whole problem whether he can testify (given the charge of a lie to the FBI agent, the grand jury testimony, and so on), I would try to get some expert testimony, and there are some obvious possibilities:

• An expert who perhaps could testify that DeLaughter’s rulings were at least arguably correct. This has the potential of having a (seemingly) neutral witness say what DeLaughter needs to tell the jury: That these rulings were honest. Thus no denial of honest services.
• The actual expert from the Wilson case. As I understand it, what DeLaughter did was reject a special master’s ruling that largely accepted the expert testimony advanced by the Wilson side and rejected that put forward by the Scruggs side. I’d be seriously considering calling that expert to say “Oh, yes, my testimony was honest and correct, and Judge DeLaughter was honest and correct to accept it.” If I’m correct about who this witness is, it is someone closely associated with Scruggs, so Scruggs’s guilty plea may be complicating here, but surely that expert would have to stand by their prior testimony.
• Scruggs’s lawyers other than Langston and Balducci. The indictment accepts the version of this tale that Scruggs decided in late ’05 / early ’06 to bring in Langston and Balducci to work Peters to dishonestly influence DeLaughter. Before that decision, Scruggs was represented by widely respected lawyers about whom there has not been a hint of impropriety in this case; presumably they were advancing the arguments on which Scruggs ultimately “prevailed”– the suggestion is not that Langston and Balducci brought new arguments to the table but rather went through the backroom to make sure the old arguments won.  Presumably, the earlier lawyers would have to say that they advanced arguments they thought legitimate and took seriously.

In some ways, these theories would make this trial more like a legal malpractice case than a fraud case, much less a normal criminal case!

If DeLaughter’s defense takes any of these tacks, it gives the defense the possibility of defending the honesty of DeLaughter’s decisions without DeLaughter needing to take the stand to defend them.

Will that be enough? This is where the issues I raised under the heading “concealment” become critical. If the backroom ex parte contact to influence a judge’s decisions suffice– without regard to whether the judge ruled correctly, the jury will be invited in the jury instructions to convict DeLaughter without regard to whether his rulings were correct.

Which, by the way, means that there may be another kind of expert testimony in this case: Testimony about the propriety of the backroom ex parte contact.

Do all these suggestions for how the defense can handle the case mean I no longer think that the judge has a hard row to hoe? Nope. I still do, but am now of the opinion that there are some interesting angles the defense can work in this case.

I’ll close out by noting that given all these issues, I would not be surprised to see a motion to dismiss from the defense side, arguing what’s called the rule of lenity– that this statute doesn’t sufficiently charge as a crime honest rulings made in a process involving back room conduct. I would expect such a motion to be a loser but serve to bring before the judge issues that will become key when the judge decides how to instruct the jury about all the issues described in this post.

The Judge began by saying to the Government, “You say you have never seen substantial cooperation like this.” Bob Norman responded, “None of us can remember any substantial cooperation like this,” to which the Judge responded by asking whether without Balducci’s cooperation, the prosecution would have stopped with him.

The Judge said that Balducci was accosted by the Government when he was arrested and shown film of him passing money to Judge Lackey. “There is not a lot else a man can do, but he could have taken it all upon himself.”  The judge talked about Balducci wearing a wire.

“On the other hand, I have to consider that you were the bag man, that you were the one who carried the money, you were the one who talked the judge into going along with what you wanted to do.”

As with Patterson, he stated that the guidelines pointed to more than the sixty-month maximum, and then he sentenced Balducci to 24 months, without a fine because he is unable to pay one.

The government advised the court that Balducci is still needed for a continuing investigation of other people involved in this type of activity. As with Patterson, he was allowed to stay out until the grand jury.

Former Mississippi state auditor Steve Patterson (right) with attorney Hiram Eastland as he enters U.S. District Court for sentencing this morning. Patterson appeared light-hearted before being sentenced, asking the photographers taking his photo: “Where were you when I was running for office?” Photo by Bruce Newman.

2/13/09 – Last two judicial bribery defendants sentenced
Alyssa Schnugg
Staff Writer

The last two defendants in what’s been branded the Scruggs I judicial bribery case were sentenced to spend 24 months in federal prison for their roles in the scheme to bribe a circuit court judge.

Timothy Balducci and Steven Patterson both appeared before U.S. District Court Judge Neal B. Biggers this morning at the Federal Courthouse in Oxford.

Both men pleaded guilty a year ago to a charge of conspiring with Richard “Dickie” Scruggs, his son and attorney Zach Scruggs and his law partner Sidney Backstrom to bribe Circuit Court Judge Henry Lackey with $40,000 for a favorable ruling in a lawsuit against the elder Scruggs involving legal fees in Hurricane Katrina related litigation.

During Balducci’s sentencing hearing, U.S. Assistant Attorney Bob Norman told the judge that his department had never seen such “complete cooperation” from another defendant. He said Balducci’s help has opened the doors to other investigations of corruption and that the Scruggs case got as far as it did because of Balducci’s assistance.

“His cooperation was immediate,” Norman said. “He’s doing the best he knows how to do to right the wrong he has done.”

Biggers agreed but reminded Balducci he was the “bag man” in the case.

“You carried the money,” he said. “You talked the judge into going along with what you wanted to do.”

Balducci told Biggers and the court that he was “profoundly sorry” for what he had done.

“All I can do now is try to make things as rights as I can,” Balducci said.

Norman also reported that Patterson has cooperated with the government, albeit to a lesser degree than Balducci.

Patterson was called a “minor” participant in the case, although he received the same sentence as Balducci.

Before he was sentenced, Patterson said he was embarrassed and humiliated.

“If God gave me a choice to live carefree in paradise the rest of my life, or to choose to go back two years ago and change my actions, I would not hesitate to enlist to do the latter,” he told Biggers.

Both men will report to prison on March 25. The government asked for the later reporting dates because their testimony may be needed when the grand jury meets in the March.

The saga began on Nov. 27, 2007, when FBI agents raided Scruggs’ office on the Square. The next day, the five men were indicted.

On Dec. 5, 2007, the day of his arraignment, Balducci pleaded guilty to the bribery charge.

It was later learned that Balducci had been working with the government in building its case against Scruggs and the others.

But it was also Balducci who got the ball rolling. In trying to gain favor with Scruggs, during a meeting with the other defendants in March 2006, he told the famous trial attorney that he could use his friendship to corruptly influence the judge to find in favor of Scruggs in the lawsuit Jones v. Scruggs.

After Balducci approached Lackey and suggested that if Lackey would find in favor of Scruggs, he would give Lackey a place in his law firm after Lackey retired. Appalled, Lackey told the FBI about the conversation. For six months, Lackey allowed his office and telephone to be tapped. In September 2006, in another meeting with Balducci, the subject of money came up and Balducci offered Lackey $40,000. It was later discovered Scruggs was providing the funds.

Balducci was approached by the FBI in November 2007 and he began cooperating with the government and wore a wire tap himself on the day the money was given to Lackey.

Scruggs was sentenced in June to spend five years in a federal prison in Kentucky. His son is serving a 14-month sentence in Forrest City, Ark., and Backstrom is serving 28 months in Forrest City.

Earlier this week, Scruggs was sentenced to seven years in prison for his role in a bribery case involving Hinds Circuit Court Judge Bobby DeLaughter, which came to light during the Lackey case and through testimony of Balducci. The sentence will run concurrent with his original five-year sentence.

When he was called before the bench, he spoke first. He said:

I am profoundly sorry for what I have done and I accept full responsibility for what I have done and the consequences. I apologize to all the innocent people who have been hurt by my conduct. I intend to make things as right as I can…

Bob Norman then spoke:

I wake up some mornings and look at where we are and I look at how far we have gone in these cases and where we are going. Not because of me, Tom Dawson, or Chad Lamar, but because of Tim Balducci we are were we are in this case. His cooperation was immediate, unrelenting, and continuing. He asked people not to write letters on his behalf, and made no objections to the Presentence Report. He doesn’t contest anything in it. He is trying to right the wrong he has done. At the beginning, I thought there was considerable risk to him and his family.

He has literally been digging ditches to support his family.

I don’t want to presume to speak for everyone in the office, but I have made some inquiries, and our office has never seen substantial cooperation like this.

The court then began his explanation of Patterson’s sentence by stating it was true that Patterson came forward early and aided the government and he would give consideration for that. He noted that the government had filed 5K motions asking for a downward departure. He stated that Patterson’s attorneys had filed objections to the presentence report on the calculation of the amount, and asked if counsel wanted to stand on the motion for downward departure or argue those issues. The court noted that if Patterson is a minor participant, the guidelines would still be at 57 months– it would not make a difference.

His lawyer (this time it was McCoy who spoke) persisted in the objection, and the court denied the objection, noting that the court has ruled that the amount involved was not what Patterson may have received (which was nothing) but the benefit the briber (Scruggs) was to get (which was upwards of $400K).

He noted that based on all these considerations, the guidelines point to level 31, which points to a guidelines sentence of more than the maximum of 60 months (the Balducci sentence produced the same calculation).

He noted the 5k1 motion and all the letters.

“You’re the only one in this case who is not a lawyer, and therefore I wonder if you realize you had a disrespect for the legal profession that would make you enter into a conspiracy to corrupt the courts.”  The judge could not decide how to weigh the issue of him not being a lawyer.

“You were in a firm that sounded like a legal firm called Patterson and Balducci.” At this point, he noted that the PSR said he was receiving $80K a month from tobacco fees, and Patterson interrupted to say, “No, it’s more like $20,000.” On pretty close questioning by the judge, Patterson’s lawyer (McCoy) clarified that the amount had gone down.

The judge concluded he was not going to consider his non-lawyer status as a big factor. He then sentenced Patterson to 24 months with a $150k fine to cover the costs of incarceration, which the court acknowledged was a downward departure.

He noted that the government said they would continue to need his cooperation, and that he was not charged in the other illegal bribery case, that this sentence was about this case only and he didn’t know the government’s other plans as to the case involving Judge DeLaughter.

They then discussed the report date and Patterson’s future grand jury testimony.

The issue was raised again in Balducci’s sentencing, and the same report date was set.

It seems that there are further investigations for which these two men are needed before the grand jury.

There is no question that Tim Balducci’s cooperation was critical to bringing in Scruggs. His cooperation was comparable to Langston’s in that respect, but it’s doubtful that Balducci had as much to tell as Langston. He came in first but was caught red-handed. Balducci is comparable to Langston in some ways, except that he does not have an agreement that sets a maximum (Langston did) and is not before Judge Mills.

There is no public evidence of meaningful cooperation by Patterson. He had already entered his plea during the Scruggs motions hearings, yet there was no hint of him as a potential witness, unlike Balducci and Langston.

I think the judge will view both as in this scheme up to their eyeballs; I cannot see them viewing Patterson as a fringe player to any great degree. I think I’m recalling Patterson saying he was a fringe player in a sentencing letter; if he takes that tack, it could have an adverse effect before Judge Biggers.

In Balducci’s plea agreement, the government acknowledged that he had already substantially cooperated within the meaning of Section 5K1.1 and that if he continues cooperating, the government agrees to file a motion for downward departure. (Note the comparison with Scruggs’s agreement to cooperate in the case this week, where it is in the government’s discretion whether they’d file one– they hadn’t agreed to file one).

The Balducci plea agreement provided: “There is no agreement as to the sentence to be imposed, which will be in the sole discretion of the Court subject to the Federal Sentencing Guidelines….”  Both parties reserved the right to speak at sentencing.

Patterson agreed to cooperate. The government agreed that if they determined that his cooperation reached the level of substantial assistance, the government would file for a downward departure. The sentence was in the sole discretion of the court.

Where does that leave all this? I think Patterson has to take a slightly worse hit than Balducci, particularly if there is no “invisible” cooperation. Patterson had a chance for well over a month to come in and didn’t, and then when he did, it didn’t matter much. The judge may not know the full details about that, but will have a sense of it. Once Balducci was tapped, he flipped 180 degrees and probably made a start to making this new case. So clearly, Balducci does better than Patterson. I don’t think the guidelines much matter here  (I haven’t got them with me, but this must guideline out about like Langston did, and that pointed toward a sentence at the max. I could be wrong about that).

So one question is whether it matters much to compare sentences between judges. Does the 3 years for Langston (which was partly the result of a binding plea at 36 months) matter in evaluating Balducci’s time? How does that compare to the 28 months for Backstrom (whose cooperation has been about as invisible/ineffective as Patterson’s– the judge essentially stated he’d not cooperated at sentencing– and who had a binding plea agreement that capped his time at 2 1/2 years)? How much less does Balducci get for flipping first? How much worse does he get for leading the charge in the effort to bribe Judge Lackey? I can’t see Balducci doing worse than Backstrom, but can’t see him being much better off than Langston.  Patterson should be at Langston or worse…

That all ends up too complicated for me to feel that I can make a good prediction. I really can’t see them getting the same as Scruggs, who got the max at 5. I’m going to say 1 1/2 (maybe 2?)  years for Balducci.  Three for Patterson, unless he’s done some cooperating that is invisible and hasn’t made public radar. I’d say 4 for Patterson, but I’m puzzling out the 28 months for Backstrom.